Using benchmarks

Benchmarks can help you gauge how well your investments are doing against the overall market.

For instance, if your U.S. small-cap mutual fund dropped 5% in value in a year when the Russell 2000 Index — considered the benchmark for small-cap investments — gained 10%, it may be time to reconsider your investment choices. Of course, you may want to give your investment a couple of years to meet your performance expectations. But if your investments are underperforming the corresponding benchmarks year in and year out, then it's probably time to evaluate your other options.