How has the index performed? How are you performing?

It is good to know how to compare your investment performance with a related index. In my case, the index I like the best is the S&P 500. That is because my investments often mirror the content of the S&P 500. Most of my investments are large cap and pay a dividend. Of course, the other key indices are the NASDAQ (technology-heavy) and the Dow Jones Industrial Average (DJIA).

The good news is that there is one site that contains a good snapshot of many key indices. It is called the “DJIA, S&P500, NASDAQ Yearly Returns Comparison” at 1stock1. When you look at a historical chart like this, it is helpful to know your history. For example, the extreme drop in the indices for 2008 is due to the “financial crisis.”

If you have someone managing your investments for you, then you should expect them to perform as well as one of the indices (which you can choose) after expenses. If they cannot do so, then you should put your investment dollars to work in a low-cost index mutual fund or a similar ETF and save on expenses. I can tell you that 99% of the “professionals” you select will not be able to beat the market enough to cover their expenses. Recognize using a professional might be a losing proposition. If you doubt me on this, read John C. Bogle’s excellent investing primer called THE LITTLE BOOK OF COMMON SENSE INVESTING. Mr. Bogle is the founder of the Vanguard funds. He was a leader in providing low-cost solutions for investing. I admire him for that.