Myth 3 – A client’s investment portfolio should meet or beat a relevant investment index or benchmark
The only benchmark that matters is meeting one’s personal financial life goals and to do that you need a personal plan that gives proper context to saving, investing and spending decisions.
As behavioural finance expert Dr Daniel Crosby puts it in The Laws of Wealth: Psychology and the Secrets to Investing Success: “Measuring performance against personal needs rather than an index has been shown to keep us invested during periods of market volatility, enhance savings behaviour and help us maintain a long-term focus.”
