Understanding investing performance doesn’t have to be a challenge. Here’s how we simplify it for you.
By Mindy Yu, CIMA®
Director of Investing, Betterment |
Published | Updated
In this guide, we look at how we crunch numbers for you and provide two tools to analyze your returns. Plus, see four questions to ask so you understand the overall performance of an investing platform. But first, don’t fall for fallacies: Typical media coverage may skew your perspective. Avoid these two fallacies when looking at your own investing performance. Instead of falling for fallacies: To know how you’re performing relative to the market, ask, “Which market?” Many Betterment portfolios are globally-diversified, making the MSCI All Country World Index a better benchmark than the S&P 500 or Dow. How Betterment simplifies looking at performance: We crunch the numbers for you, showing you three aspects of performance. Two tools to analyze your returns: We don’t encourage frequent monitoring of performance, but when you do want to review performance, we have two tools to help you understand the big picture. Tool #1: Time-weighted return. Time-weighted return is the default return you see on your Betterment accounts. Tool #2: Individual rate of return. Individual rate of return can be displayed on the performance screen of each account by clicking on the “Show balance details” link. Looking beyond returns is important when considering an investing platform or fund. Here are four questions to ask: