No gain in 9 months of investment

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freshinvester
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No gain in 9 months of investment

Post by freshinvester »

Hello every one. I am new for investment and just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % . I have some money on my checking account and I was wondering if it is a good idea to continue investing in these 3 funds or add/change other fund/s? I know return in investment is a longterm thing, but I just want to make sure I am doing right to continue investing in these funds.

Thank you in advance for your feedback.
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retiredjg
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Re: No gain in 9 months of investment

Post by retiredjg »

Both Total Stock and Total International are at higher values than 9 months ago although the international fund was at a higher value before that.

When did you invest? Where are you invested? Is there an advisor? Did you pay transaction fees to buy?

Seems like maybe there's some loss to fees or something.
livesoft
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Re: No gain in 9 months of investment

Post by livesoft »

In 9 months, the Vanguard Target Retirement 2010 fund (has about 50% bonds) hasn't been negative since the beginning of November. Yes, the returns are weak, but they were almost 5% at one point which is quite respectable for such a short time period.

So are you calculating returns properly? If you go by the NAVs, then you would be missing out on reinvested dividends.
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Grt2bOutdoors
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Re: No gain in 9 months of investment

Post by Grt2bOutdoors »

No gains in 9 months? :oops: There must be something wrong? right?, well no not really. Your post didn't provide enough details, so let me ask some questions. Is a 50/50 asset allocation suitable for one who expects to see gains in 9 months based on your need, ability and willingness to accept risk? It seems your asset allocation is suitable for one who is conservative, not willing to place their money at high risk and lets you sleep at night. Bearing that in mind, why are you assuming that you've done anything wrong at all? The market does not go up in one straight line, it will fluctuate, some days returns will be high, but some days they will be muted or even negative. Now let's look at this years performance of your portfolio - Total Bond Market is down -0.75% year to date through 6/26, Total Stock Market is up 3.75% and Total International Stock is up 8.11% (assumes all dividends received have been reinvested). Taking those returns we see (50% * - 0.0075%) + (40% *.0375) + (10% + .0811) = a total return year to date of 2.686%. Not quite sure how you can be down 2%, when the numbers indicate you are UP 2.686% year to date. Are you dollar cost averaging your contributions over the last 9 months? That could be part of the difference.

Investing in mutual funds is a long term endeavor, more of a marathon and nothing like a sprint. Compounding of gains takes time, 9 months may be good for having a baby, but not for investing - for that you need more like 20 or 30 years for the real magic to appear. Have you read any of the books listed on the wiki under suggested reading? I recommend The Little Book of Common Sense Investing by John Bogle or The Bogleheads Guide to Investing - either of those two books are suitable for beginner investors and even for more advanced investors.

P.S. Welcome to the forum!
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Lafder
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Re: No gain in 9 months of investment

Post by Lafder »

freshinvestor,
Welcome !

Post your holdings like this including expense ratios. it will help you and us get to the bottom of why your investments have not grown in 9 months !

viewtopic.php?f=1&t=6212

lafder
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22twain
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Re: No gain in 9 months of investment

Post by 22twain »

freshinvester wrote:just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % .
Exactly when did you start, and are you reinvesting dividends? Using the Morningstar growth charts which include reinvested dividends, letting them run from 9/29/2014 to 6/26/2015, and combining the results using the percentages you gave above, I get a net growth of almost exactly 4%.

I used the investor shares of Total Stock (VGSMX), Total International (VGTSX) and Total Bond (VBMFX).
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sawhorse
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Re: No gain in 9 months of investment

Post by sawhorse »

Is there historically a time of year with more movement in either direction? It seems the stock market has had little drama. Up a percent one day, down a percent the next, repeat. Pretty flat.
lack_ey
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Re: No gain in 9 months of investment

Post by lack_ey »

The bigger question is why you're evaluating investments on a 9-month timeframe.
IPer
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Re: No gain in 9 months of investment

Post by IPer »

9 months? You are not even a baby yet! Come back and ask this question in 9 years and 3 months...and then another 10 to start to get a bit more feeling.
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kenner
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Re: No gain in 9 months of investment

Post by kenner »

Historically, 90% of stock market price gains can occur on 10% of stock trading days. No investor wants to miss out on the "up" days. That averages to roughly one trading day every two weeks, two days per month, 24 days per year.

