The Biggest Mistake Investors Make: Measuring the Wrong Things

Whether you're new to investing or have been in the game for years, chances are you've checked your portfolio and compared it to the stock market. You see headlines and think, “Wait, the Dow is up 15% this year, but my portfolio only returned 10%! Am I doing something wrong?” 

It’s a natural reaction. But here’s the problem—this way of measuring success is often misleading. 

Numbers Can Be Deceptive 

A lot of people check their account performance and compare their returns to benchmarks—scoreboards that track different parts of the market, like the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite.  

Benchmarks give a general idea of how the market is doing but stacking them up against your own portfolio isn’t a fair comparison.  

Your portfolio isn’t built for speed; it’s built to get you where you need to go safely, efficiently, and successfully. 

A Different Perspective   

Instead of watching market indexes, it’s better to focus on what really makes a difference in your portfolio, like: 

• How much you’ve put in over time 

• How your overall account has grown 

• The types of investments in your portfolio (stocks, bonds, real estate, etc.) 

• Whether your comparison is fair—are you comparing apples to apples or apples to oranges? 

It’s like comparing weight loss from sticking to a balanced diet versus a crash diet. One gives you fast results, while the other is a healthier, more sustainable track. When it comes to your portfolio, a mix of stocks and bonds will give you slower growth than an all-stock index like the S&P 500. Different vehicles, different goals. 

Market Benchmarks vs. Real-Life Investing 

Indexes and benchmarks can provide useful context, but they don’t tell the whole story. Here’s why: 

1. Investment mix variation
A portfolio with bonds, real estate, or other assets won’t hit the heights of a stock-only index at the same speed, but it carries less risk. Each asset will perform in a certain way depending on the movements of the markets. 

2. Risk matters
Some indexes can have big swings, while others don’t. Balance and stability won’t behave like a high-risk stock index. It’s a different approach. 

3. Different journeys for different destinations Market performance is just one piece of the puzzle. To develop the strongest investment strategy for you, you and your wealth planning partner will want to consider your goals, timelines, and risk preferences—not just keeping up with the market. 

Measuring What Really Matters 

Instead of worrying about an account "beating" a specific index, it is more useful to ask: 

• Is this aligned with my long-term financial goals? 

• Does this investment mix match my level of comfort with risk? 

• Am I making steady progress over time? 

Tracking performance matters, but only if you're measuring what actually impacts your financial future. That’s why we help clients focus on what truly moves the needle to help them meet their goals, not just how their numbers compare to a market index. If making real progress toward financial security and long-term success is what you're after, let’s talk.