Portfolio Performance Secrets

Portfolio Performance Secrets

Comparing Performance Kills Contentment

Investors often compare their portfolio’s performance to the market’s performance or worse, an individual company’s performance. The issue with this is that investors often are not invested 100% in U.S stocks.

They likely have a mixture of stocks, bonds, and cash in their accounts. As a result, a direct comparison of any time period would not be an accurate representation of their expected performance.

When investing and saving for retirement, we are not trying to get the absolute highest return we possibly can, we are trying to minimize the chance of financial ruin. Doing this could lead to underperformance relative to the market and your co-workers. But do not let this relative underperformance lead to the Fear of Missing Out (FOMO) or discontent with your own situation.

3 “Enough” Questions to ask yourself

Am I saving enough?

We want to use investing as a tool to become incrementally wealthier over time. We never want to do anything that could jeopardize our financial future. With these conditions in mind, you often have to ask yourself questions about what is enough for you.

The amount you save is more likely to be within your control than future market returns. There is no universal “enough” as that will vary from person to person. If you are not saving adequately, you will become increasingly reliant on potential market returns to meet your goals.

Am I taking enough risk?

You invest as a means of reaching a desired future state. Investing involves risks and you cannot guarantee future performance based on past results.

If you are not able to sleep at night because of the fluctuations in your investment portfolio you likely have exposed too much of your portfolio to volatile assets.

When this is the case you will need to reevaluate your goals. Meaning you will have to accept the expected volatility required to give you the best chance of reaching your goals or you will have to adjust some aspect of your goals.

Are my investments performing well enough?

Instead of looking at your portfolio as a whole, compare the individual components to their relative benchmark. This way you have a true apples to apples comparison. From there you can determine if each investment is doing a sufficiently good job or a change needs to be made.

Any investment strategy that attempts to outperform its peers will likely have periods of time where it underperforms. The duration of underperformance can not be known in advance and judgment must be made as any underperformance continues for a significant period of time.

‘If you know your enemy and know yourself, you need not fear the result of a hundred battles.’ (Sun Tzu, The Art of War). 

Everyone Has a Plan Until…

Our experiences shape who we are, especially when it comes to investing. We may think we can handle a certain level of volatility, but have a much different opinion once we experience it firsthand. Knowing what we should do and actually doing it are two different things.

Making a plan you can not stick to is not much better than not having a plan at all. Turning inward and asking yourself what you need instead of looking at others for reference and their returns can allow you to focus on what you can control and not worry about the things you can not.

Feel free to email us at info@westernreservecm.com with any questions you have. If you would like to schedule time with us to discuss your specific situation click here.


Gage Paul, CFP®, RICP®, EA
Gage Paul, CFP®, RICP®, EA

Gage Paul is an investment advisor at Western Reserve Capital Management. He works with the firm’s clients to create sustainable financial plans and investment strategies.

If you liked this post, you can subscribe down below. 👇👇


Join the Western Reserve Capital Management Newsletter