How to Tell If Your Investment Plan Is Working
Up 4% this year could be a disaster. Down 8% could be exactly right. The broker app's number is meaningless without a benchmark, and the benchmark almost no one is honest about.
Long-run annualised total returns
Beat the S&P 500 over 5+ years and you are in rare company.
Key takeaways
You cannot judge an investment plan without a thesis. Write down what you own and why before you measure anything, otherwise you are just looking at numbers in a vacuum.
The benchmark almost everyone is trying to beat is the S&P 500, which has averaged around 10% per year over the long run. If your portfolio is consistently below that, you have to ask why.
Total return is the only number that matters. That means dividends reinvested plus capital growth, not just the share price you see on your broker app.
A single year tells you almost nothing. You need at least three to five years of data, ideally more, before you can fairly judge whether your plan is working.