4.2.5 Assessing a portfolio’s performance
Most retail investors or traders judge performance against the cost of the shares that they have bought, ignoring the opportunity cost of their money – what they would have got from investing in an equivalent-risk investment, including dividends, for the whole five-year period.
You can only really judge performance relative to a benchmark. This might be buying an index fund linked to the FTSE All Share index and holding it for five years untouched, but if you included non-UK shares in the portfolio, a more international benchmark would be appropriate. It is all too tempting to set yourself an easy benchmark and to forget the bad investments that you have made, concentrating only on the successes.