March Madness Costs Corporations $14 Billion - Don't Let Your Portfolio Slack Off Too

March Madness Costs Corporations $14 Billion - Don't Let Your Portfolio Slack Off Too

March 14, 2024

With an estimated $10 billion in annual spending, March Madness is big business—and big entertainment. In 2022, March Madness cost employers nearly $14 billion in lost productivity as employees carved time out of the workday to watch games, make bets, and discuss plays around the water cooler.[i]

But this sort of seasonal slump for employers is nothing compared to the lifelong impact of an underperforming portfolio. Learn how a quality financial professional can help your portfolio work up to its full potential. 

The Dangers of an Underperforming Portfolio

No one can predict exactly how a certain investment will perform over time. But if your portfolio's annual rate of return regularly comes in a few percentage points (or more) behind the major stock indexes, these losses can compound over time. This means you'll need to save even more than someone with a better-performing portfolio just to end up in the same place.

For example, someone with a $100,000 portfolio who invests an additional $5,000 per year for 10 years and achieves a 6 percent rate of return on these funds will amass a total of $250,000. If this rate of return is increased to 8 percent, the total 10-year yield is closer to $300,000. [ii]

But someone whose portfolio returns only 3 percent will wind up with barely more than the $150,000 they already invested—a mere $193,000 after 10 years. And because these returns will continue to compound over time, underperforming early in your investing years can have a major impact on your retirement totals.

How a Financial Professional Can Help

There are a couple of specific steps a financial professional can take to work towards hitting your appropriate metrics.

Establishing Benchmarks

Regardless of which investments you choose, a financial professional can create some customized benchmarks to compare your portfolio's performance against the standard. If your portfolio isn't meeting these benchmarks, that may be a sign to swap out some lower-performing investments with better ones.

Reducing Fees

One of the most common ways a portfolio can underperform its peers is through the payment of higher fees. Investors who are paying a portfolio management fee based on a percentage of their total assets, rather than a flat or per-transaction fee, will need to consistently meet or beat their investment benchmarks to avoid falling behind.

Your financial professional can work with you to see which fee structures make the most sense based on your risk tolerance, asset allocation, and investment style.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.  All indexes are unmanaged and cannot be invested into directly.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05363304


Footnotes:

[i]Office March Madness! Businesses lose nearly $14 BILLION from workers watching NCAA Tournament - Study Finds

[ii]Investment Return Calculator: Measure your Portfolio's Performance (moneychimp.com)