Personal Rate of Return Useless?

[tompalm]

Vanguard has the lowest cost in the industry. Fidelity offers the most funds with lowest fees to pick from. At the end of your investing, the most important part is the rate of return you achieved over the years. The only thing more important is not taking a big loss like the market took in 2008. There is program I use to follow which funds to use and when to change them. It will tell you when to move to cash and when to buy back in. It is all based on technical analysis, computer driven and back tested for proven results. The link is below. If you want more info, send me a pm.

This is not timing the market, but it looks at momentum of sectors to see which sector has the best momentum during the last few months and it will tell you to switch to the mutual fund or sector that is doing the best. Money market and bonds are a sector, so in 2008, it sent emails to move to cash. The market was already down 10-15 percent by the time you got an email, but at least you didn't have to ride it all the way down. In 2009, emails were sent to buy back in.

http://www.sumgrowth.com/default.aspx

 

[VacationForever]

You do need to think about whether you are better off just having your funds managed by wealth management company. I pay less than 1% commission on my portfolio and the gains average 7% per year for the past 7-8 years, invested at moderate risk level. It takes the stress out of management of your money and gets rid of the tendency to buy high sell low.

 

[Chrispee]

You all are making me feel young and reckless! Am I the only Tugger aggressively invested in self-directed stocks for retirement?

 

[PigsDad]

You all are making me feel young and reckless! Am I the only Tugger aggressively invested in self-directed stocks for retirement?

While I may not be quite as aggressive as you, my individual retirement accounts (401k, IRAs) are close to 100% stock equities. Mostly in stock funds, but probably 15% individual stocks. I'm 49 (not sure if you consider that "young" or not). But at my age, I shouldn't need to draw on any of these accounts for another 12-15 years.

My thought is that I have plenty of other assets to balance out the stock equities in those accounts to make for a decently balanced total portfolio. Assets such as the equity in our almost-paid-for house, some company pensions from my early working career (before they stopped contributing to them), and (eventually) my Social Security benefits. With those three being fairly stable, I figure I can be more aggressive in my 401k/IRAs.

Kurt

 

[geekette]

You all are making me feel young and reckless! Am I the only Tugger aggressively invested in self-directed stocks for retirement?

You are not the only one. I began div paying stocks 25 years ago and 95% of what I have is in stocks, not funds of stocks. I own about 75 companies, a few are spinoffs that I've kept.

I do not consider it reckless but if that's the label, I'll own it as I'm not taking my foot off the pedal. I'm 50, hoping to retire in 10 years with no plans to sell any companies but wouldn't mind a slight downturn to pick up some more bargains as I finish my Roth contribution for the year.

I have no pension coming, the dividends are to replace my paycheck. I am on target for that to occur in 10 years, even without putting new money to work. I know there are no guarantees. Working 15 years instead is acceptable contingency.

 

[Ironwood]

You all are making me feel young and reckless! Am I the only Tugger aggressively invested in self-directed stocks for retirement?

No, you are not! I'm retired and manage my retirement funds and other family. We are not yet fully invested, but will be if I see signs of a Santa Claus rally this year. The holdings are well diversified stocks ETF's, and fixed and floating income as appropriate. Equities range from Alphabet (Google) at $731 to a small tech company trading at 16 cents I've recently increased our weighting in oil and to a lesser extent gas. I manage things on a daily basis, typically in the morning. My expenses are of course very low.

 

[Chrispee]

Phew, now I feel a little better. I'm lucky enough to have a pension plan at work and a little real estate equity, so I switched over to self-directed online trading of stocks for my registered retirement investments. It's fun (and pretty scary) to be the one picking the stocks rather than paying a manager or fund fee.

 

[WinniWoman]

mpum,
I think your anxiety about your finances is causing you to churn your accounts sufficiently to seriously whack your personal rate of return. I would pay less attention to that arbitrary number than the deployment of assets. You are invested in pretty much everything so step back and draw your pie charts and determine what each holding does for you and going forward it will be easier to decide if you should keep investment A or if investment B is more suitable to your goals for that investment type. Could be that you are overdiversified and complicating things unnecessarily.

Moving in and out as the market changes can put you further behind than ahead, but, everyone's mileage varies. Best I can tell you is to firm it up and then don't touch it for a while and see how each does and redraw those pie charts to see that you are, indeed, on course.

The only other thing I might recommend is to check on 401k "stable value" or the like. If there is any guaranteed return investment, you might deploy some forward contributions to some certainty that can help you sleep well at night. Even 2-4% guaranteed beats current inflation tho not necessarily personal rate of inflation.

You're doing great, imo.

Thanks. yes, I know about the stable value funds. My 401K does not offer one, but my husband's entire 401k is in one, plus 5% company stock.

