Chapter 8

Measuring Your Performance

In This Chapter

arrow Seeing the importance of tracking your performance

arrow Figuring out the best way to calculate investment performance

arrow Using online tools that can measure your risk and returns

arrow Choosing the right benchmark

It’s surprising how many investors keep buying and selling stocks online even when they have no idea whether they’re beating the market. They’ll brag at cocktail parties about the winning stocks they’ve bought. But if you ask them what their rate of return is, they’ll look at you blankly. Most online brokers don’t help either, because many don’t have tools that accurately measure your returns.

To me, investing online without knowing how you’re doing is like driving with your eyes closed. As an online investor, it’s pretty much up to you to calculate your own returns. To help you get back in control, this chapter first shows you how to manually calculate your returns and how much risk you’ve taken to get those returns. In case you want more handholding, I then discuss online sites and software that do all the calculations for you. Either ...

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