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Old 03-03-2016, 09:24 AM   #161
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Speaking of how to compute return, we have talked about this before, but I will reiterate something here. If there is no withdrawal nor deposit, it is simple. But when there cash flow in/out of the portfolio, that's where people may differ on how it is computed.

Let's say the market return is 5%, and you also make a withdrawal of 5%. So, your portfolio should stay the same, right? No, it depends on when you make the withdrawal.

Start out with $1M, if you let it grow to $1,050K then take out $50K, you still have $1M.

But if you withdraw $50K at the beginning, your $950K will grow to only $997.5K. It's $2.5K less or 0.25% less than the first case.

In the 1st case, the return is ($now+$wdrl)/$start, while in the second case the return is $now/($start-$wdrl). The difference between the two cases is the growth of that withdrawal, the 5% gain on the 5% withdrawal amount if delayed till the end.

If you now also have deposit it gets a bit more complicated. Worse, with multiple withdrawals and deposits, you will have to use the XIRR function, which mathematically accounts for the time of all the deposits and withdrawals. But I want to keep it simple, and just use ($now+$wdrl)/$start. I actually take money out throughout the year and not at the end, so the real return is actually a bit better than what I compute.
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Old 03-03-2016, 10:08 AM   #162
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+2.3% YTD as of EOD Feb 29.
Not great, but given all the volatility, I'll take it.

Trading profits + small consulting > expenses.
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Old 03-03-2016, 06:06 PM   #163
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+2.3% YTD as of EOD Feb 29.
Not great, but given all the volatility, I'll take it.

Trading profits + small consulting > expenses.
Considering that I am -2.25% YTD as of today after the gains of the last week, I'd say you are doing pretty great.
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Old 03-03-2016, 06:17 PM   #164
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Originally Posted by LOL! View Post
I did not write that anybody had to agree with me.

OK, now let''s get back to the Tower of Babel that is everyone's YTD performance.
How about this and everyone use 12 months as months elasped? While it sacrifices some precision to simplicity, at least it would offer consistency.

Investment Return Calculator: Measure your Portfolio's Performance

Quote:
This calculator can only give you an estimate (total accuracy would require you to give the date and amount of each addition and withdrawal) but it's a respected estimate, using a formula recommended by The Four Pillars of Investing and The Motley Fool, and widely used by many others.
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Old 03-03-2016, 06:20 PM   #165
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Absolutely correct, and I have been looking at benchmarks, but I am lower than the benchmarks I've been looking at - so that has really been making me wonder about my allocation. For example:

as of 3/1:

VSMGX: - 1.69%

We are ~ 60/40 with international (when I have time I will rerun my rebalancing spreadsheet and post more details). Our return as of 3/1 (I verified with XIRR, a bit better than I posted earlier) was - 2.23.


Perhaps if I post more details you all can help me figure out what benchmark would be most appropriate for me to compare to...back later! Thanks!
Ok my asset allocation currently is:

60% stock (17% of this is international)
33% bond
7% short term/cash

Seeing the above, what benchmark would you all recommend I compare my YTD return to?
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Old 03-03-2016, 06:32 PM   #166
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In selecting a benchmark it is more important to know your target AA rather than your current AA because in comparing the benchmark to your actual results it reflects differences between your actual AA and target AA as well as different performance between your actual holding in each category and the indices in each category.

One idea would simply be the Target Retirement fund of your choice that best reflects your target AA... or you could select an index fund in each category and then compute a weighted average based on your target AA.
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Old 03-03-2016, 06:48 PM   #167
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Originally Posted by simple girl View Post
Ok my asset allocation currently is:

60% stock (17% of this is international)
33% bond
7% short term/cash

Seeing the above, what benchmark would you all recommend I compare my YTD return to?
Is that 17% of 60% so 10% of total portfolio? Or 17% of total portfolio?

Either way, I think VSMGX is a perfectly good benchmark for you.

At the end of today, below are the YTD total returns from Morningstar.com
VSMGX - LifeStrategy Moderate Growth - 60/40 asset allocation using total market weights, unchanging over time.

VTWNX - Target Retirement 2020, 60/40 now, but changing over time

DGSIX DFA Global 60/40 - small-cap and value-tllted with DFA fund managers

VBIAX - Vanguard Balanced 60/40 but no international.



