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Thread: Post Your Total Annualized Rate of Return

  1. #13

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    Default Re: Post Your Total Annualized Rate of Return

    I was looking for something simpler. If I invested $10 and I now have $20, wouldn't that be a $10 profit or 100%. And if I divide that by 5 years I have an average of 20% earnings per year? Is that over simplified or is it correct?

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  3. #14

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    Default Re: Post Your Total Annualized Rate of Return

    Ok. I took the difference between my lifetime contribution and my ending balance and divided that by my lifetime contribution. I got 82.68%. If I divide that percent by 5 years (time in tsp) that comes out to an average of 16.5% a year. Does my computation jive?

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  5. #15

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    Smile Re: Post Your Total Annualized Rate of Return

    To All,

    I love throwing monkey wrenches. This might be one: I don't think the TSP paperwork includes the match in 'Your Contributions'. Should we really be including the match as growth. Can someone shed light by doing some math...

    JP, the market (the S&P500) has almost tripled since March 2009. It was at $666 on something like March 9th, 2009. It was at $909 on December 31, 2008. It ended 2013 at $1,848. Putting those numbers in the spreadsheet ends up with BirchTrees C Fund:

    Ending Balance: $1,848
    Total Contributions: $909 - I'm guessing the starting balance is kinda like a onetime contribution
    Number of Years: 5

    Gain: 103.30%
    Annualized Return: 29.48%

    So, no, me not think the calculations are quite right. This is hard to do. Much like the CAGR. I'm thinking the problem has to do with compounding. Getting real numbers is very difficult. In fact, Tom provides a grand service hooking us up with real annual numbers.

    By the way, for all us cocky trader types, the S&P500 (our much maligned C Fund) has an average annual return of 18.41% over the past five years. That computation is just the average of annual growth rates. I don't know if that is legit. I think the number of folks documented in the AutoTracker that can claim to have beaten the S&P500 from 2009 through 2013 can be counted on one hand. Oddly enough, you will need two hands if you incorporate 2008 - some folks don't lose as much as the S&P500 when it dives. So, something like <1% of the folks beat the market (but something has to be said for smoothing out the curves while still attaining good returns). And - Amoeba, I'm talking to you - the S&P500 <sarcasm>cratered by +9.14% annually</sarcasm> from 2008 through 2013. Just sitting in the 'C Fund' and drowning your 2008 sorrows in a never ending whisky bottle would have been one of the best strategies documented in the AutoTracker.

    How is that for something to talk about
    Lookin' up at the 'G Fund'!!!

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  7. #16

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    Lightbulb Re: Post Your Total Annualized Rate of Return

    Here are two great calculators that seem valid:

    By looking at the discussion, you can see that attaining those numbers is very difficult - especially the CAGR. Cactus is doing us a great service with his CAGR computations - even though I cannot seem to get my version of Excel to do them right. Believe it or not, my wife 'helped' me get the horrible equation noted in the S&P500 CAGR discussion in a spreadsheet. The problem is that it doesn't seem readily transferable - and it is gross.
    Lookin' up at the 'G Fund'!!!

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  9. #17

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    Default Re: Post Your Total Annualized Rate of Return

    Quote Originally Posted by Boghie View Post
    To All,

    I love throwing monkey wrenches. This might be one: I don't think the TSP paperwork includes the match in 'Your Contributions'. Should we really be including the match as growth. Can someone shed light by doing some math...

    JP, the market (the S&P500) has almost tripled since March 2009. It was at $666 on something like March 9th, 2009. It was at $909 on December 31, 2008. It ended 2013 at $1,848. Putting those numbers in the spreadsheet ends up with BirchTrees C Fund:

    Ending Balance: $1,848
    Total Contributions: $909 - I'm guessing the starting balance is kinda like a onetime contribution
    Number of Years: 5

    Gain: 103.30%
    Annualized Return: 29.48%

    So, no, me not think the calculations are quite right. This is hard to do. Much like the CAGR. I'm thinking the problem has to do with compounding. Getting real numbers is very difficult. In fact, Tom provides a grand service hooking us up with real annual numbers.

    By the way, for all us cocky trader types, the S&P500 (our much maligned C Fund) has an average annual return of 18.41% over the past five years. That computation is just the average of annual growth rates. I don't know if that is legit. I think the number of folks documented in the AutoTracker that can claim to have beaten the S&P500 from 2009 through 2013 can be counted on one hand. Oddly enough, you will need two hands if you incorporate 2008 - some folks don't lose as much as the S&P500 when it dives. So, something like <1% of the folks beat the market (but something has to be said for smoothing out the curves while still attaining good returns). And - Amoeba, I'm talking to you - the S&P500 <sarcasm>cratered by +9.14% annually</sarcasm> from 2008 through 2013. Just sitting in the 'C Fund' and drowning your 2008 sorrows in a never ending whisky bottle would have been one of the best strategies documented in the AutoTracker.

