Coffee Stains and Ribena: The Only Benchmarks You Really Need to Worry About

Here we discuss why you should be more concerned about marks on your kitchen worktop than how your portfolio is doing against an index, and we talk about the real measure of investment success.

In the world of finance, much is made of investment performance benchmarks. You may have heard terms like the FTSE 100 or S&P 500 and seen endless analysis comparing portfolios to these indexes. But for most people, knowing how a portfolio performed against the FTSE 100 isn’t nearly as important as knowing whether they’re on track to live the life they want.

The Problem with Industry Benchmarks

Industry benchmarks, aim to represent a method of comparing investment performance. They’re useful for comparing investment performance between those that invest in the same areas,  but they don’t account for your unique goals, values, or financial needs. Focusing on outperforming a benchmark can distract from what matters most, which is whether your plan is helping you achieve everything you want to do in life.

Why does the industry focus so much on benchmarks, then? For investment managers, comparing funds to market indexes is a way to show relative performance. But for most of us, the short-term gains or losses against a benchmark don’t impact long-term financial success. In fact, focusing too heavily on these comparisons can introduce unnecessary stress when fluctuations don’t directly affect your financial plan.

Your Financial Plan as Your Benchmark

Rather than looking to market indexes, the best benchmark for your portfolio is your own financial plan. Your financial plan isn’t about beating the FTSE 100, it’s about being on track to live the life you want. Whether your portfolio outperforms or underperforms a particular index is secondary to whether you’re achieving what’s most important to you.

Real Benchmarks for Real Lives

For many clients, the benchmarks that truly matter are personal milestones: paying off a mortgage, celebrating retirement with family, or helping a child buy their first home. These goals are the true indicators of success, not whether your portfolio beats a particular index.

The Power of Staying on Track

The beauty of a well structured financial plan is that it keeps your progress front and centre. When we work together to create a financial plan, we start by identifying what matters most to you, then map out a strategy to get there. Regular reviews help ensure that any adjustments keep you on course, regardless of what’s happening in the market.

Imagine going to bed each night, knowing your financial future is secure, not because you beat the FTSE 100 but because you’re steadily moving toward your life goals. When your financial plan is on track, you’re free to enjoy life with peace of mind.

Measuring What Matters

At Own Your Future Financial Planning, our aim is to focus on what truly matters to you. If your plan is moving you toward those personal goals, the market’s ups and downs become less stressful. Rather than worrying about outperforming an index, you can concentrate on living the life you want, confident that you’re taking the necessary steps.