Compared to what? Part 1: Your personal objectives

Did your investment return move you closer to your personal objectives?

Is your goal to earn a certain level of income to sustain your lifestyle? To accumulate a certain level of savings for retirement? To provide an inheritance for your family? Did your investment return move you closer to, or further from, your personal goals?

Using your personal objectives as the measure of your performance is known as outcome-based investing and it is being adopted by more investors today because it is pragmatic and personal. If you know you are on track to your overall financial plan, you will be less concerned with unsuitable comparisons and less likely to make a rash or emotional decision that is not in your long-term interests. According to research, investors who have a comprehensive plan report significantly higher levels of financial and emotional well-being than those who do not.

At Newport, we develop comprehensive, long-term financial plans for clients, which we revisit every couple of years, to ensure that client portfolios are tracking towards these goals and making adjustments as necessary. After all, the underlying assets are merely a means to an end.  Too many investors are concerned with beating an index or the arbitrary % return on their statement, rather than how they are progressing towards their overall personal goals.