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Saturday, October 15, 2011

Performance Report

How are your investments doing? This is a fairly common question these days with Europe dealing with bailout problems, the U.S. worried about a recession, and politicians acting stupider than usual.  Some put all this together and opt for money market accounts.  Unfortunately for many, that won't get the retirement many want.

On a number of occassions, I've posted about asset allocation and how to set up a well-diversified portfolio of exchange traded low-cost funds.  I've touted the performance capabilities of Schwab that enables investors to track their performance on an ongoing basis.

Returning to the question above, the fact is that most investors don't know their performance.  I know because I ask them.  I could probably put together a pretty entertaining comedy tape from the answers I get. The bottom line is that many wait for an advisor's report that arrives weeks after the end of a quarter.  Then even with all the negative news going around, they are afraid to open the report.

Here is a Schwab client performance report through the close of the market yesterday:

Source: Charles Schwab
CLICK TO ENLARGE  This client happens to be in the "Moderately Conservative" model which is basically 40% equities/60% fixed and cash. Note that the return since inception is within .12% of the benchmark (shown as the footnote)  - basically the cost of the fund's ETFs.  This report combines 3 accounts:  taxable, traditional IRA, and Roth IRA.

Although the return is modest at 4.62%, it is considerably better than the return many seniors have achieved on CDs, etc.; and it is at relatively low risk.

Managing risk, of course, is a key element of this process.  At the beginning, client and advisor need to assess risk tolerance because a key is to be comfortable holding the portfolio through ups and downs.

Disclosure:  Past returns are no guarantee of future returns.  Individuals should consult an advisor and/or do their own research before investing.  I am not affiliated with Schwab.  This post is solely for educational purposes.


  1. I love how the report shows a benchmark based upon asset allocations rather than the standard S&P 500!

  2. I agree with Moneycone's statement. Also, I don't think that the return is bad considering how especially tumultuous the market has been over the past year.

    BTW, I used to think I had a very high risk tolerance. However, for the past 2 years I have slept much better with a more conservative (i.e., balanced) approach.