How are my Rate of Return in my Roth IRA?

[ducky911]

2007 - $1,000.

2008, 2009, 2010, 2011 and 2012 - $5,000 each year.

2013 - $0.

2014 - $500.

2015 - $1,500.

2016 - $2,000.

2017 and 2018 - $5,500 each year.

2019 and 2020 - $6,000 each year.

Thus far, I have contributed $1,000 toward my 2021 contributions.

that is $140,354.00
And you would have had to pay some taxes along the way that would lower that number. My gut says it should have been much higher than E jones....How risky have they been? maybe I made a math error?

 

[F.I.R.E User]

that is $140,354.00
And you would have had to pay some taxes along the way that would lower that number. My gut says it should have been much higher than E jones....How risky have they been? maybe I made a math error?

Equity and Growth funds.

 

[Whisper66]

that is $140,354.00
And you would have had to pay some taxes along the way that would lower that number. My gut says it should have been much higher than E jones....How risky have they been? maybe I made a math error?

@Ducky911 - I get S&P 500 yields $149,362, about 6% higher than the EJ fund. Screenshot attached.

 

[F.I.R.E User]

@Ducky911 - I get S&P 500 yields $149,362, about 6% higher than the EJ fund. Screenshot attached.

What if I did something like VTSAX only?

 

[SecondCor521]

2007 - $1,000.

2008, 2009, 2010, 2011 and 2012 - $5,000 each year.

2013 - $0.

2014 - $500.

2015 - $1,500.

2016 - $2,000.

2017 and 2018 - $5,500 each year.

2019 and 2020 - $6,000 each year.

Thus far, I have contributed $1,000 toward my 2021 contributions.

If I assume your $1,000 towards your 2021 contribution was made on 1/1/2021, assume you did the other contributions mid-year each year (July 1st), and assume your ending balance was as of 5/1/2021, then I get an XIRR of 13.06%.

If I use Yahoo adjusted closing prices for VTI for 7/1/2007 and 4/30/2021, I get an XIRR of 10.10%.

So if your numbers and my assumptions are accurate, you outperformed VTI during that time frame. This outperformance doesn't account for taxes or risk, which are harder to properly account for but probably puts you in the ballpark of VTI with somewhat more risk I would guess.

I note with interest that you haven't mentioned which funds you owned during this time frame, nor how much trading (aka churning) of your account EJ did.

 

[Whisper66]

What if I did something like VTSAX only?

If you go to www.portfoliovisualizer.com you can compare VTSAX (Total US Market) to VFIAX (S&P 500) over any time period you wish. They track each other very closely and there's very little difference between the two.

 

[Whisper66]

.....So if your numbers and my assumptions are accurate, you outperformed VTI during that time frame.......

@SecondCor521 - any idea why the results of the XIRR calculation would be so different than the method MRG suggested and numbers reported in my recent post?

 

[SecondCor521]

@SecondCor521 - any idea why the results of the XIRR calculation would be so different than the method MRG suggested and numbers reported in my recent post?

Either

(a) I messed up my XIRR calculations. This has happened before.

or, more likely,

(b) For my VTI XIRR calculation, I just looked up the starting value on 7/1/2007 and the ending value on 4/30/2021 (give or take a couple of days). This is not exactly apples to apples because that 10.10% number I came up with would mean putting in the full investment in 2007, not over the course of 14 years. The year-to-year variability in both the cash inflows by the OP into their investment and the annual rates of return of VTI probably account for the majority of the difference.

less likely,

(c) You're using S&P500 and I'm using VTI. They overlap about 80% or so but are not identical.

 

[Whisper66]

.....

(b) ...... that 10.10% number I came up with would mean putting in the full investment in 2007, not over the course of 14 years. The year-to-year variability in both the cash inflows by the OP into their investment and the annual rates of return of VTI probably account for the majority of the difference.
...........

Thanks. Running some quick numbers in MRGs link... it appears the "putting full investment in 2008" followed by the large market correction in 2008 makes a significant difference and may account for the delta we are seeing.

 

[OldShooter]

... My gut says it should have been much higher than E jones. ...

Yeah, me too. I would be astonished if Eddy produced those results for for a non-load class of shares. To see it with a big fat load skimmed off the OP's investments seems incredible.

@F.I.R.E User:

Was that account balance zero before you put in your first $$ in 2007?

Have any other funds been added to the account, like from a rollover?

Are your contribution amounts stated before the loads were deducted? -- IOW are you somehow paying the loads separately/outside those numbers?

 

[F.I.R.E User]

Yeah, me too. I would be astonished if Eddy produced those results for for a non-load class of shares. To see it with a big fat load skimmed off the OP's investments seems incredible.

@F.I.R.E User:

Was that account balance zero before you put in your first $$ in 2007?

Have any other funds been added to the account, like from a rollover?

Are your contribution amounts stated before the loads were deducted? -- IOW are you somehow paying the loads separately/outside those numbers?

All my funds are Class A. Starting front load was 5.75% but it’s lower now.
Account was $0 before 2007 because I started Roth IRA in 2007.
I did buy shares on similar funds on a non retirement account at EJ but we ended up transferring those funds to Roth IRA.

 

[OldShooter]

... I did buy shares on similar funds on a non retirement account at EJ but we ended up transferring those funds to Roth IRA.

