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Book Value vs. Invested Capital

Educational

In an effort to keep you informed as it relates to your investments and achieving your goals, we wanted to share the following and attached with you.  Our office has fielded several calls as it relates to what is known as “Book Cost / or Book Value” and we would like to provide some clarity on this term and your statement.

Book Cost is a figure recorded on your statements, however if used for the purpose of assessing the growth of your investments, it will unfortunately likely misguide you.  A complete and detailed explanation is attached, (provided by one of our investment partners, Edgepoint).  Book Value is relevant for a tax calculation, but it is usually not relevant for a performance calculation.

We recommend you read the attached well-written article.  Also, here are a few highlights to keep in mind:

  • Do NOT use book value to calculate how much your investment has grown or returned
  • DO use invested capital or amount invested to calculate how much your investment has grown or returned
  • DO rely on us, your Investment advisors Greg and Adrian, to monitor and ensure your investments are achieving what is expected

Should you wish to have a report provided to you which includes invested capital or amount invested, please contact our office and we are happy to provide this to you.

Lastly, we are pleased to say that later in 2019 / early 2020 we anticipate our HollisWealth Client Portal will be upgraded and will provide the invested capital figure.

Should you like any further explanation, please call our office, and any of our team members would be happy to help you.

 

Click here to access Edgepoint’s article, which further clarifies Book Value vs Invested Capital

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