Stash Learn


Apr 4, 2018

What is Investment Performance?

By Team Stash

It’s the positive or negative traction of your investment portfolio.

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If you’re an investor, you want your portfolio to provide some sort of return. In other words, you’ll want your holdings to perform.

What is investment performance?

Performance, as it relates to your investment portfolio, usually refers to the returns you’re seeing on your investments.

What’s a return? A return is either the monetary gain or loss on your portfolio Naturally, investors want positive performance, results from a positive return. A negative return, in which your portfolio actually loses money, would signal negative performance.

In other words, “performance” describes how your investment portfolio is doing.

Simple, right?

What determines my portfolio’s performance?

Your portfolio’s overall performance will hinge on a number of variables. But mostly, the holdings — or assets — contained in your portfolio will determine whether you see positive or negative returns.

Your holdings are subject to market conditions. That means that sometimes you’ll be in the red, other times you’ll be in the black. Markets tend to move in cycles, and downturns often swing around into gains — and vice versa. Your portfolio’s performance will probably mirror what’s going on in the market.

Measuring performance

How can you measure your performance? The two key metrics for gauging performance are called yield and total return. Both measure your portfolio’s performance, but do so with differing degrees of exactness.

Yield is essentially the income generated by an investment–whether that’s a coupon from a bond, or a dividend payout from a stock.

Total return, which is generally considered a more precise measure of performance, is the yield plus the percent change in price for a bond, stock, or a fund.

Both yield and total return can help you gauged performance.

Can I improve my investment performance?

There’s, unfortunately, no magic formula to ensure that your portfolio always performs well.

But that’s not to say that there aren’t things you can do to try and improve your portfolio’s performance. In fact, there are numerous strategies and tactics you can engage in to boost your returns or buffer yourself from the volatility of the markets:

  • Diversify your portfolio with a mix of stocks, bonds, ETFs, and other assets
  • Buy and hold: Engage in a ‘set it and forget it’ investment strategy
  • Automate your savings and investing with features like Auto-Invest

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Team Stash


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