One thing to note is that the dispersion of returns from similar passively-managed mostly index 60/40 portfolios is about 0.25%. So I do not think that being 0.3% different from your benchmark is that significant.

Clearly, international has done worse than domestic this year, so VBIAX is doing better than the funds with international equities.

I also think the only way to do much better or much worse than these benchmarks is to have a different asset allocation (or high fees). For instance, someone who panicked and sold out on Feb 11th for just a couple of weeks, then bought back in would way underperform. In contrast, someone who switched from 60/40 to 75/25 on Feb 11th would have outperformed even if they sold to get back to 60/40 yesterday.

And a change of stocks from 60% to 75% temporarily comes with risk and maybe not as much reward as one might think. If stocks go up 10% while at the higher allocation, that improves performance by only 1.5% total. If stocks up up only 5%, that extra 15% to stock improves performance by only 0.75% total. Of course, if one shifts to 75% equities and stocks go down, then that hurts instead of helps.

It might be easier for some folks to reduce fees to improve performance than it would be to do any market timing, too.
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Old 03-03-2016, 06:51 PM   #168
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Originally Posted by pb4uski View Post
How about this and everyone use 12 months as months elasped? While it sacrifices some precision to simplicity, at least it would offer consistency.

Investment Return Calculator: Measure your Portfolio's Performance
Good idea. But, I wonder if there might be another calculator we could use as this one didn't give me the numbers that I wanted to see.
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Old 03-03-2016, 06:53 PM   #169
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Originally Posted by pb4uski View Post
In selecting a benchmark it is more important to know your target AA rather than your current AA because in comparing the benchmark to your actual results it reflects differences between your actual AA and target AA as well as different performance between your actual holding in each category and the indices in each category.
Oh, sorry, I didn't mention - that is our target AA - we are currently balanced.

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Originally Posted by pb4uski View Post
One idea would simply be the Target Retirement fund of your choice that best reflects your target AA...
That is what I am asking for. Are there suggestions for a Target Retirement fund that is 60/40, which includes ~ 17% slant towards international in the stock section (43% US stock, 17% Int, 33% bonds, 7% cash). I can continue to research on my own but was hoping someone would have a suggestion of one they know is close to that.
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Old 03-03-2016, 06:55 PM   #170
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Originally Posted by LOL! View Post
Is that 17% of 60% so 10% of total portfolio? Or 17% of total portfolio?

Either way, I think VSMGX is a perfectly good benchmark for you.

At the end of today, below are the YTD total returns from Morningstar.com
VSMGX - LifeStrategy Moderate Growth - 60/40 asset allocation using total market weights, unchanging over time.

VTWNX - Target Retirement 2020, 60/40 now, but changing over time

DGSIX DFA Global 60/40 - small-cap and value-tllted with DFA fund managers

VBIAX - Vanguard Balanced 60/40 but no international.



One thing to note is that the dispersion of returns from similar passively-managed mostly index 60/40 portfolios is about 0.25%. So I do not think that being 0.3% different from your benchmark is that significant.

Clearly, international has done worse the domestic this year, so VBIAX is doing better than the funds with international equities.

I also think the only way to do much better or much worse than these benchmarks is to have a different asset allocation. For instance, someone who panicked and sold out on Feb 11th for just a couple of weeks, then bought back in would way underperform. In contrast, someone who switched from 60/40 to 75/25 on Feb 11th would have outperformed even if they sold to get back to 60/40 yesterday.

And a change of stocks from 60% to 75% temporarily comes with risk and maybe not as much reward as one might think. If stocks go up 10% while at the higher allocation, that improves performance by only 1.5% total. If stocks up up only 5%, that extra 15% to stock improves performance by only 0.75% total. Of course, if one shifts to 75% equities and stocks go down, then that hurts instead of helps.

Thank you very much - that's exactly what I was looking for!
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Old 03-03-2016, 06:57 PM   #171
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It is unlikely that any target retirement fund will be holding 7% in cash, but the 2020 fund would be a good benchmark IMO.

Ranking by PercentageFundPercentage
1Vanguard Total Stock Market Index Fund Investor Shares35.6%
2Vanguard Total Bond Market II Index Fund Investor Shares*27.7%
3Vanguard Total International Stock Index Fund Investor Shares23.5%
4Vanguard Total International Bond Index Fund Investor Shares12.2%
5Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares1.0%
Total100.0%
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Old 03-03-2016, 08:16 PM   #172
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Originally Posted by pb4uski View Post
How about this and everyone use 12 months as months elasped? While it sacrifices some precision to simplicity, at least it would offer consistency.

