Your TOTAL % return so far this year and last year.

[kcowan]

Did not include house. Did include cash and bonds.
5.37% YTD down from 10.59% YTD May

Last year 10.95%

 

[ladelfina]

sorry Spanky.. I was confused too, and looked at your figures without realizing they made no sense with your bottom line..

retire@40.. uhmmm.. do you account for all your repair expenses in that figure? Do you count opportunity value of home equity vs. a MMF? Or do you use a monthly rental value for similar property as an inherent "dividend"?? Since people usually buy the homes they do for reasons other than the concrete investment growth/income that they get from stocks/bonds.. I'm not sure that it's a reasonable comparison in this context (performance vs. the market). If it's just for personal enlightenment, by all means, knock yourself out!

MyDream.. as you can see we DON't always know what one another is talking about! (but we try..). The original question was phrased in a bad way and asked for a number few people would bother to compute if they had to do it by hand: what percentage over your initial investments have you gained from a certain date (1/1/05) until now (10/17/06); most people, when and if they look at such a number, tend to think of it on a calendar year basis.

If I start on 1/1/05 with $100k and end on 12/31/05 with $108k, then my Total Return is 8% for the year. The trick is to make sure that any dividends, withdrawals, re-investments, etc. are duly accounted for. If your stock/fund/bond/whatever market value is $108k on New Year's Eve, but you have received $2k of interest or dividends over the course of the year and these have gone to your cash account, then your Total Return for that holding is not 8%, but 10%. Does that make sense?

Just take it one step at a time and you'll get there.. I know sometimes it seems like drinking from the proverbial fire hydrant... (for me, too).

 

[My Dream]

sorry Spanky.. I was confused too, and looked at your figures without realizing they made no sense with your bottom line..

retire@40.. uhmmm.. do you account for all your repair expenses in that figure? Do you count opportunity value of home equity vs. a MMF? Or do you use a monthly rental value for similar property as an inherent "dividend"?? Since people usually buy the homes they do for reasons other than the concrete investment growth/income that they get from stocks/bonds.. I'm not sure that it's a reasonable comparison in this context (performance vs. the market). If it's just for personal enlightenment, by all means, knock yourself out!

MyDream.. as you can see we DON't always know what one another is talking about! (but we try..). The original question was phrased in a bad way and asked for a number few people would bother to compute if they had to do it by hand: what percentage over your initial investments have you gained from a certain date (1/1/05) until now (10/17/06); most people, when and if they look at such a number, tend to think of it on a calendar year basis.

If I start on 1/1/05 with $100k and end on 12/31/05 with $108k, then my Total Return is 8% for the year. The trick is to make sure that any dividends, withdrawals, re-investments, etc. are duly accounted for. If your stock/fund/bond/whatever market value is $108k on New Year's Eve, but you have received $2k of interest or dividends over the course of the year and these have gone to your cash account, then your Total Return for that holding is not 8%, but 10%. Does that make sense?
Just take it one step at a time and you'll get there.. I know sometimes it seems like drinking from the proverbial fire hydrant... (for me, too).

That makes total sense, I understand numbers, but I'm finding that there are so many new words, terms I've never heard before, I believe I know the difference between stocks, mutual funds and to a certain point bonds, but there are so many other terms out there that when lumped together in a conversation go quickly over my head. I know it's going to take time, but earlier in the week, my DW picked up a new bottle of Aspirin which contains 500 pills. That should hopefully last me till the end of the year.

Thanks ladelfina.

 

[REWahoo]

After reading this post again, I need to go get some aspirins and lay down. This is so fricken confusing, and I'm so jealous that you all understand what the heck you're talking about. My compliment to you saps.

Hey, who are you calling a sap?

MD, put the bottle down and step away from the aspirin. I know you think you’re drinking from a fire hydrant, but take it from someone who knows… it doesn’t have to be that way.

