How to tell if you're beating the S&P 500

Your brokerage app shows a big green number. It does not answer the question behind it. Would you have more money if you had put everything into an index fund and left it alone? That’s a relatively simple calculation, and most people who try it get it wrong in one of two ways.

The short answer

Take every deposit and withdrawal you made, on the date you made it, and pretend you put that money into an S&P 500 fund instead. Whatever that imaginary account is worth today is your benchmark. If your real account is worth more, you beat the market. If it’s worth less, you didn’t.

Everything below is about doing that honestly.

Why “I’m up 30%” doesn’t answer it

Say you deposited $10,000 in January 2022 and another $10,000 in January 2024. Today the account is worth $26,000. You put in $20,000 and you are up $6,000, or 30%.

Now the index. To keep the arithmetic simple, we’ll use round, made-up prices for an S&P 500 fund. Say it was $400 a share on the day of your first deposit, $500 on the day of your second, and $600 today.

The comparison that flatters the index. The fund went from $400 to $600, a 50% gain, and you made 30%. That looks like a 20-point loss. But half your money was not invested for the first leg at all. Comparing it to a return it could never have earned is not a fair test.

The comparison that flatters you. “I’m up 30% and that sounds pretty good.” It says nothing about what the same dollars would have done elsewhere.

The fair comparison. Put your deposits into the fund on the days you made them:

Date	Deposit	Fund price	Shares bought
Jan 2022	$10,000	$400	25
Jan 2024	$10,000	$500	20

That is 45 shares, worth $27,000 at $600. Your account is worth $26,000. You trail the index by $1,000. That’s behind, but by far less than the 20-point gap the first comparison suggested.

Do it yourself in a spreadsheet

The comparison most people picture first is trade by trade. I bought Apple, so what if I had bought the S&P 500 instead? That answers a different question, which is whether one pick did well. It also can’t see the time your money spent waiting in cash, after a deposit or between a sale and the next buy. Had you put it into an index fund instead, that money would have been invested the whole time.

So the inputs here are not your trades. They are your deposits and withdrawals, because in the index-fund version those are the only times you would have traded. You’d buy whenever you added money and sell whenever you took some out.

1. List every cash flow. Each deposit and each withdrawal, with its date. Your broker’s activity export has them.
2. Look up an S&P 500 fund’s adjusted close on each date. Use a fund you could actually have bought, such as SPY or VOO. The adjusted close folds the fund’s dividends into its price (more on that below).
3. Convert each flow to shares. A deposit buys amount ÷ price shares. A withdrawal sells that many.
4. Add up the shares and multiply by today’s adjusted price. That is what your money would be worth if you had bought the index fund instead.
5. Compare it with your account’s total value today, including any cash sitting in it.

Two cash flows are easy to miss. Shares transferred in from another broker count as a deposit of whatever they were worth that day, and money you moved out to spend counts as a withdrawal. Dividends paid into the account are not deposits. They are return, and they are already in your account’s value.

There’s one exception. If part of the account is cash you never meant to invest, leave it out of both sides. The comparison is for the money you put to work.

The three mistakes that change the answer

Ignoring the index’s dividends. The S&P 500 number quoted on the news is a price index. A fund that tracks it also pays dividends, between one and two percent a year in recent years. If your side includes your dividends and the index side does not, you’re giving yourself that head start every year. Adjusted prices fix this, because they fold reinvested dividends into the price history.

Comparing your holdings instead of your account. Your broker’s positions page shows the gain on what you still own. The losers you sold are gone from it, and so is any time a third of your account sat in cash. Both are part of your result, and money you had put in an index fund would have been invested the whole time. Compare whole account against whole account.

Using different dates. “The market did 12% last year” is a calendar-year figure. Your money arrived on particular days. Match the dates or the comparison means nothing.

What this doesn’t tell you

One number says whether you are ahead. It does not say why, or whether it was skill. A few years is a short record, a portfolio concentrated in a handful of stocks swings far more than the index does, and none of this accounts for taxes. Treat the result as a measurement of what happened, not a forecast.

Or skip the spreadsheet

The arithmetic is simple. The bookkeeping is the hard part, with years of deposits, splits that change the share count, dividends reinvested a few dollars at a time, and transfers between brokers. That bookkeeping is what Candid does. Bring your trading history from your broker and we draw your account against the S&P 500 over the same deposits and the same dates, with dividends counted on both sides.