How Are Your Investments Doing?

I have to admit that I am constantly surprised to learn that investors many times have no idea of their investment performance.  If they have an advisor, they are typically at the whim of the advisor in receiving investment performance.  More times than not, I find returns are reported absent any meaningful benchmark. This is like telling an alien that your automobile gets 30 miles to the gallon.  Is that good?  It would have no way of making an assessment.

I point out the fact that up-to-date investment performance, relative to an appropriate benchmark, is at the fingertips of Schwab clients.  Performance is available for individual accounts as well as for combined accounts.  For example, if you have a brokerage account, an IRA, and a Roth IRA, you can get performance for each account as well as all three accounts combined.

When I point this out to potential clients, they sometimes respond that they don't follow their performance by frequently checking on it.  I agree - it isn't a good idea to check on it constantly.  But isn't it good to know it is there when you need it?

Here is performance for Schwab's "Moderate" portfolio.  Note the well-specified benchmark.  The returns are for the last three months, year-to-date, one year, etc.  They are through the close of the previous day!  The return on the right-hand-side, 2.40% annualized,  is since inception of the account, 4/15/2011.

Source: Schwab

CLICK TO ENLARGE

Source: Schwab

CLICK TO ENLARGE  Here is the model to which the returns are tracked.  This is where an investor begins to get information on whether it is an appropriate model.

The index approach that I and many others follow seeks to attain returns close to the returns of the model.

But the model is also useful for those who see themselves as a market-beating investor.  It provides a well-defined benchmark against which to compare stock picking, market timing prowess.  Sort of like telling an alien that similar cars only get 28 miles to the gallon.  Then it has a benchmark.