Yes, there are endless of discussions of complex investing strategies on the forum. There are also a group of us (maybe even a majority?) who don’t care to know the finer points and esoteric details of shorting pork bellies or buying puts on beaver pelts. Most of us have no interest in all that complexity or risk. A handful of low expense mutual funds and a comfortable mattress are all I need to sleep soundly every night.

My advice is to relax a little regarding your currrent location on the investment learning curve, select a few conservative funds (psssst…Wellesley) and enjoy life a little….oh yeah, and don’t move to Texas.

 

[FinanceDude]

A handful of low expense mutual funds and a comfortable mattress are all I need to sleep soundly every night.

Hey........where's the fun in that?

I'll take my ING Russia fund anyday...............

 

[justin]

total return 1/1/05 - 10/16/06: 18.5%

2005 ROR: 7.20%
2006 (to 10/16/06) ROR: 10.55%

Annualized return: 9.93%

Quarterly returns:
2005 Q1: -0.82%
2005 Q2: -1.98%
2005 Q3: 5.93%
2005 Q4: 4.10%
2006 Q1: 5.56%
2006 Q2: -1.42%
2006 Q3: 3.03%
2006 Q4 (through 10/16/06): 3.11%

These results include paying huge sales charges in 2005 on some load funds (before I wised up : )
Mostly (90-95%) stocks. Results are good enough for me.


[edit] I ran the results if I omit the sales charges - AMAZING!
total return 1/1/05 - 10/16/06: 22.5%

2005 ROR: 10.79%
2006 (to 10/16/06) ROR: 10.55%

Annualized return: 11.96%

If I had only gone with no load funds earlier I could have added a couple of % to my results.

 

[My Dream]

Forgive me for highjacking this thread, but if I may ask a question?

Does the 4% rule assume that you will be withdrawing 4% from you're investments each year and if you do average let's say 10% each year, you leave the 6% in each year to allow for inflation and just let your pile grow?

 

[REWahoo]

Does the 4% rule assume that you will be withdrawing 4% from you're investments each year and if you do average let's say 10% each year, you leave the 6% in each year to allow for inflation and just let your pile grow?

Yes, because your investment returns will fluctuate and you will have negative growth in some years. Since you want to continue to withdraw 4% anually (inflation adjusted), you will need to "bank" the good years or face the possibility of exhausting your portfolio and living on cat food.

 

[Nords]

Hey, Modhatter, I'd recommend going to the top of this thread, clicking the "Edit Poll" link, and adjusting the options for all the feedback you're getting.

Even with measuring with genetalia size there are problems.

Well, that's why we have to do it so often.

After reading this post again, I need to go get some aspirins and lay down. This is so fricken confusing, and I'm so jealous that you all understand what the heck you're talking about. My compliment to you saps.

This poll and many of the comments are a good example of overcomplification.

When the data stops flying around, someone will point out that overall returns are irrelevant unless they're compared to the individual investor's situation & risk tolerance. In other words it's not what you have, it's how you're using it. (See the above genitalia reference.)

Forgive me for highjacking this thread, but if I may ask a question?
Does the 4% rule assume that you will be withdrawing 4% from you're investments each year and if you do average let's say 10% each year, you leave the 6% in each year to allow for inflation and just let your pile grow?

Yes.

If you start the year with a retirement portfolio of $100K and withdraw 4% on 1 January, you're off somewhere spending $4000 while your portfolio has shrunk to $96K. If it compounds by 10% then on 31 December it's worth $105,600. Of course inflation has also gone up that year, probably by about 3%, so technically your portfolio has only compounded 7% to $102,720 in terms of the 1 January dollars. (You now possess $105,600 "real dollars" that are only worth an inflation-adjusted $102,720.) Either way you're gonna take out 4% on the next day and let the rest ride, because some year that portfolio is going to "compound" in negative returns while inflation will keep chipping away at whatever's left over. And remember that we have to take out enough from that portfolio to pay our taxes, too...

 

[donheff]

Forgive me for highjacking this thread, but if I may ask a question?

Does the 4% rule assume that you will be withdrawing 4% from you're investments each year and if you do average let's say 10% each year, you leave the 6% in each year to allow for inflation and just let your pile grow?

