What Can You Learn from Your Investment Statement? Plenty.

financial advisor meeting with clients

If the market is booming, you’re likely pretty happy to read your investment statements. Perhaps you just scan the month-to-month results. But when the market drops, you might feel inclined to take a closer look at your statement to try to understand the bigger picture. Here are some tips for reading your statement to determine where you’ve been, where you are and where you’re going.

Where you've been ...

Seeing how your investments have done over one month’s time might seem meaningful, but in any given month, the market can rise or fall sharply, affecting your investments’ performance. What you really need to examine is how your investments have performed over a longer period of time, in all types of markets – good, bad or in-between. How does the value of your investments today compare to their values of one, three, five and 10 years ago? You may have contributed to, or withdrawn from, these investments over the years, but even so, by taking a long look backwards, you should be able to get a good sense of how well your investments are doing. (In fact, some statements can separate out the gains and losses from the amount you contributed or withdrew, so you can clearly see the performance figures.)

Where you are ...

While the sum of your dollars is important, it also matters how those dollars are spread out among your investments. That’s why another key component of your statement is your asset allocation – the amounts you have divided between stocks, bonds and other investments. Does your asset allocation still reflect your risk tolerance, investment preferences and objectives? Over time, the composition of your portfolio can change – even if you haven’t taken any major actions.

For example, suppose you determined your ideal mix of investments – given your risk tolerance, amount of time, and long-term goals – should be 60% equities and 40% bonds. However, following a long run-up in the stock market, the value of your equities now makes up 70% of your portfolio. You might find this figure too high, so you may want to scale back on your stock holdings.

Where you're going ...

No investment statement can predict the future. But some statements can give you strong suggestions of what to do to get to where you want to go.

Your statements may summarize your goals – including such information as your desired age of retirement, the amount you plan to spend during retirement, and so on – and also reiterate your stated risk tolerance (low, medium-to-high, etc.). You can use this information to help gauge whether you’re on track toward achieving your objectives.

Plus, some statements include information you will need in the years ahead, such as which beneficiaries you have on file for your IRA and other retirement accounts, and how much you will need to start withdrawing from your traditional IRA or 401(k) the year after you turn 70½.

Every statement tells a story ...

Your investment statement provides a wealth of information that can help you assess your progress up until today – and also provide you with insights for tomorrow.

We can help you thoroughly review your investment statement to determine what moves you may need to make to help further strengthen your portfolio. As you read your statement, remember to highlight your thoughts and questions so you can bring them up at your next meeting.

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