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Part 5: How to evaluate your investments

Are you comfortable with your portfolio? Learn how to build the right mix that will let you sleep at night.

It’s important to be comfortable with your investments — do they allow you to sleep at night or are you stressed by the market’s movements?

Different investments react differently to market news and global events. But if the ups and downs are keeping you awake, it’s a sign that your portfolio may not be suitable for you. Building the right portfolio for you means finding the right mix of investments, the mix that will help you achieve your goals within the desired time frame and that you’re comfortable with.

As time passes or things change and your portfolio adjusts, it’s important to ask yourself this question again. Periodically, you need to re-evaluate whether the individual funds and your overall portfolio are best for you.

Your portfolio should be all about you — it’s built to help you achieve your goals over time.

If you’d like some help from a specialist, talk to an MD Advisor* about reviewing your investment portfolio.

PREVIOUS: Part 4 – What makes a good investment portfolioNEXT: Part 6 – Understanding investment fees

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Market Watch Podcasts Are you rethinking risk in these turbulent times? 

You’ve set your goals, you have a portfolio of investments and you’re on the path to saving for your future.

This is great news!

But it doesn’t stop there.

The question you need to ask along the way is “am I on track to meet my goals and does my portfolio represent me?” Investment performance is obviously a part of that but the answer goes beyond a return figure.

It’s important to be comfortable with your investments – do they allow you to sleep at night or is excessive volatility caused by daily market news causing more stress than necessary?

Different investments react differently to market news and global events, and therefore serve different purposes in your portfolio. With the right portfolio, this is part of the long-term plan.

But if the ups and downs are keeping you awake, then you might need to make some changes. It’s a sign that your portfolio may not be suitable for you.

Building the right portfolio for you means finding the right mix of investments—stocks, bonds, mutual funds, exchange traded funds etc.—that will help you achieve your goals within the desired timeframe and that you’re comfortable with.

It’s a good idea to get help with this part of the evaluation – talk to your advisor if something about your portfolio is bothering you and inquire about how your portfolio is tracking towards your goals.

If you have a portfolio built with an MD Advisor, each individual mutual fund that makes up your portfolio serves a purpose. You benefit from two levels of professional management—at the individual fund level, where some of the most talented investment managers in the world are hard at work and at the portfolio level, where the funds are combined to represent you, your beliefs and your goals.

As time passes or things change, and your portfolio adjusts, it’s important to ask yourself this question again. Periodically we need to re-evaluate if the individual funds or your overall portfolio is best for you.

With the internet, you can easily access up-to-date performance data for each individual component in your portfolio. Total return data – that is the performance of the investment net of fees—is generally available from company websites and 3rd party data providers.

It’s important to understand that total return shows you how your investments have performed in a specific period in time.  Before comparisons are made, consider the context of the reported figure. Are the total return figures reporting on the same time period? Are their risk profiles comparable? It is important to compare apples to apples. Similarly, it’s unfair to compare your investments to others that are not suitable for you.

MD statements go one step further than industry regulation requires us to, when it comes to reporting and disclosure.  Our statements report personal rate of return net of fees. This is similar to total return with the added consideration of when you bought and sold your investments. This information is also available online through MyMD.

So, now we know that evaluating your investments is more than looking at return data. Your portfolio should be all about you - it’s built to help you achieve your goals over time. Are you riding comfortably on the right track or do you need to make some adjustments? 

For more information about evaluating your investment portfolio or help reviewing your portfolio, get in touch with an MD Advisor. He or she will be happy to answer any questions and tell you more.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.