How to read investment statements

IMPORTANT TO BE ORGANIZED Most Canadians have multiple accounts, very often with different institutions

During my recent hiatus from writing Let’s Talk Money, I was able to meet personally with many people who are concerned about having better control of their money. In discussing their financial situation, some admitted to being frustrated about not knowing how to analyze their investment statements.

This is not surprising because most Canadians have multiple accounts that may be registered or non-registered, in our personal name, with a spouse or with a group sponsor.

Very often, our accounts end up with different institutions either by choice or by circumstance during our working lives.

Let us start with how to read an investment statement. The first thing to do is pull out your most recent set and sort them by owner (you, your spouse, joint or other name) and then by type of account (individual or joint, RRSP, LIRA, RRIF, LIF, TFSA, RESP etc.). Don’t be shy to use a highlighter or marker to circle these key identifiers along with the date and period being covered for easy reference later on. There should be some kind of performance summary at the beginning of your statement outlining the current value of your investments by asset type (fixed income, domestic and foreign equity), as well as your cash balance for the current period and the previous period.

The current information may be shown as a percentage of your account and is key to helping you assess your overall asset allocation

Next you should see a cash summary indicating additions and deductions to the cash account.

Among the many types of possible transactions included here are personal contributions to your RRSP and TFSA, personal withdrawals, security transfers, investment income and trading activity, as well as fees and other expenses. While the summary is usually an “at a glance” synopsis, you should be able to examine the details of your cash account activity further on in your statement, including any purchases and/or “sells” during the period and trades that were not yet settled at the statement ending date.

The investment income summary is separate from the cash summary in order to highlight the receipt of interest and dividends for the current period and year-to-date.

Depending on your trading activity, it may also include interest paid on loans or ac- crued interest paid on trades.

When it comes to analyzing your investments in depth, you want to pay particular attention to the sometimes lengthy section that lists your portfolio holdings.

Here you should find each of your securities grouped by investment type (i.e., fixed income, equities, mutual funds) with its name and description/symbol, as well as the quantity of units you hold and the latest unit price used in calculating current market value. You should also find what is called the Adjusted Cost Base (ACB) which is the amount you paid (up front and in subsequent purchases) for the security in question.

The ACB is not only essential to measuring performance returns, but in the case of taxable accounts, this is information you will need in the event you sell a security and are reporting a capital gain or a loss on your tax returns. The ACB may be missing or incorrectly reported for a particular security for a number of reasons.

If you have questions about your ACBs, contact your investment adviser or tax accountant for assistance in getting your ACBs corrected.

This may involve digging into old statements and trade confirmations from years ago to find the original purchase amounts, so now you’ll be glad that you learned how to decipher your statements more easily!