Your 2013 Investment Return

[RunningBum]

Quote:

Originally Posted by WestLake 40% in the Vanguard 401K. I'm 90% stocks in S&P 500, Life Strategy Moderate and Growth, PRIMECAP, Windsor II, Selected Value. Just starting contributing more to International Value and Growth funds. I am astounded! Also worried I should go more conservative now. But what Age 55 now but won't be withdrawing until 60 or later.

You must've been really heavy in Selected Value since that's the only one that did better than 40% (and not by much), and the Life Strategy one was in the teens. Are you counting contributions as investment return?

[gerntz]

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.

[mickeyd]

Vanguard says that my 60/40 AA pulled in 16.46% in 2013.

[BigNick]

With 50% in stocks I only made about 9% on the year. Why? Because I calculate the overall value in EUR and over the year, it strengthened 8% against USD, 30% on JPY and 4% on GBP --- and 70% of my stocks are outside the Eurozone. It's nice when I visit the US to find that almost everything seems quite cheap, but I would not object to a 6-7% drop in the Euro...

[RunningBum]

Quote:

Originally Posted by gerntz 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 don't consider my house an investment, nor my collectibles since they are just small hobbies. The question wasn't the return on all assets. Unrealized gains is no issue with stocks and mutual funds since they had a closing market value on 12/31. 99+% of my investments are with Vanguard so I just used what they tell me my rate was and I assume they are properly accounting for withdrawals. VG gave me one decimal point so that's what I reported.

[NW-Bound]

Quote:

Originally Posted by gerntz 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]

Quote:

Originally Posted by gerntz 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]

Quote:

Originally Posted by gerntz 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]

Quote:

Originally Posted by gerntz 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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by RunningBum 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]

Quote:

Originally Posted by audreyh1 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]

Quote:

Originally Posted by RunningBum 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.