You haven’t really given any proof/reason why knowing your portfolio returns will encourage return chasing. When you are driving a car, does knowing how fast the car is going make you want to drive faster?

Mike

Your portfolio is what your portfolio is. Knowing that it returned 4% or 7% historically doesn’t change what you do in the future (as past performance is not indicative of future returns, blah blah blah)

The only reason I can think of for using a performance metric is to compare it to other metrics. If you make changes based on past performance, you are over analyzing and aren’t following the spirit of the prevelant investing wisdom..

I like to measure my results and compare them to my plan. It inspires me to keep the discipline like a runner who tracks his course times.

I manage six portfolio’s: my wife’s RRSP, my wife’s Spousal RRSP, my wife’s LIRA RRSP (she retired and received a pension payout), my RRSP, my wife’s non-registered portfolio and my non-registered portfolio.

I’ve been managing these portfolio’s since my wife and I married in 1975 (very small accounts), long before the advent of index funds, ETF’s or even the internet. Investment research was conducted Saturday mornings at the Public library.

My wife and I started with nothing and long ago achieved financial independence from a disciplined approach to savings and a prudent investment strategy. This is not to infer I haven’t made mistakes. The mistakes I’ve made are what helped me develop a prudent investment strategy.

I do not chase returns. I do not overtrade. I minimize costs and taxes. I do my homework.

And yes, perhaps as a matter of weakness, I like to check my score.

I also think that if you are planning for retirement that knowing your returns is important information so that you can track how your progress is coming along. For example if you make the assumption that your portfolio returns will be 7% and after 10 years, you are only averaging 4% then you might have to look at your plan again.

It’s also a good indicator of the volatility of your portfolio – if you are a conservative investor and your portfolio goes up 30% in one year then that might be a clue that you have a riskier portfolio than you planned.

I think if you are just starting out and your contributions outway the investment returns in a typical year, then the performance may not matter as much.

Mike

If portfolio performance is available, it might show many people how well (or poorly) they are doing and might convince them of the merits of indexing. Of course, it will also show how bad most mutual funds are!

If you stick with a simple indexing investment/ periodic rebalancing approach – you DON’T need to know what your returns are..

Obtaining accurate performance metrics only encourages the mindset of chasing returns..