Reading My Statement: How Am I Really Doing?

Benjamin Haas |

I find that many of my clients get overwhelmed with the amount of information on their investment statements or what they access online. If all you look for is the bottom line (do you have more money today than you did the last time you looked?), then you’re probably do just fine getting the answer to  "how am I really doing?" But doesn’t that only work if there are no adjustments to your bottom line? 

For example: 

  • What happens if your systematically saving? This may increase an account balance, but not tell you if the investment is appreciating or not. So how are you really doing? 

  • Conversely, what if you’re taking withdrawals? Your account balance may be declining even though the investments are appreciating in value. So how are you really doing? 

  • And finally, what if you’re reinvesting dividends, interest or capital gains instead of having them pay to cash, which can make calculating your initial investment a nightmare. So how are you really doing?" 

Here are two things to consider when determining “How am I really doing?” 

  1. Every time a purchase is made, either through new savings or dividends/gains being reinvested, the cost basis of the investment increases. This inevitably makes it a little more difficult to determine a winner or a loser at first glance. 

For example: You purchase an investment for $10,000. It pays a $1,000 capital gain (10% distribution to you) at the end of the year. You’ve made $1,000 on this investment, correct? You choose to reinvest this to purchase more shares of the investment. Now your cost basis is $11,000, not $10,000. But then, the investment loses 5% of its value. So, now you have $10,450 in the investment. Your “change since purchase” or “unrealized gain/loss” now reads -$550.00. 

Since initial purchase, have you lost money in this investment? The answer of course is, no. You’ve still seen an increase in account value of $450, or 4.5% on the investment. However, the “unrealized gain/loss “ report certainly looks like you lost money on your investment. So naturally, this can be confusing. 

  1. To me, not all withdrawals are considered equal. I believe there’s an important difference between receiving dividends and interest as income and liquidating investments to meet income expectations. In more plain terms, are you eating the eggs, or the goose that’s laying them? 

If you spend only from dividends and interest, then the investment’s short-term losses may not be worth commenting on/stressing over – as long as the income stays the same. I look at it this way; if you plan to live in your house for the rest of your life, then does the market value matter to you? It shouldn’t. You never plan to liquidate it – so its purpose is to provide shelter, not to appreciate in value. So too with some investment portfolios; keep the main thing the main thing. 

As opposed to asking, “How am I doing,” perhaps it would be better to ask, “Is my portfolio doing what it needs to do for me and my financial plan.” That’s a meaningful conversation to have with your advisor.  Because interpreting “change since purchase” or “unrealized gains/losses” or savings versus withdrawals can be downright confusing…. 


Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.  All content and information is for informational and educational purposes only. Tracking # T005777