Year End Returns

This post isn’t meant to be an in depth analysis. I just wanted to provide some general thoughts from a novice investor’s view. I’ve been at this for 4 years now, and it has been enlightening, humbling and exciting. This board has been a treasure trove of information.

I use XIRR to calculate my returns as I add money regularly to my 401k account. My accounts consists of a 401k that makes up 58% of my portfolio. This account is about 50/50 mutual funds and equities (the most allowed by the account) My taxable account is 35%. And my IRA is 6%.

Using XIRR, my total returns for the year were 4.7%.

Excluding the IRA which is a small base, for the first time, my mutual funds gave the best return at 6.5%. My equities in the 401k returned a paltry 1.1%. The taxable account return was 3.2%.

Also, my current cash position is about 24%. That increased about 8% in November due to a good size cash infusion.

Am I unhappy with these results? Sure, I am. However, I continue learning a great deal. Since I began investing, my portfolio has increased a tremendous amount. Much of that has been due to savings, which I seemed to have forgotten was important prior to investing. So, I’m learning a great deal, enjoying myself and building a portfolio for retirement. I’ve become a better investor and will continue to do so.

Happy New Year everyone!



Hi A.J.

Much of that has been due to savings, which I seemed to have forgotten was important prior to investing.

This is a great point A.J. and, in my opinion, one that is underappreciated. I think my stock-picking skills have improved over time, thankfully, but I think the main things that got me where I am (I retired in my mid-50s) were (1) being a very diligent saver, and (2) focusing exclusively on equities. In the roughly two decades of my prime earning years, I rarely saved less than 35% of my salary, spread across 401(k)s (or the non-profit equivalent), IRAs, mutual funds, individual stock holdings. Sure, I could have afforded a bigger house or a nicer, newer car, but retiring early was a more important goal for me. My existence hasn’t been all about self-denial either… I have a nice wine collection and my wife and I enjoy the occasional fancy dining experience. I’ve got a very nice road bicycle (not “pro” quality, but only a step or two below) and my wife and I do some traveling (moreso in retirement). I’m blessed to have assets spread across a mix or IRAs and taxable accounts - it really gives me flexibility in retirement.

I don’t think anyone would describe me as wealthy. At best, I’m pushing the upper-end of middle-class, I figure. That said, early retirement is possible if that’s your goal. Save aggressively and keep learning how to improve your investment process. It worked for me!

Thanks and best wishes,
See my holdings here:
Peace on Earth


TMFDatabaseBob addressed the importance of saving before I got to it. If you are successfully in business you can generate a lot of wealth but if you are employed or even self-employed you must save to feather your retirement nest. Not to be negative but it is very difficult to beat the market except by being very skilled or very lucky. Professional retirement fund managers are having a hard time meeting their goals because they set their sights too high at around 7 to 8 percent per year. Just recently I saw some news that these fund managers were lowering their expectations (CALPERS?)

If 5% net is a reasonable return and you expect to spend $50K a year during retirement, you need a portfolio of around a million dollars and most of that has to come from savings. This is your portfolio, not your net worth. Add a home and a car or two and the other thing one has or needs and it all comes from what you save after your living expenses.

One has to beware the siren song of stock market riches. It’s possible but certainly is not a given.

Denny Schlesinger