What was a good investment return in 2017?

By now, most investors have received their year-end account statements from their financial advisors/money managers. And by now, many investors may still be wondering about their investment return. Was it a good return? Average? Poor?

The question we would ask is, “Compared to what?”

Compared to the year before? Compared to your neighbor/colleague/brother-in-law/tennis partner? Compared to a set of expectations? Are any of these realistic measures? Or even relevant?

By and large, the financial industry does a mediocre job of helping investors understand how to assess the quality of their investment return. In the following three-part series of posts, we want to give you a framework for measuring performance based on factors that we, as professional investors, employ:

1. Did your investment return move you closer to your personal objectives?

2. What level of risk did you take to earn your investment return?

3. How did your investment return compare to a relevant benchmark?

Each of the three posts above represents important context in being able to properly assess the performance of your investments. If any of these factors are not being considered currently, you should speak with your financial advisor to develop a true gauge of your investment performance or contact us for a second opinion.