I'm in the first year of early retirement and using the (java-based) flexible retirement planner (
www.flexibleretirementplanner.com/wp/) to help me model my retirement.
I'd like to enter portfolio return estimates for that model. I'm trying to estimate the average historical annual yield of my portfolio based on the last 8 years of my 403(b) end-of-year portfolio value. (Yes, future yields do not necessarily reflect past yields....) The end-of-year portfolio values are net of fees.
I contributed a total of $30k in each of those 8 years (my contribution + employer match) and so I want to take that into account in my calculations.
I haven't started to withdraw anything so far from this portfolio and all dividends were automatically reinvested, and so the only changes in each year end value should be due to the $30k annual contribution and the portfolio's performance right?
For any year after 2009, I calculated year-over-year return like this:
[(year 2 - year 1)/year 1] X 100 = year-over-year % yield
Here's that historical data:
Year |value| value-$30000 | calculated % yield
2009 $424000 $394000
2010 $527000 $497000 26.14
2011 $547000 $517000 4.02
2012 $655000 $625000 20.89
2013 $844000 $814000 30.24
2014 $928000 $898000 10.31
2015 $941000 $911000 1.45
2016 $1087000 $1057000 16.02
2017 $1270000 $1240000 17.31
Average calculated yield 15.80%
My annual $30k contributions were spread out, twice monthly, and while that annual contribution is subtracted, the effect of gradual yearly contributions isn't taken into account, but is, I think, small.
Is it logical that I enter 15.8 % as a reasonable estimate of the annual return of this portfolio?
Thanks for anyone's time,
Red Head