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How to Know How Your Investments are Doing

Partners' Network Blog

The market was very good to us this past quarter; not so for last year.  The question is how good (or bad)?  Below is a simple schedule to fill out to help you review your portfolio’s performance.

Your gain or loss would include the realized gains and losses, interest and dividends received, less the margin interest and fees paid and the increase or decrease in yearend value of your securities.  This is not a scientific method, nor is it arithmetic since your funds were not time weighted.  Further, most accounts have multiple asset categories, i.e. stocks and fixed income, but this schedule provides a thumbnail look at your performance.

If you use an investment manager or advisor ask them to provide the annualized return on your investments which would include a time weighting of the account.  Further, some brokerage accounts provide this information and all you need to do is find the right tab to click to get it.  If you are a do-it-yourselfer and your brokerage account cannot provide this information, then unless you do convoluted calculations you will not be able to obtain your annualized portfolio return.  However, you will have the net change in the account and this year it should be a nice positive amount.  If it isn’t, then you are doing something wrong and I suggest meeting with a professional investment manager.

Most accounts have multiple asset categories, so comparing your portfolio’s performance to the S&P500 index or a bond index will not provide a reasonable assessment.  You should compare your stocks’ performance to the appropriate stock indexes and likewise with the fixed income to get the true results.  This can be easily provided if you use an investment advisor; otherwise it would be difficult.  Another thing you can look at is the interest and dividend income as a percentage of the average of the opening and closing account balances. Again, not so scientific, but it provides a good idea of the cash flow.

If you want to know how you did, you need a start. The above listing provides that start.

Do not hesitate to contact me with any business or financial questions at emendlowitz@withum.com.

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