In 2017, your dealer began providing you with a new annual report about the performance of your investments.
The descriptions below will help you understand the new information.
Your personal rate of return
One of the investment reports you now receive annually details information about how well your investments performed after costs have been deducted. To locate this information on your statement, look for the term “Personal Rate of Return”. Some firms will use the more technical term: “Money-Weighted Rate of Return”.
Your personal rate of return is unique to you because it is based on:
- The timing of when you deposited money into and withdrew money from your account,
- Dividends and interest that you earned within the account, and
- Changes in the market value of the securities held within your account.
Since each investor has a different combination of deposits and withdrawals, each investor may have a different personal rate of return.
Your target rate of return
A ”target rate of return” is a goal that some investors set, often with the help of a financial advisor. For example, an investor might set a goal of saving ‘x’ dollars by a certain year in order to retire comfortably. To achieve that goal, based on the investor’s current and planned savings, the investor will aim to earn a certain rate of return – the target rate – each year.
You may wish to compare your personal rate of return to your target rate of return to see whether you are on track to meet your investment goals.
A benchmark can be used to compare the performance of different investment products but it can’t be compared directly to your personal or target rates of return. Learn more…
For more information about the performance of your investments, contact your financial advisor.