It's Good To Take Stock of Returns

[RetirementColdHardTruth]

Just did my half yearly checkup and pulled data from my vanguard account. It is nice to see that staying the course no matter what the market does and keeping an eye on the AA is always the right thing to do. I wish they still reported the 10 year figure....

My Personal rate of return 06/30/2011
1 year 26.9%
3 years 12.9%
5 years 10.5%

 

[Aeowyn]

I pulled my returns from Quicken - they are very close to yours. Perhaps the 10 year is too.

Annualized personal rate of return as of 6/30/11:

1 year 29.2%
3 year 11.8%
5 year 10.5%
10 year 9.9%

 

[LOL!]

Please note that one year ago the market had dipped to a low point around June 30th. There were only a few days in 2010 where the market closed lower than on June 30th. Then over the next 5 weeks, the market popped more than 10%.

Thus everyone's one-year personal rate of return should look particularly awesome. Enjoy it now because next month your 1-year personal rate of return is going to be quite a lot lower.

 

[Dawg52]

I wish I had the gonads to be as heavily invested in stocks. The S&P is up 30.69%(according to Fidelity) over the same 1 year period. You guys must have a strong tilt towards equities to get those returns. Congrats!

 

[pb4uski]

Question for OP and Aeowyn: What is your AA and what tickers are you in?

I'm 60% equities/40% fixed income AA and mostly in index funds and Harbor Bond in my employer's 401k. While I'm happy with the returns and volatility, the returns are more modest:

Quicken Vanguard (ex 401k)
1 year 16.21% 26.8%
3 year 4.09% 4.5%
5 year 3.42% 4.2%

 

[ziggy29]

I agree with staying the course no matter what the market does, but from time to time it still makes sense to check your "course" and see if it's still the right one for you. I stayed the course after the 2008-09 meltdown, but after all that stress once I saw the market recovered a majority of its losses I redid all my numbers and realized that my investment goals could likely be achieved with a 55/45 or 60/40 allocation instead of the roughly 70/30 I had been using. (That would *not* have been the case if I panicked and sold a lot of stocks near the lows.) So a few months ago I scaled back my equity holdings to that level, and I'm prepared to again "stay the course" with the new course.

So in some sense this is letting bad market memories impact my investing decisions, but it wasn't a knee-jerk response based on gloom and fear. I didn't sell really low, I didn't panic, but when most of the paper losses were recovered I took a long look to see if (and how much) I could safely pare back my equity exposure and still have a good shot at reaching my target. Split-second emotional decisions based on fear and greed are wealth killers. But it is appropriate from time to time to ask yourself whether or not the AA you've selected still is, and will continue to be, the most appropriate given your own situation and risk tolerance.

I discovered what my risk tolerance was after 2008-09: just tolerant enough to not panic and sell out at the bottom, but not so high that I'm willing to relive that scenario with a 70/30 AA ever again.

 

[slingshot]

Aeowyn-love your foal pic

 

[Aeowyn]

My personal returns are a little better than my portfolios would suggest. I put a lot of money into the market when it was crashing (and also as it was recovering). Then I recently took a lot out last fall and winter to make a couple real estate purchases (bought low, sold high). My portfolios have also been in a state of transition as I prepare for a major career change.

Until recently, I've basically been 100% equities. I primarily invest in managed funds (vs. index). As I get ready to leave my current job, I'm starting to build some bond portfolios as an insurance policy against a down market when I need to pull money out. Right now, I'm ~10% bond.

 

[Aeowyn]

Aeowyn-love your foal pic

Thanks! She's a lot bigger now, but she's still my baby.

 

[teejayevans]

My Personal rate of return 06/30/2011
1 year 26.9%
3 years 12.9%
5 years 10.5%

I was 60/40, now more like 65/35
1. 20.3
2. 9.4
3. N/A joined VG back in 2007

To give you an idea of what difference makes in investment choices, my 1 year for my fido account that is 95% equitys: 33.4%.
My VG post-tax investments are more conservatively invested because of the shorter time horizon. Don't get too worked up in a "mine is bigger yours contest", the key is are your accomplishing your goals.
TJ