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View Poll Results: How did you do RELATIVE to S&P500?
5 or more % less than S&P 500 5 4.50%
3 to 4% less 10 9.01%
1 to 2% less 13 11.71%
Same as S&P 500 (11.7%) 17 15.32%
1 to 2% better than S&P 500 26 23.42%
3 to 5% better 23 20.72%
6 to 10% better 9 8.11%
11 to 20% better 6 5.41%
21% or more better 2 1.80%
Voters: 111. You may not vote on this poll

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Re: YTD 2006 investment
Old 11-30-2006, 09:00 AM   #41
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Re: YTD 2006 investment

Here's another example to think about in your calculation. Suppose you have $100 and invest January 2006. In the beginning of May 2006, you see things have gone up to $120, so you sell. You buy back in July 2006 and things go up another 10% leaving you with $132.

Your average ROI on your investments individually is 20% on the $100 and 10% on the $120. You could compute a weighted average ROI which gives you 14.5%, but your really got 32% ROI.

The "correct" approach means you use Quicken, MSMoney, the XIRR function in Excel, or other software like PFROI. These all take into buys, sells, reinvested dividends, and time. And even with these programs, we see there are issues with "annualized YTD" versus "current year".
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Re: YTD 2006 investment
Old 11-30-2006, 09:16 AM   #42
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Re: YTD 2006 investment

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Originally Posted by Sam
Thank you all for your vote. As expected, the majority does better than S&P 500. This is indeed the ER forum
We're all excellent drivers as well.

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Re: YTD 2006 investment
Old 11-30-2006, 09:27 AM   #43
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Re: YTD 2006 investment

Did you plan it, or is it just "one of those things" that it's a normal distribution (bell curve) at this time? :P
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Re: YTD 2006 investment
Old 11-30-2006, 09:35 AM   #44
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Re: YTD 2006 investment

Since Iíve already FIREíd, Iím watching all the gyrations on this thread about the Ďrightí way to calculate YTD returns with more than a little amusement. Rather than try to measure my returns with a micrometer and get a precise percentage (and be sure the rest of you arenít calculating your returns incorrectly, or heaven forbid, cheating ), I look at it this way: Our savings and IRAís have been the sole source of our income for the past 18 months, and after all withdrawals our total is up $100k from when I retired.
I donít care what % that represents, it works for me...

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Re: YTD 2006 investment
Old 11-30-2006, 09:43 AM   #45
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Re: YTD 2006 investment

Quote:
Originally Posted by REWahoo!
I look at it this way: Our savings and IRAís have been the sole source of our income for the past 18 months, and after all withdrawals our total is up $100k from when I retired.
I donít care what % that represents, it works for me...
I enjoy it. I look at these threads this way:

"Oh yeah? Yeah?!? Well-- well-- I'm up $100,125.73 this year!* So how about that, huh?!?"

*Accrual accounting method using a 360-day fiscal year, adjusting for CPI-U, not wage indexed, pre-paid bills at 85% marked-to market, including home equity but not the mortage, plus all the food in our pantry but not the zero-interest balance transfer credit-card money we've stashed in CDs. Because that would just be wrong.
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Re: YTD 2006 investment
Old 11-30-2006, 09:58 AM   #46
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Re: YTD 2006 investment

[quote=Nords ]
I enjoy it. I look at these threads this way:

"Oh yeah? Yeah?!? Well-- well-- I'm up $100,125.73 this year!* So how about that, huh?!?"

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Re: YTD 2006 investment
Old 11-30-2006, 10:05 AM   #47
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Re: YTD 2006 investment

Quote:
Originally Posted by Ron'Da
Did you plan it, or is it just "one of those things" that it's a normal distribution (bell curve) at this time? :P
No, I did not plan it, but I did expect to see that type of distribution, leaning on the positive side. I'm glad I covered all possible bases this time. When I was typing "21% or more better", I said to myself "yeah, right" But as always, there is at least one exeption to anything.

