Your average ROI in the last 15 years

[jerryo]

Gosh. Do folks really keep such accurate records over 15 years? I have no idea what my ROI was over that entire period. I do loosely calculate my ROI from year to year and certainly for specific investments. But, more generally, I just keep track of my net worth and whether it's heading in the right direction. I've never really tried to figure out what my ROI is over time net of savings, 401k contributions, a small inheritance, etc.

That said, my net worth has grown from something like $500-600,000 in 1991 to $2.5-$3.0 million in 2006, so I guess I don't need to worry.

[wabmester]

How about this as a heuristic for those who have no idea:

1) Guess at your net worth in 1991. Use that as "current principal."

2) Guess at your average annual investment (mine was usually a paltry 15% of income, for example)

3) Play with a compound interest calculator, using a fixed annual contribution while varying the interest rate until you get to your current net worth (future value).

Use that interest rate as your ROI.

calculator

[grumpy]

I have no idea what my ROI was. I do know that over the period 1993 thru 2005 my net worth increased at an average rate of 19.75%. That includes all savings plus investment returns.

Grumpy

[scrinch]

Okay, based on the Fidelity calculator and the wab swag method, ROI is 11-12% while networth increased 18-19% annually.

[Nords]

Quote:

Originally Posted by jerryo Gosh.* Do folks really keep such accurate records over 15 years?

We bought our first copy of Quicken in 1992 and shortly afterward started paying our bills by Checkfree. Every few months I'd add some more data and eventually got our investments recorded all the way back to late 1985.

Quicken was primarily a budgeting tool back then. We still enter all our transactions-- old habits die hard and it sets a good example for the kid-- but today we use it mostly as history. ("When's the last time we replaced this #$%^ing faucet?!?") But you can push a few menu buttons and generate an IRR report, too.

With over 100,000 transactions in a database there's bound to be some problems. I just realized that spouse's conventional IRA shows the correct total number of a fund's shares but one transaction has a number that's incorrect. Even on the summary screen you can see that the numbers don't add up. Unfortunately Quicken's "sell" transaction depends on the individual entries, not the summary, so to sell off all her shares in the account I'm going to have to fiddle with the data to make it come out right. The IRA custodian, of course, had no problems doing the transaction...

[Sam]

Quote:

Originally Posted by jerryo Gosh.* Do folks really keep such accurate records over 15 years?* I have no idea what my ROI was over that entire period.* I do loosely calculate my* ROI from year to year and certainly for specific investments.*

I keep accurate ROI records for one main reason:* To determine a reasonably appropriate withdrawal rate in my retirement.

Sam

[dwk]

Don't have 15 years of data, but I do have 10.

Have recovered from a move to southern California in the late 1980. Move to Mission Viejo in 1989, when real estate was at it peak (at least for that time period). Within a year of moving out there, the defense department pulled out, boeing closed a major plant in LA, we had the earthquakes and the fires -- so within 12 months -- housing prices drop 25% - 30%. We had neighbors who actual packed up and walked away from their mortgages.

Moved back to the east in 1991. Our investments including contributions have gained 12.5% since 1997. Our net worth grew at 31% annual from just under 50K to 820K, mainly fueled by the real estate market for our house and condo.

Need a few more good years prior to and into retirement. Our best investment, our children -- the result, four cute grandkids.

dwk

[CyclingInvestor]

Quote:

Originally Posted by jerryo Gosh. Do folks really keep such accurate records over 15 years?

I have records back to when I was 9 (38 years worth), when I got my first paper
route. I wanted to be an accountant when I was a kid. Nowadays I keep everything
(stock trades, balances, deposits/withdraws, taxes, etc) in Excel, so calculating return
over any period is trivial.

[PJ03]

I had about $14K in the bank in 1990, today my net would be around $2.7 ish mil.
can someone do the math ?

[tryan]

Only have 10 years of data. NW increased 19%/year on on portfolio consisting of 75-90% real estate. Yeah, my 401k contributions are in there too; but 10-13k contributions were just a drop in the bucket.

[Sam]

Thank you all for participating in the poll.* We now have 34 votes.

Observations:* I'm a little disappointed in myself for not being able to foresee a significant portion of investors achieving more than 16%.* I should have had a few more fields, [16 - 18%], [18 - 20%] and [20% or more].* Oh well, hindsight is always 20/20.* I'm somewhat surprised by the high percentage of [I have no idea].

Anyway, keep voting.

Sam

[azanon]

Unless these people have some really nice financial software with everything entered into it, including all accounts and amounts for the full 15 years you specified or however long it was, they're pulling these numbers out of their ass.* *

The matematics is very complicated, since a program has to weight the returns based on amounts invested each and every day as well as dealing with buying and selling of partial shares, etc.* *In short, you ain't gonna do it in longhand.

My ass someone made 16% in a portfolio over 15+ years, including 2000-2002. I have some snake oil for sale too.

Azanon

[scrinch]

The poll results so far probably have something to say about who is on the board here.

1-Those few with ROI less than 8% most likely are the conservative "got it gonna keep it" CD/bond crowd.

2-The plurality with 8-12% ROI are likely the book-reading diversified asset allocation crowd.

