Your brokerage statement comes at least quarterly, and usually monthly, but do you read and understand it? I’ll give you a quick run-down on how to read your statement.
Here’s a copy of one of my statements – a tiny, little Roth IRA that I haven’t fooled around with for a while. (Please don’t make any judgements about the investments – I’m going to reallocate the whole thing pretty soon. Just think of them as examples.) First, let’s take a look at the whole thing:
Let’s cut it down a bit. The last three pages look like boilerplate – so you can read that at your leisure. We’ll concentrate on the first two pages.
We’ll start at the beginning – the top of the first page.
First, we have the header; which has the date, the statement recipient’s name and address, and the name and address of the advisor of record.
The next section gives the account number, the account owner, and the type of account.
After that, we have an account summary. This will give a brief outline of activity in the account over the statement period. It’s analogous to the account summary that comes at the top of your checking account statement. The income summary lists the total of various types of income over the statement period.
The next part is a table of investments that are in the account. This is the part that gets people from zero to confused in no time flat. We’ll look at it very slowly. I think once you see how it works, it will really make reading and understanding you statement far simpler.
The holdings section is next. This is the part where people get confused the most. We’re going to take it step-by-step by looking at the first holding.
The holding section is laid out like a table. Some holdings will take up more rows than others. In this example, a mutual fund takes up two rows, with the first line being the name of the mutual fund, and the second row is the ticker symbol for the fund. As we look down the row, we come to the first column, which is the number os shares owned as of the end of the statement cycle.
The second column is the price per share as of the end of the statement cycle.
The cost column should show how much you’ve paid for your shares. In this case it won’t since this account was transferred from another firm and it’s in a tax-advantaged account.
The next column shows the total value of the investment at the beginning of the statement cycle.
The next column has the investment value at the end of the statement period.
The final column ordinarily shows the gain and loss. Since there’s no cost number on my statement, there’s no gain or loss calculation.
The holding section can get unwieldy since many statements can have several dozen holdings listed over several pages. If you just look at each holding as a row, then this section should become much simpler.
On the next page, there’s another, shorter header that shows the date, account number and owner information.
On this page you can see the tail end of the holdings section. We’ll skip that and take a look at the next section – transaction details.
Each transaction in the account will show up in this section. In my case, there’s a dividend from one of the mutual funds. Other types of transactions will look a little different. If you are a client and have any questions about a transaction on your statement, feel free to give us a call.
In the next section, you can see a summary of cash transactions for the account.
And finally there’s a list of the daily cash transactions in the account.
The rest is boilerplate that is printed and sent to everyone. Feel free to read it if you like.
That wasn’t so hard, was it? My best rule for reading statements is to know that (usually) every statement will have a holdings and a transactions section, and each section (usually) has a heading on top that will tell you where you are.