What Kind of Returns Are You Getting?

[Amiriliano]

Hi all-

I allocate my 403b and IRAs investments into "life cycle" funds. Some are more aggressive (farther out to retirement), some less. My returns have been between 7-12% all time.

 

Is this low? What are people averaging here?

 

Thanks!

[Zaphod]

Its going to depend on your asset allocation and of course what you're comparing yourself with. If youre in some kind of tdf that is a mix of stocks and bonds than you cant be comparing yourself to an all stock portfolio. You have to find your AA mix and see the benchmark, and I bet you're hitting it. If that doesnt seem like enough its an asset allocation problem not a fund problem, unless of course you have crazy high fees, but that should also be baked into your assumptions.

[PhysicianOnFIRE]

That sounds great to me. What time frame is "all time"? Does that include 2000 or 2008?

Last year, my portfolio returned 11.5%, trailing the S&P 500 (with dividends reinvested) by about 0.5%. I have a 90% stock / 10% bond allocation. In general, I expect my returns to track fairly closely with the stock market, although I do hold 10% REIT, 10% bonds / cash, and 20% international stocks.

[Amiriliano]

Since 2009.

I only invest in Life Cycle funds because I am clueless. So I split the entire investment into mostly a fund that projects late retirement (I'm 44 years old). The rest in decreasing proportions in funds that range from 5 to 15 years away from age 65. So about 80 in more stock-heavy funds and 20% bond-heavy funds.

 

Not sure how smart this is...

[Zaphod]

Amiriliano wrote:

Since 2009.

I only invest in Life Cycle funds because I am clueless. So I split the entire investment into mostly a fund that projects late retirement (I’m 44 years old). The rest in decreasing proportions in funds that range from 5 to 15 years away from age 65. So about 80 in more stock-heavy funds and 20% bond-heavy funds.

 

Not sure how smart this is…

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Well that really understates your actual bond percentage in reality. I find all those target date funds are heavily weighted towards bonds. You should look up your actual split percentage. They also have high fees. If thats all I was offered I would just choose the farthest date one and rebalance into the next farther one every 5 years or so for about 10 years.

[Amiriliano]

OK - I'll check the fees and the breakdown.

[Crazyroadtodublin]

There is no magic here, returns and risk will be directly related.  Current YTD return 43.3%

[Amiriliano]

Wow. How?

[Crazyroadtodublin]

Leverage and concentration

[Zaphod]

Crazyroadtodublin wrote:

Leverage and concentration

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How are you getting PC to show your return? It never has mine correct, well maybe just because IBKR is difficult and it never knows how to assess options, etc...

I shy away from showing that kind of thing because its not for the average forum member, takes more time/interest than most have.

[PhysicianOnFIRE]

Crazyroadtodublin wrote:

Current YTD return 43.3%

Click to expand...

Dang!

[Crazyroadtodublin]

Click on portfolio then holdings , should come up

 

Crazy Run won't happen again ever

[Zaphod]

Crazyroadtodublin wrote:

Click on portfolio then holdings , should come up

 

Crazy Run won’t happen again ever

Click to expand...

Here is my play account for q1.

And in total disclosure I fat fingered a trade two weeks ago that put me into a trade on accident, and an order of magnitude larger than would have been preferable. Even though my actual trade for that week was 100% profitable and an excellent setup, as a result of that fat finger move and trying to get out of it I ended up with a sizable loss. Still a great year so far, but that sucked.

[DMFA]

Amiriliano wrote:

Since 2009.

I only invest in Life Cycle funds because I am clueless. So I split the entire investment into mostly a fund that projects late retirement (I’m 44 years old). The rest in decreasing proportions in funds that range from 5 to 15 years away from age 65. So about 80 in more stock-heavy funds and 20% bond-heavy funds.

 

Not sure how smart this is…

Click to expand...

Vanguard's 2035 TDF VTTHX is 47% US, 31% int'l, and 22% bonds/cash.  Returns are 16.3/6.7/10.9/5.2% at 1/3/5/10 years (by 365 days, not by calendar years) and was 8.26% in 2016.  Expenses are 0.15%.

The 2040 TDF VFORX is 52% US, 33% int'l, 15% bonds/cash; returns are 17.9/7.0/11.3/5.5% at 1/3/5/10 and was 8.73% in 2016.  Expenses are 0.16%.

So if you're 80/20 2040/2035, then you're about 51% US, 32.6% int'l, 16.4% bond.

Compare your returns to the S&P 500 (19.9/11.0/15.0/7.1%, 11.96% 2016) and the MSCI ACWI ex-US (20.1/1.35/7.32/1.25%, 4.50% 2016) and you'll see that they're pretty much what you'd expect them to be.  You can see that in 2016, portfolios more heavily weighted towards US small-cap value stocks (+26% in 2016, 14% above the S&P which is large-cap) killed it.  Those TDFs often have few small caps (75/18/7% large/med/small), and are fairly evenly weighted between growth and value, and as such didn't catch a lot of that upside.

You can get into slicing and dicing, but if you don't have the appetite for complexity, it's not particularly likely to be superior over the long run.

[Amiriliano]

Thank you! Super helpful.

 

Just opened a Schwabb robo-account for post tax investments what do you guys think of this mix? Retirement goal is in about 20-25 years.

Stocks Pending: Stocks Allocations (65%)
US Large Company Stocks - Fundamental	11%
US Large Company Stocks	9%
US Small Company Stocks - Fundamental	8%
International Developed Large Company Stocks - Fundamental	8%
International Developed Large Company Stocks	5%
International Emerging Market Stocks - Fundamental	5%
US Small Company Stocks	4%
International Developed Small Company Stocks - Fundamental	4%
International Developed Small Company Stocks	3%
International Emerging Market Stocks	3%
US Exchange-Traded REITs	3%
International Exchange-Traded REITs	2%

Fixed Income Pending: Fixed Income Allocations (21.5%)
US Corporate High Yield Bonds	8%
International Emerging Market Bonds	7%
Investment Grade Municipal Bonds	4%
International Developed Country Bonds	2.5%

Commodities Pending: Commodities Allocations (5%)
Gold and Other Precious Metals	5%

Cash Pending: Cash Allocations (8.5%)
Cash	8.5%