Navigating financial statements
Financial statements contain some of the most important information about your savings and investments, but they can sometimes be confusing to navigate. Here are some commonly used terms you’ll notice in your financial statements. Understanding them will help you take charge of your money.
Understanding how to analyze your financial statements can allow you to better assess your financial situation and make informed decisions about your financial habits. Luckily, these terms don't only apply to one type of statement. Learning what they mean will allow you to get a clearer picture of how your investments are growing over time and across all your statements.
Estimated rate of return
An estimated rate of return is the forecasted amount you might expect an investment to grow over time. In your financial statement, the estimated rate of return of an investment helps you decide which investment best aligns with your financial goals and risk level. It also helps predict how much your investments will grow to meet your specific retirement goals.
You can use this Investment Comparison Calculator to compare different investments and their rates of return.
Your investment timeline
You might see a section in one of your financial statements that includes one or all of the following terms:
- Opening value
- Contributions1
- Withdrawals
- Growth in value
- Maturity
Each of these terms works together to help you track where your money is going, how it’s growing, and when you could access it. They’re all interconnected: The opening value sets the starting point and indicates the initial amount you have invested in the asset. Contributions and withdrawals change the account balance based on additional money you contribute or allocate elsewhere. The growth in value of your investment increases the worth of the account, and maturity indicates when you can access the funds and fully benefit from your investment without penalties. Together, these terms provide an in-depth picture of your money over time.
Beneficiary details (revocable vs. irrevocable)
The beneficiary details section of a financial statement usually includes a list of who will receive your assets, benefits, retirement plans, and trusts if you pass away. This list provides information regarding the selected beneficiaries (name, relationship, contact info) and shows the specific percentage or amount each beneficiary will receive. You may see the terms “revocable” and “irrevocable” here. Understanding these terms is important for managing your estate effectively.
A revocable beneficiary can be changed at any time, and an irrevocable beneficiary cannot be changed without the beneficiary’s consent.
Regularly reviewing this section in your statements can ensure your accounts continue to reflect your wishes and that the transfer of your estate will be clear and seamless.
Financial statements are an important tool for understanding the trajectory of your savings and investments. By familiarizing yourself with the key terms and concepts outlined above, you’ll gain a clearer picture of your financial situation and make decisions that better align with your personal goals and risk tolerance.
Sign in to our secure site or mobile app to review your statements and ensure your investments are on track.
1 There are different types of contributions, depending on who is contributing (you or your employer), and whether the contributions are mandatory or not (required or voluntary). Your statements will clearly show how much of your contributions come from each category (member required, member voluntary, sponsor required, or sponsor voluntary).
Important disclosures
The commentary in this publication is for general information only and should not be considered legal, financial, or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.