Your 2013 Investment Return

[NW-Bound]

13-14% with ~50 equities/~5 GLD (was higher!)/~5 rentals/~40 intermediate & short bonds + cash.

Beats me how some of you can figure this number to one, much less two decimals with all the fudgeries in real estate valuations, collectibles, unrealized gains, etc.

I never bothered with values of homes, my clunky cars, nor the few gold coins I have for keepsake. When it comes to assets held in brokerage accounts, the values are reported to the penny. With that, for a 7-figure portfolio the return of the portfolio, not the networth, can be computed to 9 significant figures .

Not that it matters much beyond the 1%, because the market can move that much in one day. But since you asked...

 

[sengsational]

Beats me how some of you can figure this number to one, much less two decimals with all the fudgeries in real estate valuations, collectibles, unrealized gains, etc.

The unrealized gains thing is easy, you multiply share count times the price on 12/31, hehe. I don't put real estate or collectables in my numbers.

But I think if an accountant went in and audited some of these reports, there would be some discrepancies . The figures posted by a web site for assets held there are probably pretty close, but then the CD's and bank acounts (which, in this year would have dragged down the result) are left off. And that can make a huge difference, as I'm about to show.

I do an IRR (Internal Rate of Return) on each account's cash flows. I sum up all accounts' cash flows and do an IRR there, which is how I come up with my result. It's not "perfect" because I smash all transactions in a quarter into one line of the spreadsheet. So I'm doing an IRR calculation on 5 values: Jan 1, 2013 starting balance, ins&outs in Q1, i&o's in Q2, i&o's in Q3, Dec 31, 2013 plus i&o's in Q4. The formula makes it annual:

=(1+IRR(H155:H159,0.1))^4-1

With an asset allocation of 15% Bonds, 30% Domestic Equities, 34% Foreign Equities, 17% Hard Assets (REIT, Gold), 4% Cash:

Good ones (covers 56% of liquid investments):
Vanguard: 16.7% (site reports 16.8%) - this is a mix of funds that doesn't follow my asset allocation.
401k Equities: 32.7%
DW's Roth: 20.6%
Swiss iShares: 27.0%
Employee Stock Program: 139.3% (only a couple bucks here)

That all might sound pretty good, but when I put in every dime of liquidity into the equation, it's not so rosey. For instance, the kids' college funds IRR was 3.4%, The bond allocation did about 3%, emerging markets lost 5%, cash just sat there. TIPS down 5%. The bottom line IRR for everything? 10.9%.

 

[clifp]

13-14% with ~50 equities/~5 GLD (was higher!)/~5 rentals/~40 intermediate & short bonds + cash.

Beats me how some of you can figure this number to one, much less two decimals with all the fudgeries in real estate valuations, collectibles, unrealized gains, etc.

It is a fair point. While financial assets do a have specific price. I always keep in the back of my mind the Buffett/Ben Graham quote.
"Price is what you pay, value is what you get"
But no stretch of the imagination did the value of US equity market increase by 30% this last year (nor did it fall by 40% in 2008).
But if they give me a exact quotes I might as well report them so I I'll say there were up 24.69% +/- 21%

In the case of real estate. I separate my financial assets from everything else. In my case investment real estate is 8% of my total net worth, plenty of folks have 1/2 or more of their net worth in rental. It also increased last year. Now valuing real estate is even more difficult than stocks but the volatility is lower, the last 10 years being a true anomaly. I average Trulia and Zillow estimate when possible.

I think your house equity should be included in your net worth but not in your investment gains.

 

[tmm99]

My current 401K (about 50% of my asset) shows 17.668%.

 

[KMyer]

33.98% overall aggregate return for the taxable and retirement accounts. I've always been 100% invested in equities since I started working 28 years ago. I'm beginning to think about diversifying into fixed income investments (or at least reduce my overweighting in consumer cyclicals) since I will be turning 51 years old in 2014. The last couple of years have been fabulous from an investing perspective.

 

[audreyh1]

13-14% with ~50 equities/~5 GLD (was higher!)/~5 rentals/~40 intermediate & short bonds + cash.

Beats me how some of you can figure this number to one, much less two decimals with all the fudgeries in real estate valuations, collectibles, unrealized gains, etc.

I gave the return of my retirement portfolio which does not include real estate or collectibles, but only investment assets whose values are marked each trading day so unrealized gain is clear. With no additions or withdrawals during the year, computing the return is a piece of cake.

I think most people here are giving returns of their investment accounts, not their net worth which is a different beast.

 

[keegs]

checked my 401k...AA is approx. 75/25... one year annualized return shows 20.8%

 

[Fermion]

I find it surprising how many people are getting 30% to 40% returns, meaning they are 100% equities with no cash. 2008-2009 must have hurt or they just have great timing skills.

 

[audreyh1]

I find it surprising how many people are getting 30% to 40% returns, meaning they are 100% equities with no cash. 2008-2009 must have hurt or they just have great timing skills.

I only noticed very few. Most people's returns seems to correspond pretty closely to their equity allocation as given.

There are a couple of posts which seem like they they might have included additions to the portfolio in their annual return.

 

[KMyer]

I find it surprising how many people are getting 30% to 40% returns, meaning they are 100% equities with no cash. 2008-2009 must have hurt or they just have great timing skills.

