As the year comes to a close, do you know how your investments fared for the year?  Will you know your net investment return?  Do you know how to calculate it?  And to what benchmark do you compare your return?

Most investors will simply look at their balance at year-end and be happy with a nice gain and may not even consider how much money they added to their portfolio.  But your investment return is important and subpar returns, compounded over a couple decades or more, can leave you living your golden years without much discretionary income.

$30,000 per year invested for 30 years at 5% vs. 7% investment return.  $2,092,824 vs. $3,032,191 a difference of about $940,000!

If you manage your own investments, it’s critical to monitor your results and objectively evaluate how you are doing.  Managing your own investments is really difficult and your emotions and politics can sometimes wreak havoc on your return.

Frank Moore, our Chief Investment Officer, learned this lesson the hard way.  You’d think that a professional might well outperform his clients.  Back in the 1990’s, Frank bought a lot of investments that he didn’t recommend for his clients.  There were some “exclusive” opportunities, some hot stocks, and funds without established track records that sounded great.  But after two or three years of comparing his results to his clients he threw in the towel.  He marched into the next office and told another advisor to start investing his portfolio in our growth model alongside our clients.  And he’s been quite happy with his returns ever since.

If you’d like some help calculating your investment return, we’d be happy to run the numbers for you.  If you are adding or withdrawing funds during the year, the math gets tricky and we have software to get you the right number and can share with you an appropriate benchmark for comparison.  Don’t let your ignorance or ego cost you hundred of thousands of dollars or more.