Boghie, I'm intrigued by your allocation and risk/return. Is there a formula you use to come up with that?
Sarcasm - Oh, the horror
Anyway, as Einstein may have said - "Compound interest is the most powerful force in the universe!!!"
Doing absolutely nuthin' has resulted in a more risky allocation. Fisiks has put some risk and thus more potential growth in this old geezers normal allocation:
- G: 18%
- F: 19%
- C: 29%
- S: 24%
- I: 10%
Return/Risk:
8% Expected Growth - Probably still accurate, I'll check when I get some time
7% Expected Risk - Probably actually 8%, or getting close to 8%
Lookin' up at the 'G Fund'!!!
Boghie, I'm intrigued by your allocation and risk/return. Is there a formula you use to come up with that?
50% S, 50% C 06 Mar, was 100% G; 80% S 20% C COB 08 Jan '24; 100% G COB 14 Nov; was 100% C COB 31 Oct (Boo!); was 100% G COB 12 Oct; was 50% C, 50% S COB 22 Jun; Life is good!
Allocations as of COB Dec 28 : 100% S. | Retirement Date:Dec 2025
Past Returns: 2020 31.85%,2019 27.97%,2018 -3.36%,2017 13.10%, 2016 -1.79%, 5Yr Avg 12.61%
50% S, 50% C 06 Mar, was 100% G; 80% S 20% C COB 08 Jan '24; 100% G COB 14 Nov; was 100% C COB 31 Oct (Boo!); was 100% G COB 12 Oct; was 50% C, 50% S COB 22 Jun; Life is good!
Whipsaw,
For the quick and dirty I do use the Quicken Investment Allocation summary (just a tab on the Investments page - yuk, yuk). For that I have to shove our 'G Fund' into 'Cash' and our 'S Fund' into 'Small Cap'. That means that the numbers are not perfect, but they are quite good. Our 'G Fund' earns more interest than Cash, and the 'S Fund' includes ALL U.S. equities other than the S&P500. That means that the 'S Fund' is likely less risky than a true Small Cap fund. It also means that you can expect a 2%+ bump to whatever your 'Cash' allocation would normally provide. Good all around.
I am trying to track on the Portfolio Analysis site I used to use for more advanced research. I think that is what Cactus is talking about. That site allowed me to crosswalk our funds much closer to reality. After realizing that Cactus remembers me yammering about it here I realize I can just search through my thread to find it. I victimized myself with 'The Great Computer Smoke Check of 2019' recently. That has put a crimp in my life. There wasn't much of importance that I did not backup - but Web Favorites was one of them :-(.
In the end, the Quicken numbers are pretty accurate. The site I had is very accurate. And, with the market being so strong it really does not matter
Lookin' up at the 'G Fund'!!!
Amoeba reminded me that my retirement fund crashed on Friday. It crashed by 0.33%
I think I lost some money. Oh well, time to take a nap
Lookin' up at the 'G Fund'!!!
I tracked on that website I use for tighter growth/risk numbers: Portfolio Visualizer
In that site, the end numbers are entered in the 'Backtest Portfolio Asset Class Allocation'.
This weekend I'll carefully review where each of our individual funds map to, but if my aging brain is correct:
- G: Short Term Treasury
- F: Total US Bond Market
- C: US Large Cap
- S: US Small Cap - the growth/risk numbers seem to correlate best with this
- I: International Developed, ex-US Market
Given those mappings my allocation of:
- G: 18%
- F: 19%
- C: 29%
- S: 24%
- I: 10%
Results in a Return/Risk:
- 8.50% Expected CAGR / IRR
- 9.68% Expected Risk
Please note, a CAGR/IRR is generally a point or two lower than an Average Return. That also changes the Expected Risk. I think these numbers are a little bit 'more real' than the ones Quicken provides if you know what a CAGR is...
As a reference, the S&P500 has a:
- 10.44% Expected CAGR / IRR
- 14.74% Expected Risk
Lookin' up at the 'G Fund'!!!
No, a CAGR (Compound Annual Growth Rate) or IRR (Internal Rate of Return) (same thing) are intended to address the addition of new money into the holdings for the term (1 year). It is not perfect, and we mess with it quite a bit when we change our allocation. It is, however, probably less gameable than an annual return. The MoneyChimp site has a nice short discussion of the benefit of looking at a CAGR vs an Average Annual Return:
Other areas of Quicken generate an IRR for your selected investments. I elected to manually input recent data rather than kludge all my old stuff in via backups so my long term IRR is no longer available. I might be able to get that info again or find the Average Annual Return from that site I mentioned.A problem with talking about average investment returns is that there is real ambiguity about what people mean by "average". For example, if you had an investment that went up 100% one year and then came down 50% the next, you certainly wouldn't say that you had an average return of 25% = (100% - 50%)/2, because your principal is back where it started: your real annualized gain is zero.
In this example, the 25% is the simple average, or "arithmetic mean". The zero percent that you really got is the "geometric mean", also called the "annualized return", or the CAGR for Compound Annual Growth Rate.
Volatile investments are frequently stated in terms of the simple average, rather than the CAGR that you actually get. (Bad news: the CAGR is smaller.)
Lookin' up at the 'G Fund'!!!
I'm in an absolute panic.
There is a bad flu in China.
And, the world now all dying.
Now is the time all should panic.
The above is a horrid haiku with a nice pyramid shape!!!
IFT Change to:
- G: 4% - because science tells me to!!!
- F: 21% - science tells me this is good, but I don't really think so
- C: 32% - because the corona virus is so scary I have to put more into the market
- S: 29% - because the corona virus is so scary I have to put more into the market
- I: 14% - because I am stooped
Expected Annual Return: 9% (6% after inflation)
Expected Annual Risk: 10%
Wut just happened
Lookin' up at the 'G Fund'!!!
You think this is a bottom already?
50% S, 50% C 06 Mar, was 100% G; 80% S 20% C COB 08 Jan '24; 100% G COB 14 Nov; was 100% C COB 31 Oct (Boo!); was 100% G COB 12 Oct; was 50% C, 50% S COB 22 Jun; Life is good!
"Treat your wife with honor, respect, and understanding as you live together so that you can pray effectively as husband and wife." 1 Peter 3:7
S&P500 (C Fund) (delayed) (Stockcharts.com Real-time) |
DWCPF (S Fund) (delayed) (Stockcharts.com Real-time) |
EFA (I Fund) (delayed) (Stockcharts.com Real-time) |
BND (F Fund) (delayed) (Stockcharts.com Real-time) |
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