Knowing how well your portfolio performs is necessary to honestly evaluate whether the excess returns (over the passive index approach) adequately pay for your time and effort. Of course you may enjoy the ‘game’ for its own sake. Regardless, you need to know how much your fun may be costing you. See this research paper concluding that investor’s perception of their own performance has ZERO correlation to their actual results. The following three steps should keep you in charge of your portfolio, without allowing it to take over your life.

Investors should make a conscious decision regarding how frequently they monitor their investments. There are two human failings that must be acknowledged. First, the more frequently a portfolio is monitored, the more investors are driven by market noise rather than long-term fundamentals. Second, investors assign a higher mental weight to a $100 loss than to a $100 gain: we are risk-adverse. These failings feed off each other to your detriment. Less frequent monitoring is better than more frequent tracking.

  • Daily/Weekly : The easiest way to keep up on the news for your stocks is to create a stocklist at GlobeInvestor. It is a GOOD thing that your personal purchase price is missing. Selling decisions should be based on a forward-looking opportunity basis, not based on whether you have broken even or earned 30%, etc. It is just that kind of behaviour that technical traders rely on.
    • It is quick to add and delete names
    • The PowerView lets you flip through all your charts at once.
    • All the news, on all your stocks, is on one page
    • You can check in daily, weekly or monthly to get the ‘%change’ over that period.
    • Include the US$/Loonie index (FXUSC-I)and you will have the current rate for translating US stocks.
    • The table can be downloaded (copy/paste-special/data) to your monthly spreadsheet (below) for auto-updates.
  • Monthly: This spreadsheet for Portfolio Transactions gives you more information and history than any of the pre-packaged software. The month-end results are saved and the YearToDate profit totalled. Your tax return can be checked against it. You need this detailed history in order to improve your investing. You can see;
    • the portion of your profits coming from income vs capital gains.the turnover speed of your portfolio.whether you got rid of losing positions fast, or hung on for large losses.whether your losses were from FX or the actual stocks.whether your gains were from a broad mix of stocks, or from big winners (but few lucky picks).whether ‘sells’ were months after your profits peaked or timely.whether you did a better job picking debt securities than common stock or foreign stock.whether the $$profits from that risky stock you sweated over, were really meaningful to your overall profits.etc.
    You manually post transactions from your broker’s statement. But the current market values of holdings are easily downloaded to a back-up page using basic Copy-Paste. Any stocks trading in US dollars automatically get translated into Loonies.The spreadsheet reports in Loonies, so there is no delusion about FX risks. You manually translate purchases, sales and distributions in foreign currencies into Loonies. Look up the exchange rate at the time or later at the Bank Of Canada site. The tax treatment of exchange rate gains and losses is covered by Interpretation Bulletin IT-95
  • Yearly: At year-end add your results to the Wealth & Success spreadsheet. It gives you positive (hopefully) feedback for renewed savings and investing. It allows you to compare your long-term returns to the index’s compounded returns, and plan for the future. If you transfer money into and out of your investment portfolio frequently during the year, this Excel file may help you determine the rate of return earned.


We always compare our returns to some metric – usually a large index. It is human nature. When you underperform the wrong index you stress yourself unreasonably, and are more likely to start trading. So how do you pick the correct index?

Use the ‘total return’ variant of any index. Dividends and interest must be considered reinvested to earn an additional return, just like the cash in your account is used for new purchases. That way it makes no difference if your holdings pay a higher/lower yield than the benchmark index.

Choose a blend of two indexes when your asset allocation includes some percent debt securities. Debt has lower expected returns than equity, so don’t compare your blended portfolio to only an equity index. It is easy to allow your current portfolio weightings to determine your benchmark weightings. This is self serving. Your benchmark weightings must be for the long term, over a full business cycle. Use your predetermined asset allocation, not the actual allocation.

It is hard to find the data for debt indexes. One quoted by the government is for Long-term Canada Bonds. This index follows bonds with 25 and 30 year maturities. There is no way for retail investors to buy those bonds. The ETFs labeled as Long-term actually hold half their position in bonds maturing in 10-20 years. So do not benchmark to that index.

