Portal Forums Links Register FAQ Members List Social Groups Calendar Search Today's Posts Mark Forums Read Log in

 Thread Tools Search this Thread Display Modes
 03-03-2016, 09:24 AM #161 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: Jul 2008 Posts: 21,418 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. __________________ __________________ "Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
 Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free! Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE! You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more! Join Early-Retirment.org For Free - Click Here
 03-03-2016, 10:08 AM #162 Recycles dryer sheets   Join Date: Dec 2013 Location: Manhattan Beach Posts: 194 +2.3% YTD as of EOD Feb 29. Not great, but given all the volatility, I'll take it. Trading profits + small consulting > expenses. __________________
03-03-2016, 06:06 PM   #163
Dryer sheet wannabe

Join Date: Jul 2014
Location: Houston
Posts: 21
Quote:
 Originally Posted by TallTim +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.

03-03-2016, 06:17 PM   #164
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...

Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 18,943
Quote:
 Originally Posted by LOL! 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.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA

03-03-2016, 06:20 PM   #165
Thinks s/he gets paid by the post

Join Date: Sep 2006
Posts: 2,599
Quote:
 Originally Posted by simple girl 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?
__________________
simple girl
less stuff, more time

(50, married; Mr. Simple Girl, 54. I am semi-retired as of 2015 (still have a part-time gig), Mr. Simple Girl hopes to fully retire 2019 (yep, we have the OMY syndrome...healthcare inflation is the culprit...and he wants a boat...not happening)

 03-03-2016, 06:32 PM #166 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: Nov 2010 Location: Vermont & Sarasota, FL Posts: 18,943 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. __________________ If something cannot endure laughter.... it cannot endure. Patience is the art of concealing your impatience. Slow and steady wins the race. Retired Jan 2012 at age 56...60/35/5 AA
03-03-2016, 06:48 PM   #167
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...

Join Date: Jun 2005
Posts: 9,204
Quote:
 Originally Posted by simple girl 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.

03-03-2016, 06:51 PM   #168
Thinks s/he gets paid by the post

Join Date: Mar 2005
Location: yonder
Posts: 2,522
Quote:
 Originally Posted by pb4uski 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.
__________________
"I'm in the need of a new signature line" -- redduck

03-03-2016, 06:53 PM   #169
Thinks s/he gets paid by the post

Join Date: Sep 2006
Posts: 2,599
Quote:
 Originally Posted by pb4uski 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.

Quote:
 Originally Posted by pb4uski 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.
__________________
simple girl
less stuff, more time

(50, married; Mr. Simple Girl, 54. I am semi-retired as of 2015 (still have a part-time gig), Mr. Simple Girl hopes to fully retire 2019 (yep, we have the OMY syndrome...healthcare inflation is the culprit...and he wants a boat...not happening)

03-03-2016, 06:55 PM   #170
Thinks s/he gets paid by the post

Join Date: Sep 2006
Posts: 2,599
Quote:
 Originally Posted by LOL! 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!
__________________
simple girl
less stuff, more time

(50, married; Mr. Simple Girl, 54. I am semi-retired as of 2015 (still have a part-time gig), Mr. Simple Girl hopes to fully retire 2019 (yep, we have the OMY syndrome...healthcare inflation is the culprit...and he wants a boat...not happening)

03-03-2016, 06:57 PM   #171
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...

Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 18,943
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 Percentage Fund Percentage 1 Vanguard Total Stock Market Index Fund Investor Shares 35.6% 2 Vanguard Total Bond Market II Index Fund Investor Shares* 27.7% 3 Vanguard Total International Stock Index Fund Investor Shares 23.5% 4 Vanguard Total International Bond Index Fund Investor Shares 12.2% 5 Vanguard Short-Term Inflation-Protected Securities Index Fund Investor Shares 1.0% Total — 100.0%
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA

03-03-2016, 08:16 PM   #172
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...

Join Date: Jul 2008
Posts: 21,418
Quote:
 Originally Posted by pb4uski 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.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky

 03-03-2016, 08:23 PM #173 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: Jul 2008 Posts: 21,418 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). __________________ "Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
 03-03-2016, 09:41 PM #174 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: May 2009 Posts: 7,834 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. Sent from my iPad using Tapatalk
 03-04-2016, 03:23 AM #175 gone traveling   Join Date: Oct 2007 Posts: 1,135 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.
 03-04-2016, 04:30 AM #176 Thinks s/he gets paid by the post   Join Date: May 2014 Location: Utrecht Posts: 2,461 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.
03-04-2016, 04:39 PM   #177
Thinks s/he gets paid by the post

Join Date: Oct 2010
Posts: 4,391
Quote:
 Originally Posted by sengsational 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"
Attached Images
 FebResultsKey.jpg (15.7 KB, 122 views) FebResults.jpg (28.8 KB, 14 views)

03-04-2016, 04:56 PM   #178
Thinks s/he gets paid by the post

Join Date: Nov 2013
Location: Bay Area
Posts: 2,175
Quote:
 Originally Posted by sengsational 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.
__________________
Pura Vida

 03-04-2016, 08:16 PM #179 Give me a museum and I'll fill it. (Picasso)Give me a forum ...   Join Date: Jul 2008 Posts: 21,418 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. __________________ "Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
03-04-2016, 09:03 PM   #180
Thinks s/he gets paid by the post

Join Date: Dec 2008
Posts: 4,073
Quote:
 Originally Posted by LOL! 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.
__________________

 Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 Thread Tools Search this Thread Search this Thread: Advanced Search Display Modes Linear Mode

 Posting Rules You may not post new threads You may not post replies You may not post attachments You may not edit your posts BB code is On Smilies are On [IMG] code is On HTML code is OffTrackbacks are Off Pingbacks are Off Refbacks are Off Forum Rules

 Similar Threads Thread Thread Starter Forum Replies Last Post 38Chevy454 Life after FIRE 30 05-05-2016 04:02 PM robnplunder FIRE and Money 689 01-21-2016 06:28 AM 4merKPer FIRE and Money 98 08-09-2011 11:09 AM Sam FIRE and Money 84 12-04-2006 12:39 PM

 » Recent Threads
 » Quick Links

 -- Early-Retirement v2.0 -- Early-Retirement v1.0 -- Mobile Contact Us - Portal Page - FIRECalc - Sitemap - Community Rules - Terms of Service - Privacy - Top
 All times are GMT -6. The time now is 04:22 AM.   Powered by vBulletin® Version 3.8.8 Beta 1Copyright ©2000 - 2018, vBulletin Solutions, Inc.