S&P 500

/Tag:S&P 500

What is a Realistic Investment Performance Benchmark? upd April 2015

You make your financial advisor accountable for beating the stock market. You make the S&P 500 index fund your proxy for the performance of the […]

Active Investing or Passive Investing – 5 key differences

Active investing sounds like a positive, proactive way to invest your assets. Passive investing sounds boring – your financial advisor is not doing much.  Here […]

Financial Advisors Claim They Can Beat the Market

80% of investors, who use the services of financial advisors, expect to beat the performance of the market. They pay higher fees and they take […]

Benchmarks Track Performance of Financial Advisors

How good is your financial advisor’s investment performance? Is your investment performance net of all expenses that were deducted from your accounts? Is your financial advisor’s performance consistent with your tolerance for risk? Will your performance enable you to achieve your financial goals?

You should have a lot of questions for your financial advisors about your performance. These numbers impact when you retire, your standard of living during your retirement years, and your financial security late in life when you need it the most.

Conflicts of Interest

If you are like most investors, you have a major problem. The professional who is responsible for producing the performance also provides the information that documents your performance. Financial advisors can spin numbers so they look better than they really are. And, they know how to deflect blame for bad numbers. They use these sales tactics so you do not terminate your relationship with them. Terminations stop their income.

No Performance Data 

What if your financial advisor does not provide performance measurement reports? Any performance data comes from the investment manager (mutual fund, hedge fund). It means your financial advisor is really a sales representative who does not provide ongoing services. Real advisors charge ongoing fees and their primary services that justifies the ongoing fee is performance reporting.  […]

What is an Investment Performance Benchmark?

A Benchmark is a performance goal. Your advisor is paid to produce results that beat the performance of your benchmark. If your advisor does not beat the performance of your benchmark you might as well invest in the index funds that make up the benchmark and reduce your fees by 75%.

Let’s say the investment performance of your stock portfolio was a positive 10% for the past 12 months. You think, “not bad, a double-digit rate of return”. However, what if the stock market is up 20%? Instead of being up 10% you have lagged the market by 10% – a complete reversal.

When your financial advisor says the stock market is up 20% he is usually referring to an index fund that is supposed to represent the performance of the market. Two frequent examples are the Standards & Poor 500 (S&P 500) and the Dow Jones Industrial Average (DJIA).  […]