How to read financial reports

Question

My investment platform provides numerous reports. But how do you read them to make sure you are comparing apples with apples? The Gain/Loss report appears to just be based on growth and is for the entire period of investment while the Performace report includes yield and can be viewed for discrete periods.

Answer

Understanding and comparing the Gain/Loss report and the Performance report on your investment platform can indeed help you make more informed decisions about your investments.

Gain/Loss Report: This report typically shows the capital gains or losses of your investments over the entire period you’ve held them. It reflects the difference between the purchase price and the current value or selling price of your assets. This report is crucial for understanding how much your investments have grown or shrunk in value over time. For example, if you bought shares at $100 each and they are now worth $150, the Gain/Loss report will show a gain.

Performance Report: Unlike the Gain/Loss report, the Performance report usually includes both the capital gains and any income received (such as dividends, rent, or interest). This report can often be customized for different time periods, which allows you to see how your investments have performed over specific intervals. This is particularly useful for assessing how different events or decisions have impacted your investments. For instance, if you receive quarterly dividends from a stock, the Performance report will show these income payments as part of the total return, alongside any capital gains or losses.

When comparing these reports, it’s important to consider what each one is measuring. The Gain/Loss report gives you a straightforward view of how much the value of your investments has changed, which is useful for understanding growth. The Performance report, on the other hand, provides a more comprehensive view that includes both growth and income, giving you a fuller picture of your returns.

To effectively use these reports, align them with your investment goals. If you’re focused on long-term growth, you might weigh the information in the Gain/Loss report more heavily. If you’re interested in both growth and income (e.g., as a retiree might be), the Performance report will be more relevant.

At Pearler, we aim to provide tools and reports that help you track and analyze your investments efficiently. Understanding these reports can empower you to make smarter investment decisions, aligned with your financial goals and strategies.

You can find out more about this topic here: Most Popular Types Investments

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

Answer

Hi G Force.

It depends what you’re trying to do exactly.

The best way to compare performance I’ve found is by using a software like Sharesight or Navexa.  It will include dividends, capital growth, currency movements.  You can also create hypothetical purchases from some time in the past to see how something would have performed.

Dave

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