By Meghan Murray
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.