Why your returns shouldn't match the market

You might be tempted to compare your annual returns to a broad index and then question why they might be different. But indexes are usually not a relevant comparison to your own performance.
Reviewing your investment performance over time is important in determining if you’re on track to reach your financial goals. But before you can evaluate your performance, you first need to determine the return you need to help achieve your objectives.
You might be tempted to compare your annual returns to a broad index, such as the S&P 500, and then question why they might be different. Though indexes can provide insight into the general performance of stocks and bonds, they are usually not a relevant comparison to your own personal performance.
Your annual returns shouldn’t match the market for the following reasons:
Ultimately, your investment portfolio should be designed to help you reach your individual goals. Because of this, you should look at investment performance compared to the return you need to reach your goals, not the return of an index. If you have any questions about your annual performance or any other investment-related questions, be sure to contact your Edward Jones financial advisor.
Scott Thoma co-chairs Edward Jones’ Investment Policy Committee and is responsible for Client Needs Research, the team that develops and communicates advice and guidance for client needs, including retirement, education, preparing for the unexpected and leaving a legacy.
He is a CFA® charterholder and a member of the CFA Institute and the CFA Society of St. Louis. Scott also earned the CFP® professional designation. He graduated summa cum laude from Southern Illinois University-Edwardsville with a bachelor’s degree in business administration, with an emphasis in finance. Scott earned a master’s degree in economics and finance from the same university.