    How is that for something to talk about
    I get 20.66% annualized. :-(

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  11. #18

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    Default Re: Post Your Total Annualized Rate of Return

    Probably close enough for your purposes. Take the 1 year rate of return from page 3 of your 2012-13 annual TSP statements, page 1 of previous statements, add it together and divide it by 5 and see what you get. There are so many ways to figure this. I kind of like the "difference between my lifetime contribution and my ending balance divided that by my lifetime contribution" method. Unless you want to find out what years were down and what you could have done different. And discount the matching contributions.

    I contributed A. My balance is now B. My employer contributed C (or C&D if you want to show automatic and matching) but that's how the game works. Is my balance increasing?

    If you get too wrapped up in this it can be discouraging. If I had been keeping track of my balance v my contributions minus employer contributions in my first year, 1998, I would have seen that I actually lost money two months during that year. I probably would have put it all in G and let it go at that point.

    FWIW using your method my number is 5.88% @ 16 years. Not great. Every year was not 2013.

    I see that while I was writing this Boghie has made a couple of posts. The starting balance was the first 1% matching contribution for that pay period. Again that question about "Should we really be including the match as growth".

    Do you want to look at your bottom line, see where you made mistakes or brag about what a great investor you are?

    In 2008 my gain was either -.23% or -.35% depending on how you figure it. In 2002 it was either -.49% or -55%. Either way my balance was higher at the end of both years. Due to of course personal contributions and employer contributions.

    PO


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  13. #19

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    Default Re: Post Your Total Annualized Rate of Return

    PO. I included the matching as part of the total contribution and not part of growth. I also don't care when the market was up or down. Not for what I was trying to figure out at the moment. I was just trying the get the average for all years combined. I can see where "double" doesn't cut it as you add more years to the computation. Good lord knows I'm not a good investor lol. I get by on luck. Gotta stay on my toes now.

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  15. #20

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    Default Re: Post Your Total Annualized Rate of Return

    You have done very good based on the figures you posted. As long as you figured out what you wanted to figure out the rest of this doesn't matter. My figures could be higher except for a few down years. I do not worry about them since I cannot change them. I do not claim to be a good investor and luck plays a part. Just tryin to explain what some of these people are talking about and how simple or complicated you can make it. Good luck with your TSP and I hope there are not too many 2008s in your future.

    PO

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  17. #21

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    Default Re: Post Your Total Annualized Rate of Return

    I got hired Sep 2008 so I was not invested yet. Thank God or I probably would be in the G Fund now.
    Thank you for taking the time to explain and for your words of encouragement.
    Judy

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  19. #22

    Default Re: Post Your Total Annualized Rate of Return

    Wow, this thread really took off this weekend. Must have been a slow one.

    jpcavin, using the values ($40,000 - $20,000) / $20,000 = 100% / 5 years = 20% / year is an average return assuming the $20,000 was deposited in your TSP account when you started working and you contributed nothing since. That's what I did at first when I saw the numbers but it's not realistic. That's why I set up the spreadsheet to assume the total contributions were evenly divided over every pay period. It's a more realistic approximation and gives you a better return, 28.78% instead of 20% for this example. A still better approximation is to assume a steadily increasing contribution like the calculator on the TSP site lets you do but then the computations get even more complicated.

    In your case, with only 5 years service, you probably still have your annual returns for all five years. The most accurate value is just to compute an average or annualized return from those numbers. For old timers like me who no longer have records of the early years, we have to use approximations.

    Boghie, that's a good point. I don't know if the Agency Matching is included in our Lifetime TSP Contributions, or not, but comparing this years statement to last years should tell us. A bigger question is should it be? If it is included, nothing changes. If I made X% I made X% regardless how much I put in there. If the matching is not included and I contribute 5% then I make a 100% return every payday just from the matching. This get's complicated fast, but then I'm just trying to come up with a better approximation for those of us without records from the early years. Hopefully this was a first step.

    You are right that we don't necessarily want to start the clock when we started working for the government. When I started I had to wait six months before I was allowed to particiapte in TSP. In your case, I wouldn't start until you started contributing. A really complicated issue would be breaks in service or people who only work part of the year (seasonal). You can't use the year you started because you aren't contributing for the entire time. You can't use your service comp date because you are earning gains on the balance when you aren't working. What do you do? I don't know. It's all an approximation so I gues you can compute it both ways and chose a value inbeween.

    Your example with the S&P500 values don't work because there are no contributions. Essencially what you did was buy a share of S&P500 for $666 and about 5 years later it was worth $1848. That comes out to a gain of about 177% and an annualized return of 22.6%.
    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%

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  21. #23

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    Default Re: Post Your Total Annualized Rate of Return

    Deleted my post. Didn't make sense.

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  23. #24

    Default Re: Post Your Total Annualized Rate of Return

    Kind of hard to say for me. I've only been in for one full year. Not sure how we're supposed to weight this but I guess you could say my annualized return is somewhere around 14%, mainly because I didn't change out of G until a year had passed. Shame on me. Shame on me.

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