Pick the investment portfolio that suits your investment goals - and stay the course. If you provide more information, more help will be forthcoming. For example, what is your investment time horizon? Three years or 30 years? It makes a difference.

Heres something to ponder:

viewtopic.php?f=1&t=6212
Lafder
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Re: No gain in 9 months of investment

Post by Lafder »

You have chosen great funds ! If in doubt about that, read this.

http://www.bogleheads.org/wiki/Three-fund_portfolio

and

viewtopic.php?f=10&t=88005

lafder
dolphinsaremammals
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Re: No gain in 9 months of investment

Post by dolphinsaremammals »

sawhorse wrote:It seems the stock market has had little drama. Up a percent one day, down a percent the next, repeat. Pretty flat.
In my excel workbook for each year, I calculate the gain of Vanguard Wellesley just using the dollar amounts in my accounts, since it's in tax advantaged accounts. Investor shares are at +0.04% and admiral at +0.08% for the year to date.
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grabiner
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Re: No gain in 9 months of investment

Post by grabiner »

Did you count dividends in your returns? If you bought a fund for $10.00 per share, and it is currently worth $10.00 per share, you have a gain because you received dividends. If you reinvested those dividends in the same fund, you might have turned $10,000 (1000 shares worth $10) into $10,300 (1000 old shares, and 30 new shares purchased with the $300 dividend).

That said, it's common to have no gains, or even losses, over a short time period, but you shouldn't care about that unless you are spending the money over the same short time period. The stock market loses money over about 1/3 of all years; if you have a long time to invest, the 2/3 good years are likely to cancel out the losses in the bad ones. But if you need money next year, you should put it in a bank account or a one-year CD, not in a stock investment which is likely to lose value in one year.
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tibbitts
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Re: No gain in 9 months of investment

Post by tibbitts »

freshinvester wrote:Hello every one. I am new for investment and just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % . I have some money on my checking account and I was wondering if it is a good idea to continue investing in these 3 funds or add/change other fund/s? I know return in investment is a longterm thing, but I just want to make sure I am doing right to continue investing in these funds.

Thank you in advance for your feedback.
There is no such thing as the "three best vanguard funds", but you can easily go for many years or even decades and either break even or lose money. To the extent there is consensus on the forum, it seems that returns in every asset class are likely to be less going forward, so it's very possible that you won't see much growth, even over long periods - maybe over your entire investing horizon (regardless of your age, which you don't state.) That result wouldn't mean you didn't do the most reasonable thing based on available knowledge at the time; it would just mean that you weren't as big a winner in the lottery of life than some of those who benefited from extraordinary asset returns in their lifetimes, and were able to take advantage of them. You may win the lottery in other respects: for example, a disease that might have killed you in an era of annual double-digit equity returns might be curable at the time you experience it. There's no way of telling.
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ruralavalon
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Re: No gain in 9 months of investment

Post by ruralavalon »

freshinvester wrote:Hello every one. I am new for investment and just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % . I have some money on my checking account and I was wondering if it is a good idea to continue investing in these 3 funds or add/change other fund/s? I know return in investment is a longterm thing, but I just want to make sure I am doing right to continue investing in these funds.

Thank you in advance for your feedback.
You are using the right funds.

You must not be counting the dividends paid. Including reinvested dividends in the last 9 months since 9/27/2014:
Total Bond up 0.9%
Total Stock up 8.4%
Total International up 2.3%


Stick with the funds you have. Keep your focus long-term.
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cheese_breath
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Re: No gain in 9 months of investment

Post by cheese_breath »

Keep your long term focus. There will most likely come a time when your portfolio actually will be down and probably a by lot more than 2%. But if you stay the course you can expect it to recover over time and more than make up for the temporary downturn. If you start jumping from fund to fund trying to minimize losses chances are you'll come out a lot worse than if you just stayed the course.
The surest way to know the future is when it becomes the past.
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Taylor Larimore
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Re: No gain in 9 months of investment

Post by Taylor Larimore »

freshinvestor:

Welcome to the Bogleheads forum!
freshinvester wrote:Hello every one. I am new for investment and just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % . I have some money on my checking account and I was wondering if it is a good idea to continue investing in these 3 funds or add/change other fund/s? I know return in investment is a longterm thing, but I just want to make sure I am doing right to continue investing in these funds.

