If you feel confused when you look at your investment statements, you’re not alone. We often get asked how to read and understand the information on these statements. In this video, Kelley Doerksen walks you through the key information you will typically find on your statement and what it represents.
On a typical investment statement, you’re going to start by seeing the book value. The book value represents the cost of your investment, so the amount that you’ve purchased as well as any additional dividends or distributions that have been added to that particular position or security. That book value is going to be all of those contributions less any withdrawals that you’ve made on that security.
You’re also going to see the market value, which is the amount that particular position or security would sell for on the given day. Book compared to market value is important information when you’re looking at an investment in a Non-Registered account particularly because that’s going to indicate some of the taxation information that you might need to know.
The difference between book and market is going to be your gain or loss. If you’ve got an unrealized gain or loss, it means that you haven’t sold that position, and you are going to eventually realize that gain or loss when you make a disposition.
Our clients will also see income on current positions on their statements. This represents for most of our clients, the dividends that they’re earning on that particular holding. It could also represent the interest income that you’re earning on the bond position.
Another really important piece to your statement of course, is the performance. So, on your statement you’re going to typically see a net result – what your portfolio has done less fees have already been considered. That’s typically going to be a percentage, and you’re going to see that indicated for short, mid-term, and long-term performance. The most important indicators tend to be the longer-term history of your portfolio performance because it shows how consistent your performance has been and what a job your portfolio manager has done for you.
You’re also going to hopefully see fees in a clear and transparent way. Your statement should show what you’re paying for the cost of fund management and for the cost of advice that you’re receiving.
Another important element to your statement is going to be the asset allocation. That’s going to show you the amount of stock versus bond, or fixed income that your portfolio holds. Every client has a different asset allocation depending on their needs and their level of growth desired, and this is going to be indicated on your statement. You will typically see a listing of all of your stocks together with a percentage that you hold in stocks as well as a listing of your fixed income posted together with a percentage there as well.
If you have any questions about your statements, how to read them and what they mean, we’re always happy to help so please reach out to one of our advisors. To learn more about the type of investment solutions we offer, visit blackburndaviswealth.ca.