Year-end: Put This Year's Investment Performance in Perspective

Print Story | Email Story

How can you assess your investment portfolio's performance in 2018? The year was full of wild swings in the financial markets, so your own results may well have bounced around quite a bit, too. But you can still get a clear picture of how you did if you keep your investments' returns in the proper perspective – by making sure your expectations are relevant, realistic and reviewed.

Let's look at how these terms can apply to a meaningful evaluation of your investment progress:

Relevant: Many investors compare their portfolio returns to a popular market index, such as the S&P 500. But this comparison is not really valid for a variety of reasons. For one thing, indexes are typically not diversified across different types of investments – the S&P 500, for instance, only tracks large U.S. companies. But your portfolio should consist of a broad range of investments: domestic and international stocks, bonds, mutual funds, government securities and so on, appropriate for your goals and risk tolerance. Also, your portfolio's performance will be affected by your contributions and withdrawals, while market index returns are not.

So, instead of measuring your results against an index – and possibly worrying about underperformance – you're better off establishing relevant expectations of your investment returns, based on your specific goals. So, for example, if you want to retire at age 62, you'll need to know the rate of return you need to achieve this goal – and then compare that desired return with your actual results.

Realistic: Ideally, of course, you'd like really high returns with really low risk – but that's really not feasible. To get high returns, you'll need to invest aggressively, which means you'll need your portfolio to be heavily weighted in stocks. However, stocks are also riskier than more conservative investments, such as bonds or government securities. So, you'll need to be realistic in what you can anticipate from your portfolio. You can shoot for high returns and accept the higher level of risk, or you can lower your expectations in exchange for greater stability.

Reviewed: The performance of the financial markets – and also your own portfolio – will fluctuate from year to year. Consequently, it's important to review your portfolio's results and the progress you're making toward your goals on a regular basis, possibly with the help of a financial professional. In these reviews, you may conclude that you're doing fine, or you might discover that you need to rebalance your portfolio by realigning your investments with your goals and risk tolerance, or perhaps make other adjustments – such as changing the amount you invest – to get you back on track. In addition, you may even need to re-evaluate these goals in response to changes in your life – a new job, marriage, new child, and so on – as these changes could affect the rate of return you need from your investments.

As you look back on 2018, and look forward to 2019 and beyond, take a holistic approach to how you evaluate your investments' performance. By looking for relevance, being realistic about what you can expect, and reviewing your portfolio in the context of your goals, risk tolerance and changing circumstances, you can gain a thorough understanding of where you are, where you want to go – and how you can help yourself get there.

This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information, see

0 Comments welcomes critical, respectful dialogue; please keep comments focused on the issues and not on personalities. Profanity, obscenity, racist language and harassment are not allowed. iBerkshires reserves the right to ban commenters or remove commenting on any article at any time. Concerns may be sent to

'Late Night': Funny Business

By Michael S. GoldbergeriBerkshires Film Critic
Somewhere between my wild youth and the acquiescence to middle-class mediocrity if not respectability, there was my bachelor pad era. The Cohens, a childless couple who had no designs on a single-family home until they inherited one, had relinquished their pink apartment on Pingry Place. And thus, after a bribe, unbeknownst to me, from my Mom to the super, the digs were mine. 
I later learned that said financial inducement was followed by regular sub-rosa gratuities in return for information on yours truly's comings and goings. In Mom's defense, I think she had a FISA warrant. And yes, this indulgent preamble has everything to do with director Nisha Ganatra's smartly funny "Late Night."
You see, my best friend Bob and I spent the better part of several weeks in the newly acquired apartment, aided by the creativity-stimulating sources of the day, arduously trying to figure out how best to transform the space from Cohen Pink to Goldberger, well, just what? Finishing second in the sweepstakes was an Italian restaurant motif, wherein several square tables with red checkered table cloths would be complemented by walls adorned in murals depicting the food-famous landscapes of Tuscany. The thinking was that since I had no etchings to show should a
young lady wish to visit my chambers for an après-theater glass of Chianti, my bistro would surely prove an appropriately adequate conversation piece.
View Full Story

More North Adams Stories