Yeah- I basically don't touch the account now. Just that some things I have no control over. I have to take the minimum distribution each year and there are a couple of funds that automatically liquidate at a certain date. But I do reinvest the money.

 

[WinniWoman]

Vanguard has the lowest cost in the industry. Fidelity offers the most funds with lowest fees to pick from. At the end of your investing, the most important part is the rate of return you achieved over the years. The only thing more important is not taking a big loss like the market took in 2008. There is program I use to follow which funds to use and when to change them. It will tell you when to move to cash and when to buy back in. It is all based on technical analysis, computer driven and back tested for proven results. The link is below. If you want more info, send me a pm.

This is not timing the market, but it looks at momentum of sectors to see which sector has the best momentum during the last few months and it will tell you to switch to the mutual fund or sector that is doing the best. Money market and bonds are a sector, so in 2008, it sent emails to move to cash. The market was already down 10-15 percent by the time you got an email, but at least you didn't have to ride it all the way down. In 2009, emails were sent to buy back in.

http://www.sumgrowth.com/default.aspx

Thanks. I use T Rowe Price. Their funds are good and fees low on most. I do have that link for sumgrowth bookmarked. I sometimes go on ZACKS and check their buy, hold and sell positions on a few of my funds, but I end up holding because I do not want to screw up like in 2001 and 2008.

 

[WinniWoman]

You do need to think about whether you are better off just having your funds managed by wealth management company. I pay less than 1% commission on my portfolio and the gains average 7% per year for the past 7-8 years, invested at moderate risk level. It takes the stress out of management of your money and gets rid of the tendency to buy high sell low.

Well, like I mentioned I will be looking for a fee only certified financial planner that I can trust that will just give us suggestions upon looking at our portfolio and help us going forward with retirement. Someone who is an expert on Social Security issues also. Hopefully this person will also a CPA. Plus, I need an estate atty to draw up documents, like revocable living trusts and so on.

 

[WinniWoman]

Did you check the time period used for the rate of return they are showing you? My 401k is with Fidelity, and by default the time period is the last 12 months. So right now, my personal rate of return looks quite low since this has not been a great year for the stock market.

Just a thought.

Kurt

You're right. I have to check that. It might be just for this year. Still seems so low, though, since a good portion of it is in a short term bond fund.

 

[Talent312]

I've tracked my annual rates of return since 2003:
The worst year was 2008 (-27%). The best was 2009 (+21%).
But this Y-T-D, it's only 1.5%, so my 7.5% average will get hit.

A 7% average over 12 years is not too shabby, considering that:
As we've aged, I've steadily increased bonds+bond funds to 50%.

My takeaway: Stay the course in your overall plan & targets.
Resist letting any 12-month performance alter your strategy. But...
Watch how each investment compares to others of like kind/style.
---------------------------------------
I self-manage a modest portfolio of 4-IRA's (2 Roth, 2 Rollover).
They consist of a variety of MF's, ETF's and individual bonds.
I asked a planner what he does: Pick MF's. Heck, I can do that.
.

 

[tompalm]

Well, like I mentioned I will be looking for a fee only certified financial planner that I can trust that will just give us suggestions upon looking at our portfolio and help us going forward with retirement. Someone who is an expert on Social Security issues also. Hopefully this person will also a CPA. Plus, I need an estate atty to draw up documents, like revocable living trusts and so on.

You should go to Charles Schwab. If they don't have an office close to you, call their 800 number. The CPA and trust issue might be better with someone that lives locally in your area that you can go to. I recommend you see a tax specialist for your CPA needs and a Trust Attorney for setting up a trust. Each person will provide professional advice in their area. One person that does everything above might be ok, but probably not the best. Schwab can probably help with that.

Schwab has managed accounts using Windhaven and Thomas Partners. Both are very good if you don't mind riding out the next recession. I think Windhaven dropped about 35 percent instead of 50 percent in 2008 and claimed they were back to even in three years while the index took longer.

Over the last 40 years, I have tried most of the big brokerage firms. Schwab is by far the best. Last year we moved everything we own to Schwab except for a Variable Annuity that Fidelity has and that has done very well.

 

[artringwald]

Performing well in last 8 years has been very easy. . Look at what your performance would have been from 2002 to 2009 doing same thing

Sent from my SAMSUNG-SM-N910A using Tapatalk

I started before the crash in 2008, so I was selling bond funds to buy more stock funds. It was pretty scary at the time, but it worked out well when stocks came back. Kind of like the Grandma in Parenthood, "I like roller coasters".

https://www.youtube.com/watch?v=w1h_hmdVJAc

 

[tompalm]

You all are making me feel young and reckless! Am I the only Tugger aggressively invested in self-directed stocks for retirement?