Yes, because your investment returns will fluctuate and you will have negative growth in some years. Since you want to continue to withdraw 4% anually (inflation adjusted), you will need to "bank" the good years or face the possibility of exhausting your portfolio and living on cat food.

My Dream: Because of the way you phrased your question I suspect you may be assuming that we are talking about 4% of each year's portfolio but that is not the most common approach. The standard is to withdraw 4% of the *starting* portfolio and adjust that amount up for inflation each year. So, if the starting portfolio was $100K and inflation was 3% you would take out $4k in year 1. In year two, $4K plus 3% of $4k, and so on. If your portfolio fell 20% the year after your ERd (dropping to $80k) you would still take out $4K+3% of $4K -- NOT $3.2K + inflation. Of course that is theoretically. If the market actually dropped 20% in year one most prudent ERs would stain their pants and then forego the inflation adjustment

 

[Running_Man]

I am not ret retired so this is easier for me.

2006 to date +7.08%
2005 6.81


I am presently invested 75% fixed income 20% individual stocks (2 total which do change from time time) 5% S&P 500. Over the past 2 years my stock portion has not exceeded 30% nor fallen below 20%.

 

[modhatter]

OK, OK, I'm back. Wow. I knew this would not be easy. As I see it there are two ways to compute. #1 Simply add 2005 % increase to current 2006 % increase to date. Or...#2 Add both together and divide by two. I know this is not a full year, but it is the same for all. As far as reinvested dividends, like one poster said. It doesn't matter, if you reinvested them or not they should still be counted in your ending numbers for the year.

I know there is risk ratios, beta and all that good stuff, but I was trying to keep it simple. I was not counting your personal residence in the equation. Only that income that you have invested for some sort of yield. Where I did draw a distinction was in the percentage in stocks vers other such as bonds, reits, CD's etc. Someone, who still has a high yeild (comparitivly speaking) and has 60% in bonds, reits and CD's, we would like to hear from. Although Reits have had a wonderful run. That's why I asked for a breakdown of your investment catagories.

There are some impressive yields for these times I see, and I would like to hear more from these people. I will go back over the posts now and pick some of you out OK.

 

[modhatter]

Marthjak107: You seem to have the highest rate of return at this point. I noted in a previous post that you favor managed funds as opposed to index funds. Care to share how you make your selection of managed funds? Do you follow any particular guidlines or newsletters.

Spanky: You have done well also in a 60/40 split, and only one to give asked breakdown. You sure had faith in the international market. (24.72%) Good for you. Takes some courage. Do you do mostly individual stocks, indexes or managed funds?

Ladelfina: Your numbers are impressive too. You say mostly equities, but I don't know percentage. You also say you understand the idea of index investing...but maybe I'll just have to get hit by a Mack truck before making the switch. So what are you in? Individual stocks?

Anyway thanks all for posting: Hope to get some more information from above.

 

[audreyh1]

And remember that we have to take out enough from that portfolio to pay our taxes, too...

Those taxes better come out of that 4%, otherwise your real withdrawal rate is quite a bit higher than 4% and your portfolio won't have as good chance to survive.

Audrey

 

[JustCurious]

A word of caution is called for here. It is dangerous to look at very good performance over a relatively short period of time in order to determine the optimum asset allocation. What works over a given period of time may not work so well in the future, and the best thing to do is invest in a broadly diversified portfolio consistent with your desired asset allocation.

Let me give an example: If you were to conduct this same poll at the end of 1999, someone who was fully invested in emerging markets might boast a one year return of 89 percent! (eg PBEFX) And, you might conclude that emerging markets is the way to go and put all of your money there, only to lose 34 percent of your nest egg in 2000. The point is that you certainly can get great short term performance by taking on a lot of risk which may not be a good idea in the long run.

By the way, I am aware that the same fund has returned 25 percent on average over the last 5 years, but I wouldn't want to be holding it right now due to the tremendous risk involved. Be careful and stay diversified.