Investment Return Calculator: Measure your Portfolio's Performance
What that formula does is to assume 1/2 of withdrawal (deposit) is at the start, and the other 1/2 is at the end. It is a compromise, and works best if you continue to withdraw or deposit periodically through the period.

To use my earlier example of 5% return and a $50K withdrawal on a $1M portfolio (post #161) :

Case 1) Withdrawal at the end -> Portfolio end value = $1M
Return = ($now+$withdrawal)/$start

Case 2) Withdrawal at start -> Portfolio end value = $997.5K
Return = $now / ($start-$withdrawal)

Case 3) 1/2 Withdrawal at start, 1/2 at end -> Portfolio end value = $998.75K
Return = ($now+1/2 $withdrawal) / ( $start - 1/2 $withdrawal)

To compare two individual returns without knowing when they make any withdrawal (or deposit) without using the XIRR function, by using case 3) you assume the average case and have only 1/2 the error.

PS. I forgot about another case. The exact formula to match this is a bit more complex, but note how it comes close to Case 3).

Case 4) Withdrawal at 1/2 point in period -> Portfolio end value = $998.765K.
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Old 03-03-2016, 08:23 PM   #173
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So, as of market close today, I am down only -0.7% YTD.

This is not at all shabby, considering that I am holding more than 30% cash with only 6% bond, and inside the 60% stock I have 16% foreign.

Bond is up 1 to 2% YTD which I do not have. Cash at 2.5%/year does not help much. Foreign stocks are still down -5.5% YTD as seen with VXUS. S&P is still down -2%. So, my short-term market timing trades and my domestic stocks save the day to bring the portfolio to nearly break even (I am not an indexer).
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Old 03-03-2016, 09:41 PM   #174
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Today was probably my best day of the year. Went from being up 1% to 2% in one day. Meaningless though, as most of money is in illiquid preferreds that jump up or down on 100-200 shares traded in a day. At the end of the year if I am up 6% it has been a solid year. I just mostly wait for dividend dumps.


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Old 03-04-2016, 03:23 AM   #175
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The entire YTD analysis is an arbitrary date - fools game ...

Broad SP500 domestic Market is Down 6.5% from all time highs.

I'm down 7.8% from all time highs

International is still lagging.
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Old 03-04-2016, 04:30 AM   #176
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As of today my equity portfolio:

-2.8% in trackers (VT & VOE)
+8.2% in individual portfolio

In the beginning of the year performance between my two segments (tracker & individual) suddenly differed quite drastically, after 5-6 years of moving roughly in sync.
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Old 03-04-2016, 04:39 PM   #177
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For the few here that reported at the end of January and the end of February, I've plotted the results. So, the month of February saw improvements in the range of .35% to .74% with the larger improvements seen by those that got hit the hardest in January. This is expected and it looks like we have some consistent reporting, for the most part. There is one outlying point not fitting the expectation. It's on the good side, so maybe that strategy should be examined

I could name names, but I figured it's more interesting to get comments (and see if you can spot yourself) first.
Time to have a look at the results! I hope I got this right. It's left to right from the list.

But as we're talking about here..."timing is everything"
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Old 03-04-2016, 04:56 PM   #178
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Time to have a look at the results! I hope I got this right. It's left to right from the list.

But as we're talking about here..."timing is everything"
S&P 500 lost a fraction between 1/31/16 & 2/29/16. During the same span, my investment went up a bit b/c of short term trades, and dividends.
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Old 03-04-2016, 08:16 PM   #179
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Wow, how nice to see that I brought up the rear of that short list as of 2/29.

As of today, I am back to even with 12/31/2015 (just missing a couple of $K). Yes, I made 3% this week. Does that change my standing any?

But seeing that most indices are still in the red YTD, and also that I have so little bonds to help my 60% stock which also has quite a bit of that stinkin' international, I do not think I am doing too badly.
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Old 03-04-2016, 09:03 PM   #180
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Performance of
VWENX (Wellington) through 2/29/2016 is -3.01%
Through yesterday: -1.62%
Through today: -1.18%
I found that the -3.01% VWENX number is the Year-to-Date as of 02/29/2016, listed on Vanguard Site. Googlefinance is using that as YTD performance.
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