Here’s a valuable idea that could provide a real breakthrough in the way you look at your brokerage statement. Even if you feel overwhelmed with all the details in your brokerage statement, there’s a simple way to find the most important numbers.
No sense focusing on the cents
One of my clients appreciated that I had spent a lot of time teaching her how all of her investments worked, and she wanted me to realize how well she paid attention. She presented her statement to me, and when she got to the line that said how much cash she had after one of her bonds matured, she said, “I have fifty thousand, one-hundred and two dollars, and fourteen cents.” She recited the number slowly and clearly, but by the time she had finished talking, she could hardly remember what she had said at the beginning. She was so focused on the cents that she missed the thousands.
Although I encourage accuracy in reporting figures, I always stress the importance of looking at the big picture. In the case of this client, she didn’t want to discuss her asset allocation, figuring what percentage of her portfolio should be in stocks, bonds, cash, or other assets, because she kept concentrating on the nitty-gritty details. I had to explain that much more important than those 14 cents was that almost 20% of her portfolio was in cash.
Look to the left
In the end, I suggested that when reviewing the “big picture” of her portfolio, the most revealing numbers would be on the LEFT side. In other words, if she sees $55,102.14, she should simply round off and say, “I have 55 thousand dollars in cash.” That way, she sees the impact of the money that needs to be reinvested. The reason many people can’t comprehend their portfolios is because they look at the RIGHT side, thinking about those last 14 cents, which just don’t move the needle.
If you’d like help getting some perspective on your portfolio, please send me an email, firstname.lastname@example.org
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published February 4, 2021. Updated April 2023