Decoding your statement
Statements can be overwhelming and filled with incomprehensible jargon, but knowing what to look for can make reviewing your statements a quick and painless process. The layout of your statements can vary by company, but they will all feature the same basic information.
Your “account summary” will feature your account balances, the things you’re currently invested in (often called your holdings or asset allocation), and a summary of recent transactions.
An account balances section should indicate your “return,” or the amount your investments have increased or decreased in value. This may be listed as a dollar value, a percentage, or both. It should also indicate a “starting” or “beginning” balance, which is how much money you started with at the beginning of the statement period (a month or a financial quarter). It should also note any taxable or nontaxable income, which will be of use to you when tax season comes around.
The holdings section indicates what you are invested in. This can be stocks, bonds, mutual funds, index funds, or other financial products. Statements vary in the level of detail they provide; some will tell you precisely what stocks you own, while others will simply tell you your “asset allocation,” or what percentage of your money is invested in stocks, bonds, and cash.
Your recent transactions section should indicate any purchases or sales of assets, as well as contributions to and withdrawals from the account. You should keep an eye on this section to make sure nothing strange appears (e.g., large sales of stocks or bonds, selling and then buying the same stock, or cash withdrawals you don’t remember taking).
There should also be a section that exclusively covers “performance,” which reviews how successful your investments have been. This section should provide detailed information about how each of your investments is performing, compare their performance to that of the market overall (this is usually done by comparing your returns to those of a major index such as the S&P 500).
It is important to remain informed about the status of your retirement plan, and statements are a great way to ensure that you are staying disciplined with your retirement plan and goals.