Title: $5M Exit Strategy: Optimizing Portfolio Returns After Selling My Business Tagline: $5M Exit Strategy: Optimizing Portfolio Returns After Selling My Business Problem: John, a 62-year-old entrepreneur, is selling his successful small business for $5 million. He wants to invest the proceeds wisely to ensure a comfortable retirement. He's considering a moderately aggressive portfolio managed by a fund aiming to outperform the S&P 500, but he's unsure if the added risk is justified by the potential returns. Over the last 3 years, the fund has returned an average of 12% annually, while the S&P 500 has returned 9%. The fund's tracking error (standard deviation of the difference between the fund's returns and the benchmark's returns) has been 6%. John needs to determine if this fund's performance merits the higher risk compared to simply investing in an S&P 500 index fund. Solution: By using Golden Door Asset's Information Ratio Calculator, John can quickly determine if the fund's excess return is sufficient to compensate for the increased tracking error. Inputting the fund's 12% return, the S&P 500's 9% return, and a tracking error of 6% yields an Information Ratio of 0.5. This allows John to compare this fund's risk-adjusted return to other potential investment opportunities and to a desired risk profile. ROI: An Information Ratio of 0.5 indicates a reasonable, but not exceptional, level of risk-adjusted return. While the fund has outperformed the S&P 500, the Information Ratio suggests that John could potentially find alternative investments with a better risk-reward profile, potentially saving him from unnecessary risk and maximizing his long-term retirement income by approximately $100,000 over 20 years, assuming a conservative 5% annual return improvement. Description: Calculate your Information Ratio to maximize risk-adjusted returns and secure your financial future after a major liquidity event. This calculator empowers you to evaluate your portfolio's performance against a benchmark and make informed investment decisions. Secure your retirement with Golden Door Asset. Category: Lead Gen