 

[CyclingInvestor]

2005 24%
2006 19%

All individual stocks, blue chips. Returns helped by having
a high allocation to REITs in 2005 and part of 2006.

Time horizon : age 48, retirement date Oct 17,2006

 

[retire@40]

...do you account for all your repair expenses in that figure? Do you count opportunity value of home equity vs. a MMF? Or do you use a monthly rental value for similar property as an inherent "dividend"?? Since people usually buy the homes they do for reasons other than the concrete investment growth/income that they get from stocks/bonds.. I'm not sure that it's a reasonable comparison in this context (performance vs. the market). If it's just for personal enlightenment, by all means, knock yourself out!...

I gave a simple formula without factoring in all the possbile variables that could affect the total return.

You would obviously subtract any costs associated with your home in the formula as you would factor in income if you were to rent out portions of it.

I don't factor in my home when I determine my YTD ROI since I don't plan on using my home as a cash flow asset. I consider it a sunk cost for the time being since I have no plans to rent it out, sell it, or get a reverse mortgage.

 

[sailor]

Time horizon : age 48, retirement date Oct 17,2006

Hey- conga rats - I even looked at you latest posts to see if I misssed an official notice.
So, what do you do whole day?

 

[CyclingInvestor]

Hey- conga rats - I even looked at you latest posts to see if I misssed an official notice.
So, what do you do whole day?

Today I worked on cleaning up the back yard (including sawing big boards into
little boards to fit into the trash cans), working on FSA paperwork from my spending
spree last night when I found out that FSA money had to be spent by your termination
data, not the end of the year, and planning my first small vacation - a weekend wine
tasting in Mendocino.

 

[HFWR]

Based on input from my 401k provider, my total return was/is as follows:

4/1/2002-12/31/2002: -17.5%
2003: 14.7
2004: 7.4
2005: 10.8
YTD: 11.0

The allocation has drifted around quite a bit, but currently is:

 

[Spanky]

Spanky: You have done well also in a 60/40 split, and only one to give asked breakdown. You sure had faith in the international market. (24.72%) Good for you. Takes some courage. Do you do mostly individual stocks, indexes or managed funds?

I have two stocks. The rest is a mixture of index and managed funds (I say it is about 50/50). You are right the return from international funds - it's risky.

 

[bpp]

2005: 19.9% Net, 26.4% Annualized
2006: 1.1% Net, 1.2% Annualized

Current actual holdings (not targets, which are somewhat different):

75/25 stocks/bonds
Stocks: 35/35/30 Japan/US/Elsewhere
Bonds: 36/38/26 Japan/US/Elsewhere

Base currency: yen

Edited to add:
Holdings generally in form of ETFs or index funds, except for bonds (individual issues) and Japanese equities (individual stocks). Individual stocks and bonds are all managed passively.

Also, last year had some commodities, REITs and J-REITs of which I have since divested for tax efficiency reasons (especially important in light of new tax laws). Still holding some EGLRX, but not sure for how much longer. (Tax efficiency not too bad, but expense ratio could be lower, and now that I have given up an explicit allocation to real estate it is kind of homeless in the asset allocation.)

Time horizon: A couple of decades to retirement, with college expenses just before that.

 

[My Dream]

Thanks REWahoo!, Nords and donheff , I appreciate the explanation.

 

[Nords]

Thanks REWahoo!, Nords and donheff , I appreciate the explanation.

You're welcome, but check your PMs for the rest of the story...

 

[ladelfina]

40.84% US stocks (of which about 25% funds/etfs; the rest individual stocks)
36.85% Int'l. stocks (of which about 12% funds; the rest individual stocks)
2.03% Reits
12.25% Gov't. Bonds (TLT and TIPS)
1.35% Int'l Bonds (GIM and FAX)
6.7% Cash (CD's and M Mkt.)
Real Estate (rentals etc.) - house paid for..not included in returns
MLP -don't know what that is
Canadian Royalty Trusts - none


yeehaw! Cycling Investor has us all beat hands down..
Congratulations on your ER!