I was lucky. I had a negative return of 65% in 2008 in my E*trade account but never waivered from being 100% invested in equities in our investment and retirement accounts. Fortunately through around 2007, I had been concentrating on becoming debt free and a majority of our taxable savings to that date had gone toward paying off the mortgage of our farm and vacation home.

The 13 year average annual return for our E*Trade account is 14.74% which includes the impact of the bad results from 2008. It seems to pay to keep investing in down markets.

 

[gerntz]

I don't consider my house an investment, nor my collectibles since they are just small hobbies.

I don't consider my house either. But I do consider my rentals estimated valuation change as reflected in tax assessments & refinance valuations. Perhaps I should have called our GLD holdings commodities instead as that was what I was mainly referring to.

 

[tricky88]

75 / 25 (the 25 is half real estate, a quarter (6%) cash, a quarter (6%) bonds). We were up 29%. When I include savings our net worth rose 40%. Whopping. A little scary.

I feel bad for all of my friends who are scared to invest in stocks and how needlessly left behind they got this year - and for the past 5 years. I learned a lot about steadiness from reading this site several years ago. I dont come by as often, but I'm practicing what I learned and making some good progress.

 

[RunningBum]

I only noticed very few. Most people's returns seems to correspond pretty closely to their equity allocation as given.

There are a couple of posts which seem like they they might have included additions to the portfolio in their annual return.

There are also a few dirty rotten market timers and/or individual stock pickers. It's very believable that some of them would do 30-40% or better. I think we even had some who did far worse and owned up to it. Too often you have the Vegas syndrome. Everyone brags about their winnings, and few mention the losing trips.

 

[Darrenb5]

24.9% - 2013 was a great year
Stocks and index funds: 90%
Bond funds: 8%
Cash: 2%

 

[brewer12345]

There are also a few dirty rotten market timers and/or individual stock pickers. It's very believable that some of them would do 30-40% or better.

As I mentioned in my post, excess return for me was in security selection. I've been diversifying into funds, so its unlikely such will be repeated.

 

[HillCountry]

NW up 11% 2013.

Retirement accounts (401K, IRA, Roth) up 27%.
Rental down 9%.
House up 12%
Domain business up 11%
Cash up 9% (3 years' living expense in CD)

 

[HFWR]

12.49388640580982%, give or take...

 

[ikubak]

23.05%

80/20

 

[MooreBonds]

86% equities, 14% fixed income

2013 total portfolio return ~13.8%.

Not too bummed, since my 2012 return was about 16%, about 35% of my portfolio is in international (heavy on EM), and my overall portfolio yield is just over 4%, with a tilt towards dividends.

 

[MRG]

Megacorp's 401k money 65/35 equity/bonds did 27.98%. One hot equity fund, did the heavy lifting. Still waiting on Fido's update, that should be about 9%(?). What a great year! My first year of retirement, I know that's not the normal, just enjoying.

MRG

 

[tulak]

86% equities, 14% fixed income

2013 total portfolio return ~13.8%.

Not too bummed, since my 2012 return was about 16%, about 35% of my portfolio is in international (heavy on EM), and my overall portfolio yield is just over 4%, with a tilt towards dividends.

Your post resonates with me. My return was slightly better, but also less than others because of Intl./EM/Reits. I've spent a lot of the time over the last week thinking about my allocation. I guess that's what you do when you're outperformed by another benchmark. Especially with those taking less risk, or more specifically, less equity exposure.

I enjoyed a comment that I read over at bogleheads: "My bold prediction for 2014: unlike the period from 2000 to 2008, threads touting a TSM approach will outnumber threads suggesting a slice and dice approach ten to one."

 

[gerntz]

33.98% overall aggregate return for the taxable and retirement accounts. I've always been 100% invested in equities since I started working 28 years ago. I'm beginning to think about diversifying into fixed income investments (or at least reduce my overweighting in consumer cyclicals) since I will be turning 51 years old in 2014. The last couple of years have been fabulous from an investing perspective.

Great results.

I think you'd be smart at taking some of these winnings off the table at your advancing age. Unlikely to come close to that run up again anytime soon & we're probably at higher than average risk of drops after this rise, but jmo. I'd suggest 20-25% anyway into bonds and/or alternatives.

With your cyclicals overweighting, I take your not an indexer/passive investor.

 

[KMyer]

Great results.

I think you'd be smart at taking some of these winnings off the table at your advancing age. Unlikely to come close to that run up again anytime soon & we're probably at higher than average risk of drops after this rise, but jmo. I'd suggest 20-25% anyway into bonds and/or alternatives.

With your cyclicals overweighting, I take your not an indexer/passive investor.

Thanks for your advice.

I'm mostly an indexer in my 401(k) plan.

I buy and hold individual stocks in the taxable accounts, harvesting some of the losses I incur to offset capital gain income allocated to me from some closely-held partnerships I partially own. I contribute some of the appreciated investments to charity if I want to realize some of the appreciation on the "winners". I only turn over around 5% of my investments in a normal year.

I'm thinking about doing what you suggest since the stock market has been doing so well for so long. It may be time to do the more prudent and conservative thing. I get older every day

 

[2035]

Four funds:

401(k)
FFTHX: 18.19%
FBALX: 18.24%
PTTDX: -1.23%

Roth
PRNHX: 44.68%

I forgot to include home equity. I bought a short sale for $300k...and it's conservatively at $360. So home, 20%.

 

[Act2]

Roth IRA 36.4%
457(like a 401k) 33.6%
A good year indeed.