Thank you in advance for your feedback.
I wonder if you understand that ALL stock and bond funds go up and down and that you cannot pick winning funds in advance? Be assured that your funds will never underperform the average stock and bond fund.

In my opinion, you own three of the best funds you could possibly own. Stay the course.

The Three Fund Portfolio

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
toto238
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Re: No gain in 9 months of investment

Post by toto238 »

One useful tool I've found is to imagine what stocks will look like in 30 years.

Think about this: S&P 500 will be at 10,000 points. If you're in your twenties it will likely happen during your investment life. It could also very easily reach 20,000 in your investment life.

So right now you are buying at 2,000 so you can sell at somewhere between 10,000 and 20,000 in the future.

None of this is guaranteed of course. You're taking an investment risk. But if the future looks like the past, it's just a matter of time before you see 10,000 or 20,000 points for the S&P 500.

30 years ago the S&P 500 was at about 170 points. Would've been nice to buy in then wouldn't it?
jimkinny
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Re: No gain in 9 months of investment

Post by jimkinny »

The only sane way to think of investing is as a commitment to the long term, 15-40 years.

You can look up the frequency that equity and bond returns have been positive or negative in the past. Some years are great, some just awful, terrible, many years are up a bit, many down a bit.

You can not control those returns by being smarter, reading more, paying attention to economic news etc.....it is all for naught, useless.

You can save more, work more, spend less and do what you have done by having a low cost, diversified portfolio by using low cost index funds that are total market.

You own maybe 20,000 stocks and bonds: not bad at all. As Taylor wrote, you will get market returns with broad based index funds.

The idea that one can do better haunts most investors but I think trying to beat the stock market is a losing proposition while owning the stock market is a winning proposition over the very long term but still, there are no sure things, risk is risk. Bonds are bonds, interest rates are what they are.

jim
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mickeyd
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Re: No gain in 9 months of investment

Post by mickeyd »

As all good Bogleheads know, investing in Vanguard mutual funds is a marathon, not a sprint.

Stay the course.
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retiredjg
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Re: No gain in 9 months of investment

Post by retiredjg »

It is true that 9 months is not long enough to make a judgement, but if this poster has lost 2% on investments that are actually up instead of down, something is wrong.

It probably is not the funds - there is nothing wrong with the choice of funds. However, depending on exactly what "more than 9 months" means, the date the bonds were bought my be contributing to what appears to be a loss.

If it is not the funds, it kind of has to be the method of investing - fees, advisors, etc.

Ovbiously, we need to know more before we can help this investor.
john94549
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Re: No gain in 9 months of investment

Post by john94549 »

Right about this time of the month, we get (over and over) the question: "why did my funds go down?" The quick answer: dividends. Your funds did not actually go down any more than Mr. Market dictated. If they went down more, then the culprit was probably a dividend.

Not to anguish, you have more shares, albeit at a lower price.
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Re: No gain in 9 months of investment

Post by abuss368 »

freshinvester wrote:Hello every one. I am new for investment and just started with the 3 best vanguard funds as: 40% in total stock, 50 % in total bond market and 10 % in total international stock. It has been over 9 month so far, but my asset is usually negative by 2+ % . I have some money on my checking account and I was wondering if it is a good idea to continue investing in these 3 funds or add/change other fund/s? I know return in investment is a longterm thing, but I just want to make sure I am doing right to continue investing in these funds.

Thank you in advance for your feedback.
Hi freshinvester,

You have selected an excellent investment portfolio that will "earn it's fair share" as Jack Bogle would state.

Stay the course and you will prosper.

I would also recommend an excellent investing book to read. Consider Jack Bogle "The Little Book of Common Sense Investing" and also Jack Brennan "Plain Talk on Investing". The Bogleheads Guides to Investing and also Retirement are excellent choices as well.

Best.
John C. Bogle: “Simplicity is the master key to financial success."
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Toons
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Re: No gain in 9 months of investment

Post by Toons »

When investing,think in terms of 10 year increments,no shorter,you will do yourself a huge favor. :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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