Is the value of those shares included in the $140K? If so you will have to subtract that value from the total in order to calculate a rate of return on your subsequent contributions.

 

[F.I.R.E User]

Here are my funds that I am invested in at EJ with American Funds Class A.

AMCPX - $24,238.92.

ANCFX - $12,290.45.

AGTHX - $18,720.41.

AIVSX - $12,248.02.

ANEFX - $18,709.76.

ANWPX - $10,024.39.

SMCWX - $28,535.89.

AWSHX - $12,617.62

Why am I invested in so many funds?

 

[F.I.R.E User]

Is the value of those shares included in the $140K? If so you will have to subtract that value from the total in order to calculate a rate of return on your subsequent contributions.

What do you mean?

 

[SecondCor521]

Here are my funds that I am invested in at EJ with American Funds Class A.

AMCPX - $24,238.92.

ANCFX - $12,290.45.

AGTHX - $18,720.41.

AIVSX - $12,248.02.

ANEFX - $18,709.76.

ANWPX - $10,024.39.

SMCWX - $28,535.89.

AWSHX - $12,617.62

Why am I invested in so many funds?

You've probably delegated investment authority on your account to your advisor at the firm. If you have done so, and they are not a fiduciary, then they can do this. Even if they're a fiduciary, they might be able to do this.

That advisor will put you in multiple funds for several reasons:

1. It makes investing look hard, so you're less likely to take control back.

2. They also might be able to convince you to pay account management fees.

3. They can move your money around more frequently, resulting in higher fees (transaction fees, trading fees, front end loads) to them.

4. It gives the appearance that you are broadly diversified.

5. It makes it harder for you to benchmark your performance, which means they can hide their fees and underperformance from you.

Probably more, but those are the ones I can think of offhand.

 

[F.I.R.E User]

You've probably delegated investment authority on your account to your advisor at the firm. If you have done so, and they are not a fiduciary, then they can do this. Even if they're a fiduciary, they might be able to do this.

That advisor will put you in multiple funds for several reasons:

1. It makes investing look hard, so you're less likely to take control back.

2. They also might be able to convince you to pay account management fees.

3. They can move your money around more frequently, resulting in higher fees (transaction fees, trading fees, front end loads) to them.

4. It gives the appearance that you are broadly diversified.

5. It makes it harder for you to benchmark your performance, which means they can hide their fees and underperformance from you.

Probably more, but those are the ones I can think of offhand.

After all these years. I could have just used VTSAX and sit back/relax?

 

[SecondCor521]

After all these years. I could have just used VTSAX and sit back/relax?

That's what I was suggesting back in post #13 on this thread:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2599485

You probably would have had less stress, more money, and paid less in taxes too.

But I wouldn't beat yourself up. EJ does this to millions of people, and what's done is in the past. What can you do now is more important.

 

[F.I.R.E User]

That's what I was suggesting back in post #13 on this thread:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2599485

You probably would have had less stress, more money, and paid less in taxes too.

But I wouldn't beat yourself up. EJ does this to millions of people, and what's done is in the past. What can you do now is more important.

Someone else said I may have beaten the average S&P 500 market with EJ.

 

[SecondCor521]

Someone else said I may have beaten the average S&P 500 market with EJ.

That was me in post #30:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2600316

I retracted that claim and admitted I had messed up the math in post #33:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2600342

You very likely did not beat the S&P 500 over time, especially after taxes and risk are accounted for.

 

[F.I.R.E User]

That was me in post #30:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2600316

I retracted that claim and admitted I had messed up the math in post #33:

https://www.early-retirement.org/fo...return-in-my-roth-ira-109064.html#post2600342

You very likely did not beat the S&P 500 over time, especially after taxes and risk are accounted for.

EJ FA also manages my 401k. If I leave EJ I will be on my own to manage it.

 

[SecondCor521]

EJ FA also manages my 401k. If I leave EJ I will be on my own to manage it.

That's likely a false dichotomy. There are other asset managers out there with better reputations and lower fees than EJ.

https://en.wikipedia.org/wiki/False_dilemma

You could certainly move your Roth IRA. You probably can't move your 401(k), but it might be possible for another asset manager to advise you on your 401(k) even if EJ continues to hold the account and the assets.

 

[F.I.R.E User]

That's likely a false dichotomy. There are other asset managers out there with better reputations and lower fees than EJ.

https://en.wikipedia.org/wiki/False_dilemma

You could certainly move your Roth IRA. You probably can't move your 401(k), but it might be possible for another asset manager to advise you on your 401(k) even if EJ continues to hold the account and the assets.

My company offers Financial Engines at a fee to manage 401k. Use that?

 

[SecondCor521]

My company offers Financial Engines at a fee to manage 401k. Use that?

Up to you. I try very hard not to give advice. I don't want to be responsible, and I don't know your whole situation.

 

[F.I.R.E User]

Up to you. I try very hard not to give advice. I don't want to be responsible, and I don't know your whole situation.

You can always put a disclaimer if you want.

 

[F.I.R.E User]

There is also the Dave Ramsey investment calculator. It's fairly simplistic, but easy to use. Put in your starting investment and the average of how much you invested monthly, and then play with the annual return until you get your actual total. Then compare this annual return with the S&P 500 annual return over the same time period.

https://www.ramseysolutions.com/retirement/investment-calculator

S&P 500 says it has returned about 12% since 1928.

Should I put 10% to be a little conservative?