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We believe that there are a few things to consider to help you answer the question "How am I doing?"
Reviewing your investment performance over time is important to help determine if you’re on track to achieve your financial goals. But before you can evaluate performance, you first need to determine the return you are trying to achieve – which is really the return you need to help achieve your goals.
To help put your investment performance into perspective, your return expectations should be:
We know you want to stay informed about how your investment accounts are doing. In addition to regular reviews with your financial advisor, accessing your account information online is a key tool for keeping up-to-date on the status and performance of your Edward Jones accounts.
To calculate your personal rate of return, we use the industry-defined "dollar-weighted" calculation that factors in the performance of your investments and the timing of your additions and withdrawals as well as any dividends, interest or capital gains distributions the investment pays.
Amount Added/Withdrawn - The net amount you've added to or withdrawn from the account during a particular period. This includes transfers in/out, cash added/withdrawn, any fees or commissions charged, and taxes withheld.
Investment Cash Flows - Net total of all cash flows for a specific investment, including buys/sells, transfers in/out, dividend/interest payments, and dividend reinvestments.
You buy XYZ stock for $1,000 on January 2 and then buy $500 more on February 1. XYZ stock then pays $50 in dividends, which you do not reinvest. On March 1, you sell $300 of XYZ stock. Your net Investment Cash Flows will show as $1150 ($1,000 + $500 - $50 - $300).
If you had reinvested the dividends, the total amount would increase:
Net investment cash flows would be $1200 ($1000 + $500 - $50 + $50 - $300).
Here's an example:
Within one year, both John and Jane deposit and invest $1,000 and achieve a $100 gain, each ending the year with $1,100.
Edward Jones tracks the performance of your investments since they have been held in the current account, but no earlier than Jan. 1, 2009. This also includes investments you owned during this time period but have since sold. Certain events, including a transfer of an investment between accounts, share class conversion, or change in an investment's identification code (CUSIP) caused by a corporate action, will impact the time frame over which the investment's rate of return is calculated.
Your annualized rate of return reflects the average annual return of your portfolio since its inception. For example, if you invested $100 five years ago, reinvested all dividends and capital gains, and it is now worth $200, your holding period return would be 100% with an annualized return of 14.87%. (Simple math may lead you to divide 100% by 5 years to get a 20% return per year, but this would not be an accurate annualized return because of compounding. Compounding occurs because you reinvested the money earned in year 1, allowing that money to grow in year 2 along with your initial $100 investment.)
This includes increases or decreases in market value, dividend and interest income received, capital gains distributions, accrued interest income earned but not yet received, minus fees associated with Edward Jones advisory programs and other account maintenance fees.
When evaluating a specific investment you own, there are multiple factors to consider. We believe you should consider not just an investment’s current value, but also:
Purpose of the investment in your portfolio (current income, growth potential, etc.)
Outlook for the investment, including the Edward Jones research opinion, which offers our perspective on the potential attractiveness of a security
Edward Jones Research Opinion Ratings:
Investment’s return over time
The long-term average annual return of the investment provides a better indication of how an investment is performing than short-term performance.
There are plenty of reasons why your portfolio is performing the way it is – the market environment, the mix of investments you own (or even certain investments themselves), how long you've held your investments – or more likely, a combination of these factors.
In any case, talk with your financial advisor. He or she can help you connect what’s happening in the market – and even in your life – to your portfolio.
For timely information on the market and investing, see our Market News & Guidance section.
Though market indexes can provide insight into the general performance of stocks and bonds overall, they are usually not a relevant comparison to your own portfolio's performance. Why?
We recommend reviewing your goals and objectives with your financial advisor at least once a year, as well as when there are changes to your personal situation.
Your financial advisor can help you review your current performance in the context of your long-term goals and our expectations for future performance. More importantly, you’ll review how that performance affects your progress toward your long-term goals and if any changes need to be made to keep you (or put you back) on track.
Past performance is not a guarantee of future results.
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
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