2014 Investment Returns

[younginvestor2013]

I'm starting to feel as if I have a poor asset allocation. I am 100% equities, and according to Vanguard's personal performance calculator, I only got about a 7.0% return for the year.

The S&P churned out about 12%. I've listed my portfolio below. Any one have any suggestions or idea why I only got 7.0% for year?

I did sell a decent chunk of my portfolio for a downpayment on a condo and a car purchase, but I don't think that should affect the way the return is calculated.

(All Vanguard ETFs)

VSS International, Small Cap
VWO International, Emerging Markets
VUG Domestic, Large Cap Growth
VO Domestic, Mid Cap
VOO
VB
VXUS
VTV

 

[audreyh1]

I'm starting to feel as if I have a poor asset allocation. I am 100% equities, and according to Vanguard's personal performance calculator, I only got about a 7.0% return for the year.

The S&P churned out about 12%. I've listed my portfolio below. Any one have any suggestions or idea why I only got 7.0% for year?

I did sell a decent chunk of my portfolio for a downpayment on a condo and a car purchase, but I don't think that should affect the way the return is calculated.

(All Vanguard ETFs)

VSS International, Small Cap
VWO International, Emerging Markets
VUG Domestic, Large Cap Growth
VO Domestic, Mid Cap
VOO
VB
VXUS
VTV

When you have a diversified portfolio, you'll never beat the top returning asset class. But you never know in advance which will be the top performing asset class, so it's best to keep a well diversified portfolio.

 

[bison74]

7.8% AA 50/50

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[Alan]

7% as calculated using XIRR. VG and FIDO sites both show over 8% for the funds invested there, but I do have a bunch of I-Bonds holding most of the 12% "cash".

40/48/12 was EOY AA.

 

[younginvestor2013]

Oops. I didn't mean to post my response here too since I just created a thread on it.

 

[tricky88]

We ended up at 13.5% for the year, which is close enough to the S&P500 benchmark for me. We're about 3% cash, 4% bonds, and the rest in equities.

This will end up a bit lower b/c I don't know what the taxes will be on the cap gains and dividends in the taxable account.

And though we're not supposed to include contributions, I am proud of our savings rate, so I'm gonna say anyway: Our net worth went up 19%, so that extra 5.5% was from savings.

I don't post here often, but I still check in from time to time. This community is really something. I looked back and saw that my first post was almost 8 years ago, and in it I said I had been lurking here for "a few" years. That's impressive. I've made some serious progress toward financial independence in the past ten years, and I owe a lot of it to the accumulated knowledge of the people on this board.

So, Thanks. Hope everyone has a safe 2015.

 

[papadad111]

Will the real return please stand up ?

What did the SP500 return this past year? I've seen here 11 12 and 13 percent. What's the de facto return including dividends ? Bueller? Bueller?

Not that it matters. What matters is total net worth increase ...

(New Val - old Val) / old Val = % chg

I'm up for the prior year !

Consensus is the international funds lagged the past year. Reits soared.

What REITS are you in ?

What do you think international will do in next 12 months?

My opinion is non U.S. equities funds are dead money for a while but good Oppy to dollar cost avg in if your asset allocation was out of whack due to usa equity gains for past couple years. May pick specific countries and do ok - eg. China but broadly will be slow going in those equity markets.

 

[texcurtis]

My portfolio performance for 2014: 5.66%


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[clifp]

Morningstar puts the total return of the S&P at 13.69% the index was up 11.5% the remainder was due to dividends and changes in the index.

 

[bingybear]

7% as calculated using XIRR. VG and FIDO sites both show over 8% for the funds invested there, but I do have a bunch of I-Bonds holding most of the 12% "cash".
40/48/12 was EOY AA.

Wouldn't bonds be the asset "bonds", not cash. I don't think I bonds would be considered even short term assets... such as short term.

or am I missing something?

 

[jon-nyc]

7.38% using XIRR

 

[audreyh1]

Wouldn't bonds be the asset "bonds", not cash. I don't think I bonds would be considered even short term assets... such as short term.

or am I missing something?

I consider IBonds cash, similar to say 1 year or slighty longer CDs. They are short term in that you can pull your money out after a year with a 3 month interest penalty, no penalty after 5. And like cash there is no drop in value if interest rates rise. No credit risk.

We keep part of our portfolio cash in IBonds.

 

[blenhardt]

6.9% on conservative AA that includes 28% cash. We are retired and just trying to preserve what we have and gain a little above inflation.

 

[REWahoo]

8.6% on a 45/45/10 portfolio.

 

[imoldernu]

A little over 5%.... about the same as the past 10 years, and for the foreseeable future.
Not smart about money.

 

[bingybear]

I consider IBonds cash, similar to say 1 year or slighty longer CDs. They are short term in that you can pull your money out after a year with a 3 month interest penalty, no penalty after 5. And like cash there is no drop in value if interest rates rise. No credit risk.

We keep part of our portfolio cash in IBonds.

we all can define things differently, and I'm not the one to decide right and wrong. I have I bonds with current rates of 4.91% and EE bonds at 4%. If I called this cash... I'd have to say my cash is performing quite well. These perform so much better than my checking, MM, or savings account that I have trouble seeing them as cash from my perspective.

I guess we just see things differently. Hopefully the above provides some insights to why I questioned it. I do agree that they have nice withdraw policies.

I still have way too much cash... even more so with EOY selling that I have not re-positioned yet (my def of cash).

sorry for the confusion.