3-Those with a long-term ROI greater than 16% are either dice rollers, prescient, or bad at math.

4-Those who don't know are either new to this money thing or #1 above and embarrassed to admit it.

[azanon]

#4 is going to be 95% or more of these people. I'd like to see a quicken printout of 15 years with every financial data piece of information entered for someone claiming to actually know the exact figure.

That is, unless they dumped everything they saved in one savings account, lol, then the math might be doable.

Azanon

[Sam]

Quote:

Originally Posted by scrinch 3-Those with a long-term ROI greater than 16% are either dice rollers, prescient, or bad at math. 4-Those who don't know are either new to this money thing or #1 above and embarrassed to admit it.* *

scrinch,

You have an "interesting" way of interpreting the poll results * *On number 4, in case anyone is embarrassed, don't be. *I am sure your vote is anonymous.

Sam

[scrinch]

No offense intended. Just trying to guess some generalizations about the results.

A 16% overall portfolio return for a couple of years is great. For 15 years it is remarkable. I'd be interested in hearing how it's done without including high risk or bad math.

I'm one of the "don't knows" because I haven't been keeping track of new contributions to the portfolio.

[azanon]

Just so i'm clear too, i'm not accusing anyone of intentionally lying. I bet the person that said that likely believes that what he/she averaged. I also believe this person made an error in this estimation too, but... back on point, i'm not accusing them of intentionally lying.

I agree, it would be very remarkable, especially given that it would include the 2000-2002 timeframe. If only it were true too.

Azanon

[CyclingInvestor]

Quote:

Originally Posted by Azanon Unless these people have some really nice financial software with everything entered into it, including all accounts and amounts for the full 15 years you specified or however long it was, they're pulling these numbers out of their ass. The matematics is very complicated, since a program has to weight the returns based on amounts invested each and every day as well as dealing with buying and selling of partial shares, etc. In short, you ain't gonna do it in longhand. My ass someone made 16% in a portfolio over 15+ years, including 2000-2002. I have some snake oil for sale too. Azanon

If all numbers are already in an Excel spreadsheet (as mine are), then setting up
the equations to compute the return over any period is simple (for a programmer
who plays with Excel alot).

A single decision can result in a 16%+ return over those 15 years, even though
implementing that decision took many steps - going 100% into REITs from late
1998 to Dec 2005. While most here would probably consider that risky, I consider
top-quality companies paying 7-10% dividends and growing at 10% with real
estate backing their prices (as KIM,GGP, VNO,WRE,etc were in '99) to be less risky
than a group of 40 P/E, 0-2% dividend payers (as many regular blue chippers like
WMT, MSFT, JNJ were at the time).

[azanon]

Quote:

A single decision can result in a 16%+ return over those 15 years, even though implementing that decision took many steps - going 100% into REITs from late 1998 to Dec 2005. While most here would probably consider that risky, I consider top-quality companies paying 7-10% dividends and growing at 10% with real estate backing their prices (as KIM,GGP, VNO,WRE,etc were in '99) to be less risky than a group of 40 P/E, 0-2% dividend payers (as many regular blue chippers like WMT, MSFT, JNJ were at the time).

Sure, i understand that.* Plunking down 10,000 In Dell computer in 1991 would have done the trick too.* *Lets clarify then.... are we decussing whats possible or what actually happened?* * *Ok, i can accept, maybe 1 or 2 active participates were this lucky.* *Maybe... but i'd still like to see it since i'm a skeptic by nature.

........
If you have multiple accounts that were bought and sold over those years, the math isnt going to be easy.* *Sure, programs can do it... i use qucken, you use excel, but one would need something like that and the 15 years worth of data with everything in there.* That's going to be 20% of the people here, tops.* *

I started actively investing in 96', so this doesnt apply to me.* * I havent ever attempted to run an average annual return over that long a period of time with quicken...* *Of course it would have to include many accounts long since closed. hmm, wonder if it could handle that.* *I'll try it this evening.

[CyclingInvestor]

Quote:

Originally Posted by Azanon Sure, i understand that. Plunking down 10,000 In Dell computer in 1991 would have done the trick too. Lets clarify then.... are we decussing whats possible or what actually happened? Ok, i can accept, maybe 1 or 2 active participates were this lucky. Maybe... but i'd still like to see it since i'm a skeptic by nature. ........ If you have multiple accounts that were bought and sold over those years, the math isnt going to be easy. Sure, programs can do it... i use qucken, you use excel, but one would need something like that and the 15 years worth of data with everything in there. That's going to be 20% of the people here, tops.

This was my actual path to FI. If it had been theoretical I would have moved into
REITs Dec 99 and out Feb 06.

I actually have kept a 'mutual fund'-like measure of my performance actively
the whole time, reflecting my early accountant leanings, although I only compute
it at the end of each quarter, so computing the return over any period is easy.

My numbers also only represents Sep 93 to Mar 06, (12.5 years), instead of 15+,
which represents when I got back into individual stocks, so I fall short here.
I realize I was lucky to recognize the opportunity when it arose, and stick with
it, especially thru 1999 when I was down 2% and my friends were up 25-100%.
I have not let my past numbers color my future expectations, however. When I
retire in a few years I plan to live exclusively on the dividends (about 3.6% at
current prices).