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Measuring Investment Success: Are Your Assets Performing?

Investments can fall into categories that can be benchmarked. For example, if you own several Canadian companies they can be benchmarked against an index like the S&P TSX. The same can be done with U.S. companies or international companies or bonds. If your investments are up 4% and the index is up 7%, then you are underperforming and receiving no value for the money you’re paying. On the other hand, if your investments are down 4% and the comparable index is down 7%, then you’re receiving value – as you outperformed the index.

We cannot control the markets, nor can we accurately predict them. Some years are up, and some are down. Simply put, you are looking for a more positive number in up markets and a less negative number in down markets. Either way, you are receiving value for the money you pay.

The difficulty in benchmarking is when products, such as mutual funds, are used. For example, a Canadian Equity Fund is typically benchmarked against the S&P TSX, but that fund could have many companies from all around the world in it. This leaves you with no way to benchmark your results accurately, as most mutual funds do not disclose all of their holdings on a timely basis.

At the end of the day, you need to receive value for your investment dollars – just like any other purchase. Look at your portfolio and ask yourself: what’s in it for me?

These results completely shape your future plans. Things like your retirement or the education of your children are all based on the value of your investments. A 1% improvement is massive over time. This is where you have the control to change your future.

Working with a Certified Financial Planner can show you accurate benchmarks for all your holdings. For more information, contact our experts at Halton Wealth Management today.

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