Wild Ride! Followed by Boring Returns. 22 Years of Portfolio Data.

Wild Ride! Followed by Boring Returns. 22 Years of Portfolio Data.

There is a lot of stock and bond market and personal history in the blue and gray graph below. From 1995 to 2003 my late husband and I created a 100% stock portfolio. We thought we were diversified with hundreds of tech companies in our tech sector stock funds. When it crashed we felt like…

Monkey eyes wide open

 

Were we wrong! Then, something happened in 2004–the returns leveled off and stay within reasonable expectations most of the way through 2016.

Nothing sophisticated, clever or lucky. We revamped our holdings with a plain, and boring, but with a good ole-fashion accurate diversification among the core asset classes (Large, Mid and Small Cap companies), international stock market exposure, both domestic and international bonds and little bit of cash. Throw in the crucial stock/bond split 30% stocks/70% bonds with saving a bundle of money (13 basis points or .13%), managing my portfolio without an expensive financial adviser, and there you have it.

1995-2016-image-of-returns


























The returns from 2003-2016 are worth repeating:
2003 26.5% (The high return is a result of the 100% stock allocation)
2004 15.7% (Started to diversify)
2005 4.8%  (Completed our diversification with a stock/bond allocation of 30/70). 
2006 14.3%
2007 5.2%
2008 -11.9%
2009 13.9%
2010 10.6%
2011 2.5%
2012 10.0%
2013 6.9%
2014 6.0%
2015 FLAT
2016 5.9%

Since the 2008 crash when my portfolio only lost 11.9% (millions of investors lost up to 50% by comparison), but worse still, they stayed out of the market and missed out on the gains from 2009 through 2016.

With the exception of losing Dan in 2015, and addressing my grief in 2016, with regards to my portfolio performance since 2003 my response is to feel like this with my late doggie Sammi (She died a couple of weeks after this picture was taken):

kiplinger_steve_schullo

Also since 2009, I have traveled to Peru, Africa twice, Argentina, Chile, Mexico, Cuba, NY City for five broadway shows, and RVing around the country. All paid for by saving a bundle on never needing a financial adviser and low costs with portfolio returns from Vanguard.

The bottom line experience regarding return expectations, build into your plan by having reasonable expectations that are within the stock and bond market averages. There is nothing wrong with earning averages. Throughout the stock and bond market return history, there is enough of a return to keep up with the inflation rate. Meeting or exceeding the inflation rate should be your primary investing goal. I have reached my goal most, but not all, of the years because of a portfolio that feels boring or sleepy like this:

Boring
and not so exciting that when it crashes you feel like this:

YIKES!!!!!!!!!!!

What I have learned and experienced first hand is that BORING is GOOD for your investing experience, and for your returns. Ignore the short-term media nonsense, and the financial product sales professionals, and enjoy the stillness and silence of your DIY (do-it-yourself) broad-based, low-cost plan.

 

BORING2!

 

 

 

 

 

 

 

 

 

 

 

 

 

Have the best of fortunes 2017 everybody,

Steve

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