Why are we not keeping up with the market?

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vanrufus757
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Why are we not keeping up with the market?

Post by vanrufus757 » Tue Dec 15, 2015 3:04 pm

I am concerned about my investments.

Prior to the summer of 2014 my wife and I had a collection of IRAs (both Roth and Traditional) and a state run deferred compensation fund that were mainly invested in Target Retirement Funds. We always kept up with the market, if not ended a little ahead of the market.

In the Summer of 2014 I worked with a Vanguard financial advisor who suggested we make some changes. We followed her advice and moved the money around and since then we have made very little money --- in the last 12 months less than 1%.

Here are the stats:

Emergency funds: Yes, we have emergency funds for about 3 months, but we have very steady, stable contracted positions (teachers/admin)

Debt: Home Mortgage $360,000 at 3.875%, student loan $30,000 at 4.5% no credit card or car debt. (I am of the “get a big mortgage and never pay if off mindset” and we are working to pay off the student loan debt within 5-7 years).

Tax Filing Status: Married Filing Jointly with 1 Dependent Child
Tax Rate: 28% Federal, 6.27% State
State of Residence: Wisconsin
Age: I am 42 and my other half is 52

Desired Asset allocation: 70% stocks / 30% bonds - Open to suggestions
Desired International allocation: 5% of stocks???? - Open to suggestions

Total portfolio is around $213,000.00 -- we also both have solid pensions in place via the State of Wisconsin with annual COLA when the market allows.

Current retirement assets

Taxable - Rollover IRA (Traditional) - Hers
19% Vanguard Total Bond Market Index Fund Admiral Shares VBTLX .07
8.4% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX .05

Taxable - Rollover IRA (Traditional)- Mine

1.4% Vanguard Total Bond Market Index Fund Investor Shares VBMFX .20%
3.6% Vanguard Total Stock Market Index Fund Investor Shares VTSMX .17%

Roth IRA - Hers
22.8% Vanguard Total Stock Market Index Fund Admiral Shares VTSAX .05
3.8% Vanguard Total Stock Market Index Fund Investor Shares VTSMX .17%


Roth IRA - Mine
4.0% Vanguard total Bond Market Index Fund Investor Shares VBMFX .20%
4.9% Vanguard Total International Bond Index Fund Admiral Shares VTABX .19%
16.7% Vanguard Total International Stock Index VTIAX .14%
3.0% Vanguard Total Stock Market Index Fund Investor Shares VTSMX.17%


Deferred Compensation Program (457b) - Mine
xx% fund name (ticker symbol) (expense ratio)
xx% fund name (ticker symbol) (expense ratio)
2.9% T. Rowe Price Instl Mid-Cap Equity PMEGX .61
6.4% Vanguard Institutional Index Instl Pl VIIIX .02
2.1% BlackRock US Debt Index Fund Coll W ????? ??



New annual Contributions

$3,600.00xx my 457b
$5,500.00 mine Roth IRA
$6,000.00 her’s Roth IRA

Questions:
1. Any idea why we didn't keep up with the market this year?

2. Any suggestions to re-balance and move it in the right direction? Any other advice?

Key Points:
Yes, we have a college fund for the child and it is not included in this breakdown. It is separate and doing very well (aggressive-age based via our State) and a small mutual fund.

Notice our age difference. My wife plans to retire in 5-7 years (around age 57-59). I will continue to work for 14 years and provide health insurance - I am the larger wage earner and our budget allows for her not to work in 5-7 years (after the student loan and private school is done). I plan to retire around 55 with a large health insurance incentive (which could change as it is negotiated).

livesoft
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Re: Why are we not keeping up with the market?

Post by livesoft » Tue Dec 15, 2015 5:04 pm

vanrufus757 wrote:Questions:
1. Any idea why we didn't keep up with the market this year?
I think you did keep up with the market this year. The market was down for the year about 1% yesterday, so at the close of today, the market will be about flat for the year. You stated "less than 1%" which is right in line with beating the market this year. Congratulations!
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edge
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Re: Why are we not keeping up with the market?

Post by edge » Tue Dec 15, 2015 5:09 pm

Uh ya, seems like you haven't been paying attention to what the market has been doing

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Re: Why are we not keeping up with the market?

Post by RadAudit » Tue Dec 15, 2015 5:12 pm

vanrufus757 wrote:we have made very little money --- in the last 12 months less than 1%.
Me, too.

Some years are like that.
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ruralavalon
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Re: Why are we not keeping up with the market?

Post by ruralavalon » Tue Dec 15, 2015 5:20 pm

It looks to me like you are keeping up with the market :) . It's just that the market stinks this year :( .
Last edited by ruralavalon on Tue Dec 15, 2015 5:21 pm, edited 1 time in total.
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Re: Why are we not keeping up with the market?

Post by nisiprius » Tue Dec 15, 2015 5:21 pm

I'm down about 0.6% year to date. I hadn't actually looked until I started reading this thread.
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jimkinny
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Re: Why are we not keeping up with the market?

Post by jimkinny » Tue Dec 15, 2015 5:37 pm

Not much going on this year in stocks, up 10% or so, then down 10% or so, up a few % depending on the day/week. The bond markets have also been pretty boring, thankfully. Yield bites but thankfully you are not holding a bunch of high yield junkiest bonds, just good old gov backed bonds with a bit of credit risk thrown in.

2014 was great: equities were up a lot as I recall or was that 2013?