Think twice before further prorating your benchmark with separate equity indexes. The media has made home-country-bias a dirty word, but the TSX has historically given exceptional returns. You invest outside the country to goose your returns and accept FX risk as a result. So it is self-serving to decide that since you own (say) 50% US stocks that you should blend the TSX and S&P; 50:50. Benchmark all your equity returns to the TSX (for Canadians).

Just as important as picking the correct benchmark, is correctly stating your own returns. No cheating. Include the interest costs of money borrowed to invest, even if it is secured by your home. Include the foreign exchange gains/losses in converting to the currency which you will be needing in retirement. Remove the effects of savings added to the portfolio and cash removed (spreadsheet.). Don’t benchmark against your friends because it is highly likely they don’t know how to correctly measure their returns and conveniently fudge the numbers.


You must keep track of the ACB of your stocks and mutual funds (the Adjusted Cost Base for Canadian income tax purposes). Failure to include all costs means you will eventually pay more tax than you should. Only assets held outside an RRSP are of concern here. You increase the ACB of your stocks when …

  1. shares are purchased (either originally or additionally later). It makes no difference if they are in another broker’s account. All are considered lumped together. The additional purchase is added exactly like the original purchase.
  2. distributions are automatically reinvested to buy more shares. This can happen three ways.
    1. DRIPs are set up to automatically reinvest all the distributions received, hence the name Dividend ReInvestment Plan.
    2. ETFs and mutual funds distribute shares instead of cash in order to pass through taxable capital gains – usually at year end. With ETFs the number of shares you own may not increase because the fund makes adjustments inside the fund. Regardless, the distribution reinvested increases your ACB.
    3. Sometimes when a corporation sells a division, it realizes capital gains that are better realized in the hands of the shareholders. Because that may not mean there is excess cash available, they pay a capital gains dividend with shares instead of cash.Because there is no cash flow some investors ignore what is happening ‘behind the scenes’. They think their original asset is simply growing in value. In fact there are two transactions. The company distributes dividends, then the investor uses that cash to buy more shares. Each purchase of more shares increases the ACB by the amount of the dividend.Some brokers’ do not include the $value of the transactions, only the number of shares issued. If so you should complain. At any rate the $total of the year’s distributions will be taxable and T5’d. That taxable amount will be the cost of the additional shares purchased. The common errors resulting from not doing this correctly are discussed later at Understanding Equity.
  3. a tax loss is denied (superficial loss in Canadian tax) because replacement shares are purchased too soon afterwards (within 30 days). In this case the loss denied increases the ACB of the replacement shares so that it can be claimed when they are ultimately sold. In the example below the Loss on Sale equalled $980 : = Proceeds ($3,000) less ACB (200*19.90=$3,980).

You decrease the ACB …

  1. when all or some of the shares are sold. The same percent of the ACB, as the percent of shares sold, is removed. This amount goes into the calculation of capital gain for those shares sold – proceeds less ACB.
  2. when income trusts issue cash Returns of Capital (ROC). This information is noted on your tax slips now.
  3. when flow-through Oil&Gas shares distribute deductable operating costs.

Staple a sheet of paper to the back of the broker’s slip for the original purchase.

b.)Div ReinvestedDec010150
Subtotal B4 Sale51010,15019.90
i.)Partial SaleMch3,000(200)(3,980)19.90
c.)Loss Denied(repurchased too soon)980
ii.)ROC Dist’n Rec’dJun200(200)
3:1 Stock Split183010,5505.77



OPTIMIZE YOUR INBOX   "Artificial Intelligence"

Get insight from our "Private Groups" offered and moderated by our geeks, investors, thought leaders and partners to provide you with a customized experience powered by our proprietary Artificial Intelligence and Predictive Analytics optimized for investors.

NEW! Private Marketplace

We now offer a "Private Marketplace" for our referral partners who have products or services to BUY or SELL through our concierge service. Interested in listing your products or service?