I swing trade about 30 percent of my funds in ultra ETFs. About two months ago I had it all in SDS, or shorting the market in ultra style, but sold out to early and should of held it longer. Bought SSO on the rebound but again sold it to soon. ROM is looking good now with some other sector ETFs, like Discretionary and Health Care that I bought in the last two weeks. About 10 percent of my assets are dedicated to selling naked puts and holding JNJ, AAPL, CVX, and 10 other puts that I sold. I like to sell contracts one year out and sometimes longer. The return on margin is better than 40 percent when it works. Got put XLE a few months ago and now down about 10 percent on that but collecting dividends and holding it while it slowly grinds up.

In the long run, Sector Surfer strategies worked the best. It recommended Health Care that went up more than 100 percent over a three year period. It didn't matter if you held Janus or Fidelity funds or XLV, they all did great and I would have done better if I had just followed the advice of that computer program and had everything in that. Still learning and figuring it all out. It keeps me busy.

 

[WinniWoman]

You should go to Charles Schwab. If they don't have an office close to you, call their 800 number. The CPA and trust issue might be better with someone that lives locally in your area that you can go to. I recommend you see a tax specialist for your CPA needs and a Trust Attorney for setting up a trust. Each person will provide professional advice in their area. One person that does everything above might be ok, but probably not the best. Schwab can probably help with that.

Schwab has managed accounts using Windhaven and Thomas Partners. Both are very good if you don't mind riding out the next recession. I think Windhaven dropped about 35 percent instead of 50 percent in 2008 and claimed they were back to even in three years while the index took longer.

Over the last 40 years, I have tried most of the big brokerage firms. Schwab is by far the best. Last year we moved everything we own to Schwab except for a Variable Annuity that Fidelity has and that has done very well.

I am sure Schwab is a good firm, but I don't see a reason to leave T Rowe Price. That would just up my anxiety level and I do not want to touch my investments to that degree. I have a brokerage account there as well. I just researched some more and see that they actually have advisory planning services and I think that is the route I will go. Have to check into it further. I do like the idea of having a financial adviser who is also a CPA, though. Got a lot to think about.

As for the estate stuff- of course I need an atty for that. Sometimes there are estate attys who work in conjunction with financial advisors.

 

[WinniWoman]

I've been tracking my personal rates of return since 2003.
My worst year was 2008 (-27%) and my best was 2009 (+21%).
But this Y-T-D, it's only 1.5%, so my 7.5% average will get hit.

Still 7% over the last 12 years is not too shabby, considering that
since 2013, I've steadily increased bonds+bond funds to 50%.

My takeaway: Stay the course in your overall plan and targets.
Resist letting any 12-month performance alter your strategy. But...
Keep a watch on how an investment compares to others of like kind.

Thanks. Everyone has been very helpful.

 

[ronparise]

The best advice I ever got regarding investing (for growth) was to let your winners run, and cut your losses short. It seems to me the op is doing just the opposite when she takes her distributions from the funds that have done the best. (And when she re-balances her portfolio she takes from the winners and gives to the losers)

and two things I learned were; diversification if done well guarantees mediocre returns and risk = volitility



This may be an oversimplification, but there are only two reasons to invest; for growth or preservation of capital. It seems to me that the op is investing for preservation of capital, and disappointed with the flat returns, . That's as big a mistake as investing for growth and being upset when things go up and down

I would bet that the accounts rate of return doesnt consider the distributions. I mean the computer doesnt know whether account got smaller because one of the funds lost money, or because money was taken out.

 

[WinniWoman]

The best advice I ever got regarding investing (for growth) was to let your winners run, and cut your losses short. It seems to me the op is doing just the opposite when she takes her distributions from the funds that have done the best. (And when she re-balances her portfolio she takes from the winners and gives to the losers)

and two things I learned were; diversification if done well guarantees mediocre returns and risk = volitility



This may be an oversimplification, but there are only two reasons to invest; for growth or preservation of capital. It seems to me that the op is investing for preservation of capital, and disappointed with the flat returns, . That's as big a mistake as investing for growth and being upset when things go up and down

I would bet that the accounts rate of return doesnt consider the distributions. I mean the computer doesnt know whether account got smaller because one of the funds lost money, or because money was taken out.

But, Ron, it doesn't matter (for the computer) what the reason is for why the funds got smaller- whether it was a required distribution or a loss or me just selling some shares- the fact is it will factor into the return either way by the computer.

I have always read that if you have some winners you might want to take your some of your profits, especially since my funds are in tax-free retirement accounts, including the inherited IRA. When I have to take the required minimum distribution, I take $ from funds that have done very well. I do not put those withdrawals into losers. I just re-invest them in other mutual funds as determined by me- usually existing ones I have.

