Post A Comment
Are you like me? Do you have trouble making sense of your investment statement? This is a pet peeve of mine, has been for some 20+ years: why can’t my investment statement tell me what I really want to know?
Important Data in your Investment Statement
Let’s start off with what we really want to know:
1- how much did I invest?
2- how much is it worth now?
3- what is the recommended asset allocation of my investor profile?
4- how are my assets allocated now?
How much did I invest?
As most, if not all investment accounts designed for retirement have all income (interest, dividends & gains) reinvested, it is not always easy to remember how much I have invested over the years. Throw in there the amazing volatility experienced since the late 90s and it’s now worse than a Rubik’s cube with a hangover. For some strange reason, my statements show gains/losses since the last statement and during this calendar year. These numbers are, no doubt, easier to calculate by those who produce them, but don’t help me much. Remember, we are focused on a target 10+ years away…
How much is it worth now?
I must admit, all statements tend to give us this number. The number itself is nice to know and would be infinitely more valuable if it was compared to the first number. Here is an example:
ABC Bond fund: paid $1000 now worth $1200, original purchase 6 yrs ago, therefore annualized return 3.1%.
Let’s face it, we could use this kind of transparency!
What is the recommended asset allocation of my investor profile?
I don’t really mind what the financial institutions call my investor profile, balanced, balanced-growth, growth, extreme-growth, etc., I do value what their experts consider an appropriate asset allocation mix for my risk tolerance and investment objective. An example of this is that currently, I am a growth investor with an investment horizon over 10 years away and their investment strategists believe I should currently hold 2.5% in cash, 17.5% in fixed income and 80% in equities.
Next is the important part:
How are my assets allocated now?
Over time the assets we have invested in grow, shrink or hold steady. It has been stated over and over that the number one method to profit from your investments is through proper asset allocation. Here is how to do it: let’s say that I look at my retirement portfolio and now my assets are as follows: 18% cash, 35% fixed income and 47% equities. How could this have happened?
It’s easy, the last time I contributed I did not know where to invest, several funds I own are carrying more cash than usual, the fixed income portion has outperformed and equities have not fully recovered from the last major setback.
Here is how to buy low and sell high: readjust your portfolio to the recommended asset allocation for your investment profile! Sell fixed income, which has done well, and buy more equities (remember I am looking for growth. 
)
There you have it! Important data in your investment statement and practical uses for it. What about your statements, do they provide this info? If not how do you keep track and make adjustments? Send us your experiences we’ll be sure to share them in future posts.