Quote:
Originally Posted by REWahoo!
Since Iíve already FIREíd, Iím watching all the gyrations on this thread about the Ďrightí way to calculate YTD returns with more than a little amusement. Rather than try to measure my returns with a micrometer and get a precise percentage (and be sure the rest of you arenít calculating your returns incorrectly, or heaven forbid, cheating )
I find it funny that some members keep insisting that others are incapable of figuring out their ROI. Funnier though, is their insistence that people are reporting higher percentage than actual. Makes me wonder why?
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Re: YTD 2006 investment
Old 11-30-2006, 10:27 AM   #48
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Re: YTD 2006 investment

Quote:
Originally Posted by Sam
I find it funny that some members keep insisting that others are incapable of figuring out their ROI. Funnier though, is their insistence that people are reporting higher percentage than actual. Makes me wonder why?
It really is a rather complicated calculation if you want to get an accurate result. I dollar cost average into my portfolio, which means at least 5 or 6 purchases a month. Not always a constant amount though. Then there are profit sharing matches and bonuses that are added at irregular intervals.

I use a method to calculate my rate of return which admittedly has errors but it is simple enough for me to implement without a huge amount of record keeping or data entry. For a given period: (End Bal - contributions during period)/Begin Bal - 1 = rate of return for period. I do it quarterly, so to get an annual return, I multiply (1+Q1%) * (1+Q2%) * (1+Q3%) * (1+Q4%). As the length of time period approaches zero, the error factor gets smaller.

Some folks use Money or Quicken, some use excel XIRR, some use proprietary software, some divide end bal by begin bal.

Some folks exclude the return from their money market/CD investments since those are "cash" and not "investments" according to their definition (and even though the cash/CD allocation may be 20% of their portfolio!). Some lump it in. Some may exclude 401k results. Some may have "special" accounts they exclude for whatever reason.

Some may report results in Canadian $, Japanese Yen, or Euros, not USD denominated.

I've already pointed out that the YTD results I see in the SP500 are different than what you have seen.

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Re: YTD 2006 investment
Old 11-30-2006, 10:36 AM   #49
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Re: YTD 2006 investment

Quote:
Originally Posted by justin
I've already pointed out that the YTD results I see in the SP500 are different than what you have seen.
Not really. It's the same number. Yours was one day earlier than mine. There was a BIG drop across the board just 2 or 3 days ago.
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Re: YTD 2006 investment
Old 11-30-2006, 10:37 AM   #50
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Re: YTD 2006 investment

Quote:
Originally Posted by LOL!
Here's another example to think about in your calculation. Suppose you have $100 and invest January 2006. In the beginning of May 2006, you see things have gone up to $120, so you sell. You buy back in July 2006 and things go up another 10% leaving you with $132.

Your average ROI on your investments individually is 20% on the $100 and 10% on the $120. You could compute a weighted average ROI which gives you 14.5%, but your really got 32% ROI.

The "correct" approach means you use Quicken, MSMoney, the XIRR function in Excel, or other software like PFROI. These all take into buys, sells, reinvested dividends, and time. And even with these programs, we see there are issues with "annualized YTD" versus "current year".
LOL,

Using the calculation I mentioned your example would give me a 34.27% return. To me that makes sense because overall you made $32 on an initial investment of $100 which would be 32% but you did a little better because you didn't deploy your capital in June. The calculation for me would be $32/(($100*(120/365))+($120*(184/365)))=34.27%

Granted this would produce absurd results if you invest $100 for one day and end with $101 and don't count what you do with your capital the other 364 days, but it works great for me because usually I have very little turnover and any short term investments are small enough not to skew the results. On individual stocks it isn't real meaningful, but it seems to work well for an entire portfolio. My biggest issue might be some small gaps in time between a sale and a new purchase. Even if I were selling 4% a year to fund living expenses, I don't think it would greatly skew the results to have 4% of my capital calculated based on a short year since the other 96% would still be deployed for 365 days during the year, more or less.

A fully comprehensive calcualtion would also work in the time my capital is deployed in bonds, the change in bond values, money market accounts, etc. I just do it for stocks because that's the vast majority of my portfolio and I already know how my cash & bonds are doing.