 

[audreyh1]

we all can define things differently, and I'm not the one to decide right and wrong. I have I bonds with current rates of 4.91% and EE bonds at 4%. If I called this cash... I'd have to say my cash is performing quite well. These perform so much better than my checking, MM, or savings account that I have trouble seeing them as cash from my perspective.

I guess we just see things differently. Hopefully the above provides some insights to why I questioned it. I do agree that they have nice withdraw policies.

I still have way too much cash... even more so with EOY selling that I have not re-positioned yet (my def of cash).

sorry for the confusion.

Sure - it's just that several of us have IBonds as part of our long-term cash allocation, which is what you questioned in the first place, and I was simply explaining how we see it, as you asked what you were missing.

They behave quite differently from Bond Funds which go up and down in value every day depending on daily interest rate changes and daily credit quality changes.

There are several vehicles available for cash, including short-term CDs. MM and checking may be paying virtually nothing, but you can park cash in high yield savings accounts yielding up to 1% these days. And that is not bad at all compared to CDs and much riskier short-term bond funds.

 

[eytonxav]

Only 5%, alas still holding too much dry powder at 30%+

 

[Klubbie]

Not quite sure of how my entire portfolio did for the year as there was a ton of moving around, simplifying and combining accounts that comes from changing jobs. So here is the breakdown:

My 401K:
Approximately 45% of total portfolio
Return: 8.52%

I rolled this 401k over from a prior employer in February 2014 and it has been in Vanguard Target Date 2045 all year. So the 8.52 may be off a little from prior employer allocation, but I'll go with it.

Her 401K:
Approximately 38% of portfolio
Return: 7.16%

This is based off of Vanguard's website 1 year return for VTIVX (Target Date 2045)

Roth IRA:
Approximately 17% of portfolio
Return: 0% (complete estimate)

My Roth was a dumpster fire this year of turnover. I rolled a tIRA into the Roth and realized I had not been properly allocated. I mainly use my Roth to tilt the portfolio to Small Cap Value, REIT, Emerging Market, and International Small Cap. This year I spent a large part of the year getting my tilts set up properly as I was way out of wack previously. Regardless, the way my tilts are set up the international returns dragged down the return on my Roth pretty substantially. My Return of 0% is an estimate since I have not had a good way to track that this year, but I think it's a fair one.

So overall that gives me an estimated return of 6.55%.

Not great, but I feel really good about where I am heading into 2015. Things are simplified. I have an actual AA, and the majority of my investments are parked in a target date fund. Re-balancing is easier. Life is good.

 

[Alan]

Wouldn't bonds be the asset "bonds", not cash. I don't think I bonds would be considered even short term assets... such as short term.

or am I missing something?

I think Audrey explained it quite well above. Unlike regular bonds, once you have held an I-Bond for a year you are guaranteed to be able to sell it at the price you bought it, plus accrued interest. Even though one loses 3 months interest if sold within 5 years it is still often a better rate of return than a MM fund, bank savings account or short term CD, and every bit as safe (unless the US government defaults on its debt).

Cashing in I-Bonds also gives me a tax credit on my Louisiana tax return which effectively ups the interest rate a little.

ETA
If interest rates rise, I-Bonds don't lose value like bond funds

 

[Eagle43]

7.5% on 35/65 allocation.

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[audreyh1]

I think Audrey explained it quite well above. Unlike regular bonds, once you have held an I-Bond for a year you are guaranteed to be able to sell it at the price you bought it, plus accrued interest. Even though one loses 3 months interest if sold within 5 years it is still often a better rate of return than a MM fund, bank savings account or short term CD, and every bit as safe (unless the US government defaults on its debt).

Cashing in I-Bonds also gives me a tax credit on my Louisiana tax return which effectively ups the interest rate a little.

ETA
If interest rates rise, I-Bonds don't lose value like bond funds

Also, the interest rate is adjusted for inflation (CPI). That is not the same as matching current short term interest rates, but it ought to more or less track short-term interest rates over the long run.

PLUS interest earned is tax-deferred until you withdraw the funds. Which is not an option on regular CDs. It's really nice being able to let the interest paid reinvest and accrue tax free (i.e. deferred).

 

[GenghisKhan]

UK based investor here. 5.6% for me from a balanced portfolio covering global equities (22% UK though), UK index linked gilts, EU/UK property and a bit of gold.

One of our main indices, the FTSE100, actually finished in negative territory for the year.

 

[clifp]

Sure - it's just that several of us have IBonds as part of our long-term cash allocation, which is what you questioned in the first place, and I was simply explaining how we see it, as you asked what you were missing.

They behave quite differently from Bond Funds which go up and down in value every day depending on daily interest rate changes and daily credit quality changes.

There are several vehicles available for cash, including short-term CDs. MM and checking may be paying virtually nothing, but you can park cash in high yield savings accounts yielding up to 1% these days. And that is not bad at all compared to CDs and much riskier short-term bond funds.

I've wrestled with the proper place for I-Bonds for many years. It is small (sadly love them 3.5% ibonds from 2000) portion of my portfolio.

I finally developed 3 categories of fixed incomes bonds, transactional cash (i.e. money markets, checking accounts) and long-term cash (i.e. CDs, Stable Value funds, and saving bonds).

 

[braumeister]

Oops!

I was just going through my year end numbers, and I realized that I had taken credit for something I shouldn't have.

Earlier in this thread, I claimed 18.1% return for the year. Upon final review, I found that it was actually 13.7% for my 60/40 portfolio. What happened is that I forgot about receiving payment of a very old debt from a relative that we had long ago written off.

Pro: I'm still delighted with this return.
Con: Let's not forget that my 2013 return was rather poor (only about half the market's return), so it does even out.