I support your way of looking at Yield calculations fully
It has been my position always to argue that as long as people understand the "nuts & bolts" of the "tools" they are working with then they are well equipped to make the choices as to what to use.
I agree also that cash in the bank is for many cases also an investment. . . and sure, if a cash supply is specifically allocated to an equity investment is it quite appropriate, indeed sometimes mandatory, to include that in the ROTAC Yield. . .This falls under the topic of Asset Allocation and Cash is certainly an Asset. This is the basic method of Investment Funds that carry a Variable Cash Reserve that is allocated to the Participants, although the participants see their shares as Equity Paper and not really as Cash + Equity.
Many people that simply buy into mutual funds without AIMing also often jump in-and-out "as the wind blows" but do not see their Cash in the bank as part of that variable investment package. Every Professional Investment Institute, ultimately, will calculate their overall yield based on all their assets for publication but internally. . without a doubt. . .they will also have Yield Figures on each Equity Portfolio on the Books. . .and these Yield figures are, I venture to say, usually some sort of ROTAI Yield and perhaps in some cases a ROTAC Yield.
In the same way a person that buys a second house would not include all his cash in the banks as an investment in that second house. . .He would, if he is smart, only consider the money he spends on buying and maintaining and managing the second house as the investment. . .for this the ROTAI Method is the “method of choice” for getting a good indication on the yield. . .he spends years long transforming cash, at various times, into “equity” or so he hopes it will become equity anyway.
I wanted to shed some extra light on this Yield issue for AIMers that now simply use the ROI method with only the initial cash considered and having ignored any amounts of cash that they might have added to the Reserve later on. . . In such cases the Simple ROI would have little meaning.
