How do I know if my stock portfolio is doing good?

I guess an easier way to ask this is, If I do +5% on all my portfolio in a month, how do I know this is a good number?

Most people look longer term in their investments. A 10% return is considered average I think. Inflation I’ve heard is somewhere around 4–8% so a return matching or greater than that would be acceptable. You make about 1–5% from a savings account so the return should be greater than that to account for the added risk you take on by investing.

ah so you mean 10% annual return?

yes

@lilikol: Please point me in the direction of a savings account that has an annual return of 5%.

@LKidKyle1985: You have to factor in growth of capital, monthly dividends and your tax bracket to get an accurate measurement of how well your common stocks are doing.

For example, I have a Vanguard Bond Fund that accrues no taxes on its interest. But at the end of the year, there is usually a capital gains figure due to the manager’s having bought and sold bonds. It is invisible income for me, but I have to declare it as long-term income and thus pay taxes.

Little thing called benchmarking.

Measure your Portfolio’s Performance using the tools found in this link

why do you need such short term evidence of growth? there are bound to be fluctuations in the market that will seem, or may be, setbacks.

Is it charitable? Does it walk elderly ladies across the street? If so, it is doing good. Your broker should have the metrics to tell you whether it is doing well.

Who are you, @dpworkin – gailcalled?

@dpworkin I don’t have a broker, I am just using etrade and trying to learn the market for myself.
@ everyone else, thanks for the links, def got me going in the right direction with this now. Thanks!

A good way to measure the performance of your portfolio is against an index, such as the Dow Jones, S&P 500, or NASDAQ. Think of these as very diversified portfolios. Also, it is straightforward and simple to “buy” such a portfolio through ETFs such as the IYY. So, if your hand-picked portfolio is earning less than the appropriate index, then you would do better to just buy the index, because you are taking on more risk (less diversified) with the smaller portfolio. The ultimate measure of performance is a relative measure of return and risk called the Sharpe Ratio, but that’s going beyond what you need for the purposes you’ve described here.

@janbb :He should only be so lucky.—xox, Milo

Tom Lehrer has a wonderful song called “The Old Dope Peddler”; one of the tropes is:”

“Ev’ry evening you will find him,
Around our neighborhood.
It’s the old dope peddler.
Doing well by doing good.”

@LKidKyle1985 What you have just received on this thread is useless. They are simply opinions from amateurs which may or may not be right. We live in a society where we don’t even cut our own hair. We go to an expert to get our haircut. Why on earth do we seek amateur opinions and then try to work it out for ourselves on our long term financial wellbeing?

Phil Mickelson is 50, just won the Masters, started playing golf when he wes five, and has been playing golf for 45 years. You’d think he knows how to play the game. And yet Mickelson has four golf coaches. Why? Because it is very very easy to get off course and only someone else can see the error and help him fix it. And the coaches are highly skilled players themselves.

I wonder why Mickelson doesnt just get on Fluther and ask us questions about how to play golf? Hell, we could do as good a job for him as we could for you. Which is to say that we don’t know our asses from a hole on the ground. It takes far more expertise than is assembled here to give you a reasoned answer to anything. Bite the friggin bullet and get someone who can help you. Pay him and hope he will rescue you from your own stupidity.

@plethora: My best friend up the street trims my hair for me, so don’t include me in your generality.

My mother has a very expensive investment advisor; I have my own brain and the motto I live by: KISS. We have both done about the same, which is to match the index funds.

@gailcalled Ok Gail…there is always an exception.

If your mother has an expensive investment advisor who matches the index funds, then she is losing money isn’t she? Why doesn’t she fire him/her?

If you are merely matching the index averages, then you are not doing so well either, are you?

The field of investment advisors is rife with incompetents. I know…I am an investment advisor (for 30 years) The stupidity and herd instinct of most of the industry is ludicrous.

Lastly, (and I’m not saying it is) if your only measure of success is your record against the index funds, how about all the other investment venues and all the other financial matters that must be taken into consideration to manage your financial future?

Finally, your mother should fire her sorry advisor.

Oh, you might consider getting rid of yourself in the advisor capacity too. But then, if your friend cuts your hair, you may be one of those people who thinks “cheap” is the ultimate measure and value never enters the equation.

@plethora: Over a period of 25 years I have done well enough to be very content and to feel very comfortable if I live to 103.

My mother is 95 and without declaring her incompetent, we can’t fire her advisor. But when he sells, he no longer buys but puts the cash into a money market fund. When and if interest rates rise, we’ll get a Vanguard tax-free MA. long-term bond fun.

Having a friend cut my hair is not “cheap” but sensible. The $100 hair cuts I have gotten from pros look just the same, given the wildness and thickness of my hair. I am very aware of value. I don’t need to squeeze a few more bucks out of my portfolio.

@plethora All I want to know is how to gauge the success I have with what I am doing. And the whole purpose of me doing this is to learn more about how to invest my money on my own. I do not like handing things off to someone in something that I have no knowledge in. I get your point but at this stage in my investing I don’t need to pay someone money for answers I could get from reading a book or asking around.

@plethora I agree with you that many investment advisors are not particularly competent. That’s why things like index ETFs that have lower fees than mutual funds—and MUCH lower fees than investment advisors—give people who are not especially financially savvy a great way to easily get diversified market exposure. My point is just that if you’re picking stocks and doing worse than the corresponding index, then you’re screwing up.

Also, your answer is less than helpful and self-contradictory. You say “go get yourself a coach”, and at the same time say that the majority of those coaches suck. All you succeed in doing at that point is making people afraid to take charge of their own finances, and potentially to rely on people like you who rely in fear, uncertainty, and doubt to justify heavy fees.

I’ll take my ivy-league MBA and self-reliance over your brand of disinformation anytime.

Vanguard just publicly and loudly lowered its already low fees.

@LKidKyle1985 Use the S&P 500 as your gauge. The Standard and Poors is the standard by which all money managers gauge their performance for any given period. An acceptable annual return for your stock portfolio must be greater than the annual return of a less “risky” investment product. Ex: Corporate and Municipal Bonds, CDs. I am an active trader and investor so feel free to ask me any questions.