Oh well, at least we are not down 30% this year. I do not want to keep up with that.

vanrufus757
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Re: Why are we not keeping up with the market?

Post by vanrufus757 » Tue Dec 15, 2015 7:39 pm

Thank you all for responding! What great perspective. I guess I was unsure of what the market actually did this year -- I thought it was higher.

And, yes, I only want to "keep up with the market" in good times.

I was just freaked out as the slow down matched my huge change in investments.

Thanks again ---

livesoft
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Re: Why are we not keeping up with the market?

Post by livesoft » Tue Dec 15, 2015 7:42 pm

I have to ask about why you are not contributing more to your tax-deferred accounts instead of your Roth IRAs. It sure seems to me that you could reduce your tax rates significantly by doing so.
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Re: Why are we not keeping up with the market?

Post by tludwig23 » Tue Dec 15, 2015 7:43 pm

vanrufus757 wrote:
I was just freaked out as the slow down matched my huge change in investments.
Post hoc ergo propter hoc--a logical fallacy of the questionable cause type.
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Re: Why are we not keeping up with the market?

Post by itstoomuch » Tue Dec 15, 2015 9:03 pm

OP: What is your definition of the Market? SP? DJI, Nasdaq? or other?
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vanrufus757
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Re: Why are we not keeping up with the market?

Post by vanrufus757 » Tue Dec 15, 2015 9:16 pm

itstoomuch wrote:OP: What is your definition of the Market? SP? DJI, Nasdaq? or other?
I usually use DJIA.

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arcticpineapplecorp.
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Re: Why are we not keeping up with the market?

Post by arcticpineapplecorp. » Tue Dec 15, 2015 9:23 pm

jimkinny wrote:Not much going on this year in stocks, up 10% or so, then down 10% or so, up a few % depending on the day/week. The bond markets have also been pretty boring, thankfully. Yield bites but thankfully you are not holding a bunch of high yield junkiest bonds, just good old gov backed bonds with a bit of credit risk thrown in.

2014 was great: equities were up a lot as I recall or was that 2013?

Oh well, at least we are not down 30% this year. I do not want to keep up with that.
2013 the U.S. market was up 33.52% (according to total stock market index fund with Vanguard). The international market was up around 15% that year I believe.

Image

Looking at Morningstar it says vtsax did 12.55% in 2014. Huh, better year than I remembered.

Image
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subham
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Re: Why are we not keeping up with the market?

Post by subham » Tue Dec 15, 2015 10:11 pm

I am in same boat, for many years i had pretty random funds in my 401k (got them by talking to friends) and didn't bother with taking responsibility.

Last year I finally pwned up to it and did a major reallocation per VG's advice.

Now i see my return is only 1% compare this to past years where it was much higher.

Good to see feedback here that we are doing the right thing.

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DG99999
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Re: Why are we not keeping up with the market?

Post by DG99999 » Tue Dec 15, 2015 11:10 pm

I'd suggest that you chart a few basic equity indicies periodically (say quarterly or monthly) to help maintain an awareness of "the market". As a minimum, you might keep track of the SP 500 (large cap US, primarily), Russell 2000 (small cap US) and MSCI EAFE (developed international). Of course this info can be downloaded, but going through the exercise of pulling the data and charting it yourself will keep you more tuned in.
I am not a financial professional. My posts are only my opinion on the topic. You need to do your own due diligence and consult with a professional when addressing your financial questions.

vanrufus757
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Re: Why are we not keeping up with the market?

Post by vanrufus757 » Wed Dec 16, 2015 7:48 am

DG99999 wrote:I'd suggest that you chart a few basic equity indicies periodically (say quarterly or monthly) to help maintain an awareness of "the market". As a minimum, you might keep track of the SP 500 (large cap US, primarily), Russell 2000 (small cap US) and MSCI EAFE (developed international). Of course this info can be downloaded, but going through the exercise of pulling the data and charting it yourself will keep you more tuned in.
Great advice. I will start that this month at the end of the quarter! thanks!

warner25
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Re: Why are we not keeping up with the market?

Post by warner25 » Wed Dec 16, 2015 8:25 am

vanrufus757 wrote:And, yes, I only want to "keep up with the market" in good times.
This statement concerns me. The evidence shows that investors can't enjoy good times without also being equally exposed to the bad times. It sounds like you haven't really accepted that yet...

vanrufus757
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Re: Why are we not keeping up with the market?

Post by vanrufus757 » Wed Dec 16, 2015 8:39 am

warner25 wrote:
vanrufus757 wrote:And, yes, I only want to "keep up with the market" in good times.
This statement concerns me. The evidence shows that investors can't enjoy good times without also being equally exposed to the bad times. It sounds like you haven't really accepted that yet...
It was a joke -- tone gets lost. I stuck through 2008/2009 without changing a thing and kept buying each month. I understand the risk, but I could see how that statement could be concerning.

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knpstr
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Re: Why are we not keeping up with the market?

Post by knpstr » Wed Dec 16, 2015 8:45 am

For starters stocks have returned roughly 1% in the last 12 months
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vanrufus757
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Re: Why are we not keeping up with the market?

Post by vanrufus757 » Wed Dec 16, 2015 11:25 am

livesoft wrote:I have to ask about why you are not contributing more to your tax-deferred accounts instead of your Roth IRAs. It sure seems to me that you could reduce your tax rates significantly by doing so.
Tell me more about this...

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