Like brewer said, I get horseshoes close and it works for me. The reason I mentioned it here is that having no real reference to work from it actually took me a while to realize that was a viable method of calculating returns for me so I thought it might help others here if they happen to be struggling with the same issue.
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Re: YTD 2006 investment
Old 11-30-2006, 10:40 AM   #51
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Re: YTD 2006 investment

With real estate trending down over the last year I am certainly making less than the SP'sgains.

On the bright side the 20% of my wad in the Fidelity Equity Income fund is beating the S&P by a little (per fidelity's web page).
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Re: YTD 2006 investment
Old 11-30-2006, 10:57 AM   #52
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Re: YTD 2006 investment

Quote:
Originally Posted by tryan
With real estate trending down over the last year I am certainly making less than the SP'sgains.
You got to be kidding! We only count Real Estate when it's going up. This year it don't count.
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Re: YTD 2006 investment
Old 11-30-2006, 11:00 AM   #53
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Re: YTD 2006 investment

Quote:
Originally Posted by dmpi
You got to be kidding! We only count Real Estate when it's going up. This year it don't count.
Sounds like the mantra for the S&P 500............ I wonder what the threads were like from 2000-2002 about the S&P..........or any other investment for that matter.............
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Re: YTD 2006 investment
Old 11-30-2006, 01:27 PM   #54
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Re: YTD 2006 investment

Quote:
Originally Posted by Sam
Not really. It's the same number. Yours was one day earlier than mine. There was a BIG drop across the board just 2 or 3 days ago.
I figured you had omitted dividends, since your number and mine were ~1.x percent different. The index itself doesn't include dividend payouts, which is why I looked at the results of a low expense SP 500 index fund (the returns of which do include dividends).
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Re: YTD 2006 investment
Old 11-30-2006, 01:56 PM   #55
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Re: YTD 2006 investment

I am up 14.3% for the year, mainly due to timely purchases thoughout the year. IMHO, when you are still working and adding funds to your portfolio it is much easier to beat the averages.

BTW, I have a 20% allocation to fixed income.
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Re: YTD 2006 investment
Old 11-30-2006, 02:57 PM   #56
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Re: YTD 2006 investment

After last nights close. ira 12.33% YTD stocks48% bonds 32% mm20% . 401k 12.15% YTD stocks51% bonds38% mm11% . taxable 19.88% YTD stocks77% bonds10% mm13%.
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Re: YTD 2006 investment
Old 11-30-2006, 03:15 PM   #57
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Re: YTD 2006 investment

For myself, there are several reasons for knowing one's legitimate ROI.

First, I want to compare my results to certain benchmarks. My personal benchmark is a particular 529 plan that I use that has domestc large-mid-small cap plus international funds.

Second, I do not want to "fool myself" into a false sense of confidence.

Third, by doing so, I have really convinced myself that it's the asset allocation and low fees that make the difference and not any judicious selection of stocks or market timing on my part.

I have seen folks write that they love their financial advisor because he made them 10% this year in their stock funds (and he was nice about it as well). As we have seen, 10% is not a good return for an all-stock portfolio this year.
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Re: YTD 2006 investment
Old 11-30-2006, 03:22 PM   #58
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Re: YTD 2006 investment

Quote:
Originally Posted by LOL!
I have seen folks write that they love their financial advisor because he made them 10% this year in their stock funds (and he was nice about it as well). As we have seen, 10% is not a good return for an all-stock portfolio this year.
I don't have a financial advisor. My YTD is 16.2%. My average ROI in the past 15 years is 11%. If those numbers are not "right" to you or for you, then don't believe them.
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Re: YTD 2006 investment
Old 11-30-2006, 03:24 PM   #59
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Re: YTD 2006 investment

Quote:
Originally Posted by retired02
After last nights close. ira 12.33% YTD stocks48% bonds 32% mm20% .
That's an excellent return for that asset mix R02! What was your equity portion invested in?
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Re: YTD 2006 investment
Old 11-30-2006, 03:25 PM   #60
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Re: YTD 2006 investment

Quote:
Originally Posted by Sam
I don't have a financial advisor. My YTD is 16.2%. My average ROI in the past 15 years is 11%. If those numbers are not "right" to you or for you, then don't believe them.
That's OK with me.
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