The Investment Scientist

Your Portfolio: The Number You See and The Number You Don’t

Posted on: November 21, 2022

A client of mine came to me very worried because at this time last year, his account was $1.35mm and now it’s only $1.19mm. That’s a “loss” of nearly 12% in one year. “At this rate, am I gonna lose everything in 8 years?” he asked. 

I showed him a number buried deep in his statement, and he immediately regained confidence that he is not losing, he is, in fact, gaining. What number did I show him? Just stop reading for a minute to think about that. After one minute you can read on.


I showed him the expected income from his portfolio in comparison to last year at this time. His October statement shows that he is going to get $39.6k in expected income, while the October statement from last year showed that he was going to get only $28.4k. It’s a whopping $11.2k increase (39%) in expected income. 

On top of that, this increased income is being reinvested in new shares of funds which are priced at a discount now. So his shares (of durable assets) are accumulating almost 50% faster than last year.

Warren Buffett famously said: “price is what you pay and value is what you get.” Don’t mistake price for value. The account balance on your statement prominently shows the price of your portfolio. But remember to also pay attention to the value of your portfolio, which is the income you can expect to get from it. 

Schedule a 2nd opinion financial review, buy my wealth mgmt books on Amazon.

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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.

Twitter: @mzhuang

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