I hesitate to take required distributions or sell off funds that aren't doing that great at the time because then I will have an absolute loss. And I learned the hard way in 2001 and 2008 that if I sell low, then I most certainly lose. So I try to hold.

I just had two bond funds liquidate- that is the way they are structured. I had no choice in the matter. They were on my taxable account. They were losers, but I at least got my principle back. I can write off the losses. And, I took the money and put it into 2 CD's for now 'cause I don't know what else to do with it.

I only re balance if necessary and in that case I look at the whole picture of what I have. Haven't had to re balance in quite a while.

My goal is BOTH preservation of capital and some growth in case I live into my 80's.

 

[am1]

I hesitate to take required distributions or sell off funds that aren't doing that great at the time because then I will have an absolute loss. And I learned the hard way in 2001 and 2008 that if I sell low, then I most certainly lose. So I try to hold.

A loss on paper or a loss from selling are both losses. Something as liquid as stocks make that very clear as the price changes all the time. Day to day may not matter that much but stocks can easily be a half or lower of what they use to be and never recover. When would you accept that loss? When the company goes bankrupt?

 

[ronparise]

So we agree the rate of return numbers are meaningless

I didn't mean to give advice beyond "set your goals and objectives and invest to achieve them"

I do think it's a mistake not to sell your losers, but that's me. If it helps you sleep at night " which should be one of your goals, by all means do it

Fill disclosure: As a former commissioned stock broker I didn't much care what you want to do, I got paid on everything, from bank CDs to commodities. The important thing was to develop a strategy that would achieve the clients goals

And you are right. Blanket advice to sell losers is not good advice, rather ask the question ; Would i buy this today. If yes that's one thing if not, quite another

I did always like to let my winners run, until I sensed the run was over. I would take profits on the way back down.

 

[bogey21]

I have a friend (age 67) who had his entire $2 - $3 million portfolio tied up in stocks. Many times we discussed the risk he was taking but he couldn't stomach swapping some of his stock for bonds. Finally I suggested real estate. Over the last couple of years he has bought 4 condos and leases them out. He walks a lot and all of them are walking distance from his house. He tells me his annual rate of return on the condos is in the 10% to 15% range and that they have increased in value over 25% (he lives in North Las Vegas) since he bought them. The moral of the story is that there are a lot of alternative out there and that you just have to find the ones you are comfortable with.

George

 

[SMHarman]

I am sure Schwab is a good firm, but I don't see a reason to leave T Rowe Price. That would just up my anxiety level and I do not want to touch my investments to that degree. I have a brokerage account there as well. I just researched some more and see that they actually have advisory planning services and I think that is the route I will go. Have to check into it further. I do like the idea of having a financial adviser who is also a CPA, though. Got a lot to think about.

As for the estate stuff- of course I need an atty for that. Sometimes there are estate attys who work in conjunction with financial advisors.

Your CPA that does your taxes is not going to be a great FA. Those are CFAs.

Having these two and a estate attorney for wills, POA, health care proxy etc are critical.

Each will need a data set and background info. Each can help you pull that totether but overall you need to be in the middle defining goals and setting out the intentions for your estate.

 

[Elan]

I have a friend (age 67) who had his entire $2 - $3 million portfolio tied up in stocks. Many times we discussed the risk he was taking but he couldn't stomach swapping some of his stock for bonds. Finally I suggested real estate. Over the last couple of years he has bought 4 condos and leases them out. He walks a lot and all of them are walking distance from his house. He tells me his annual rate of return on the condos is in the 10% to 15% range and that they have increased in value over 25% (he lives in North Las Vegas) since he bought them. The moral of the story is that there are a lot of alternative out there and that you just have to find the ones you are comfortable with.

George

Agree completely. Diversify. I have about 1/3 of my assets in personal property, 1/3 in the market long term and 1/3 in cash and market short term. Want to buy more real estate here in the next year or two.

 

[WinniWoman]

So we agree the rate of return numbers are meaningless

I didn't mean to give advice beyond "set your goals and objectives and invest to achieve them"

I do think it's a mistake not to sell your losers, but that's me. If it helps you sleep at night " which should be one of your goals, by all means do it

Fill disclosure: As a former commissioned stock broker I didn't much care what you want to do, I got paid on everything, from bank CDs to commodities. The important thing was to develop a strategy that would achieve the clients goals

And you are right. Blanket advice to sell losers is not good advice, rather ask the question ; Would i buy this today. If yes that's one thing if not, quite another

I did always like to let my winners run, until I sensed the run was over. I would take profits on the way back down.

Yes. We agree. In terms of my winners, I do not sell all the shares. Just some- enough for what I am required to take for the distribution. Otherwise, I leave them be.