Throughout time, the biggest complaint from investors has been "I didn't do as well as the benchmark/the index/my brother-in-law".
The first problem is, what index? S&P 500? TSX 60? Those are 2 of literally thousands of indices. Unless you buy an index fund, you can't compare anything to an index.
So what about the benchmark? Not many investors know the full allocation of their portfolio so by saying "the benchmark", what are they referring to? Unless their portfolio exactly mimics a specific index, its apples and oranges.
I can understand wanting something to compare your portfolio to in order to gauge how "good" or "bad" it is doing, but here's the problem: There has only been one combination of you, your money, your current investments, your objectives, and strategy. That would translate into over 8 billion individual benchmarks. Unreasonable to say the least.
This is why we don't use traditional benchmarks. We use Financial Planning to figure out what you need to do for your plan to work. That takes a little work to determine but it results in one of those 8 billion benchmarks. YOURS. We believe in this so strongly, it is literally the first thing you see on our website.
I know what you're saying. Ken, you just added that because of this post. Fair, but let's take a look at my website from August 15, 2018 courtesy of the way back machine. It's there too.
The Only Benchmark that Matters is Yours
Kenneth Coombs CFP CHS RRC
Ken has worked in the financial services industry since 2005, is a Registered Retirement Consultant, and is a Certified Financial Planner. Ken has written financial planning columns and has been a guest on financial radio and podcast programs.