As a new parent, I'm already gauging my child's development for rolling over, sitting up, speaking her first word -- 'dadas' just last week! -- and more against guidelines in the plethora of parenting books I have. This relative comparison gives my wife and I feedback as to how our little bundle of joy is doing. Later, we'll get this relative comparison and feedback from her school grades and achievement tests among other sources. Investors however tend to be more simplistic in their feedback mechanisms. They often define success as "My account went up last month. That's great!" Or conversely, "My account went down. It was a bad month." What's missing from this is a relative comparison asking the question, "Did my account go up or down as much as it should have given how much risk I am taking?" This involves a relative comparison against a representative benchmark. The S&P Indices Versus Active (SPIVA®) report m
Personal finance articles aimed to educate and sometimes entertain written by highly experienced Certified Financial Planner with deep expertise in integrating retirement, investment, and tax planning into a well-integrated retirement strategy. (This site is for educational purposes only. See disclaimer.)