I know what you are thinking, but it’s not the S&P 500. Or the S&P TSX Composite. Of course, it’s none other than the tech-heavy Nasdaq! I’m just messing with you. It’s not that either. Stay with me here.

In my world, when people think about benchmarks, they often think of stock market indexes. But benchmarks are part of everyday life, even if we rarely call them that.

We use them in all areas of our life to measure progress, success, and whether we’re on the right track. For instance, a benchmark might be a simple target weight goal or the number of days per week you want to exercise. For others, it might be a golf handicap (sorry to bring that up!), a business revenue goal, or simply arriving at our travel destination. Have you ever taken a long road trip and, on arrival, said something like “We made good time!”? A benchmark in disguise.

Without benchmarks, it becomes difficult to know whether we’re moving in the right direction. They provide context and help us understand where we are today relative to where we’d like to be tomorrow.

Most importantly, they help answer a question that most of us ask, either consciously or subconsciously: “How am I doing?”

But there is a caution here, as benchmarks can be both helpful and harmful. A benchmark tied to a personal goal can be motivating. A benchmark based solely on comparison to others can create frustration, even when things are going well.

Someone may have built a successful business yet feel behind because a competitor sold theirs for more. A golfer may shoot a personal best round but leave disappointed because their playing partner shot lower.

The lesson? Not all benchmarks are equally useful. The most valuable ones are tied to our own objectives rather than someone else’s results.

The investment industry relies heavily on benchmarks, as they provide a way to evaluate investment performance and understand how markets are behaving. They serve an important purpose. Benchmarks also help investors assess whether a portfolio is performing as expected. They provide accountability for investment managers and help measure whether the level of risk being taken is producing appropriate results. An essential tool.

But problems can arise when investors compare themselves to the wrong benchmark.

The financial media tends to focus on whatever market or sector is performing best at any given time, and to be sure, sensational stories make for good ratings. When one index has a strong year, it often becomes the standard against which everything else is judged.

But investing is rarely that simple.

A retiree who has built considerable wealth over the years and is now drawing income from a portfolio has different objectives than a 40-year-old professional looking to grow and build wealth. A family seeking more stability in their teenage child’s RESP may require a different portfolio than someone willing to accept significant volatility in pursuit of higher returns when their children haven’t even entered preschool yet.

Comparing these portfolios to the same benchmark may not provide meaningful insight. A benchmark only has value if it reflects the objective it is meant to measure.

This is where financial planning changes the conversation, because every financial plan contains a benchmark, even if it isn’t labelled as one.

Behind every retirement projection, spending goal, or legacy objective is an assumed rate of return. It’s not the only assumption, of course, but a major one. The plan is effectively saying:

“If your portfolio earns X% over time, your goals remain achievable.”

That number becomes a benchmark. The most important benchmark, and perhaps even the benchmark most overlooked by investors.

The best part is, it is not based on headlines, market forecasts, or what a neighbour earned last year. It is based on the specific circumstances, goals, and priorities of you, the individual or family involved. It’s personal and it varies from one person to the next.

But the exact number matters less (unless it’s unrealistic) than the fact that it is tied directly to the life you want to achieve and live.

If a portfolio is progressing in a way that keeps retirement on track, supports future spending needs, and preserves flexibility for unforeseen events, then it may be accomplishing exactly what it was designed to do. For you.

The most important benchmark keeps the focus where it belongs: on outcomes rather than comparisons.

There will always be another index outperforming, another stock or IPO making headlines, or another investor who appears to be doing better or building wealth faster. I can’t tell you how many articles about comparison I have seen in the past 6 months or so. It’s a thing right now, even in places like Silicon Valley where an enviable $10M net worth makes you feel like a loser.

If we measure success solely by those comparisons, the finish line has a habit of moving further away, and discontent follows shortly after.

A financial plan offers something different.

It establishes a benchmark based on what matters most to you: your lifestyle, your family, your future, and your goals.

Ultimately, the most important benchmark is not found in a stock market index.

It’s the personal rate of return required to make your personal financial plan work.

At QV, our tailored pooled fund portfolios have consistently helped clients make their financial plans work, due in large part to our strong history of capital preservation. By focusing on protecting capital during difficult market environments and participating meaningfully in long-term market growth, we have helped clients stay on track and meet their goals.

Because when your goals remain achievable, your future remains within reach, and your plan stays on track… that’s the benchmark that matters most.