How accurate is vanguard's calculation of my investment returns?

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Topic Author
mortal
Posts: 452
Joined: Mon Sep 15, 2008 11:15 pm

How accurate is vanguard's calculation of my investment returns?

Post by mortal » Tue Jan 19, 2016 12:09 am

Howdy folks,

The other day I logged on to vanguard to see how I was doing (mistake!). Turns out, I've lost more money in the last two months than I typically spend in an entire year (ouch!). That hurt, I won't lie. What really rubbed salt in the wound, is when I checked my returns over the past 5 years (during which I dutifully DCA'd every paycheck), turns out I only have capital gains of a few hundred dollars. The vast majority of my returns are apparently from dividends. So much for the magic of compounding... :annoyed

This, during the big 'post recession bull market'. If this is a bull market, I'd hate to see a bear. I know it does not include returns on my 401k from work, the G fund from the tsp, or my ibonds. Even so, it bums me out a little. If I had known investing would yield these paltry returns I would have saved a bit less and enjoyed myself a bit more. I think (read, hope) that perhaps vanguard is 'thrown off' by my recent TLH, and once everything settles perhaps the picture will look better.

Have you guys ever found vanguards calculations of your investment returns 'off'?

----
P.S.
For those wondering about my current AA:
30% bonds (ibonds / G fund)
70% stocks (55/45 dom/intl) slight tilt towards scv

ks289
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Re: How accurate is vanguard's calculation of my investment returns?

Post by ks289 » Tue Jan 19, 2016 5:15 am

I have not observed any inaccuracies with Vanguard's personal performance stats.
I think that your 5 year personal performance could be getting dragged down by your international portion being 45% of your equities. Also, if you had fewer assets 5 years ago already invested, then the robust returns earlier in the period will be dwarfed by the recent declines.
There will be more ups and downs. Try to stay positive (this is buying shares at a discount).

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rustymutt
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Re: How accurate is vanguard's calculation of my investment returns?

Post by rustymutt » Tue Jan 19, 2016 5:45 am

They match my own calculations dollar for dollar. As far as loosing money, that's a sure thing as any investor will tell you that there are periods, some long, where loosing money is the norm. Just be patient and wait for the running of the bull.
I'm amazed at the wealth of Knowledge others gather, and share over a lifetime of learning. The mind is truly unique. It's nice when we use it!

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Toons
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Re: How accurate is vanguard's calculation of my investment returns?

Post by Toons » Tue Jan 19, 2016 6:45 am

I have not found Vanguards's calculations to be inaccurate.
Regarding performance.
Keep Investing and don't "peek" :happy
You will be fine.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

biscuits222
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Re: How accurate is vanguard's calculation of my investment returns?

Post by biscuits222 » Tue Jan 19, 2016 10:14 am

the real magic of compounding happens via reinvesting dividends to buy more and making sure you put fresh savings in often, especially when prices are down (like now, when alarmist media headlines permeate everything and China OMG). Total World Stock ETF is up only 8% in price the last 5 years, but the dividend has gone from $1.02 per share in 2011 to $1.41 per share for the last year:
http://www.google.com/finance?cid=4177166

the dollar has strengthened, which has pummelled foreign stocks somewhat, making them cheaper i.e. they now have better long-term potential returns than before. currencies randomly shuffle around. the 40% dollar decline from 2000-2007 juiced up foreign stocks. swings and roundabouts.

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House Blend
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Re: How accurate is vanguard's calculation of my investment returns?

Post by House Blend » Tue Jan 19, 2016 1:28 pm

mortal wrote:The vast majority of my returns are apparently from dividends.
I take it that you are spending the dividends?

This certainly can have a negative effect on your account balance, but it should have only a mild effect on what Vanguard calls your "Personal Rate of Return", and that effect can be positive or negative.

What P.R.R. approximates is, given your particular dates and amounts of inflows and outflows, what constant (annualized) rate of return your account would have had to earn in order to get the same final balance.

So if the account actually was earning X% daily at a constant rate, your P.R.R. would be X% whether or not you took dividends in cash or reinvested them, or took out dividends plus another $100K extra whenever you felt like it.

biscuits222
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Re: How accurate is vanguard's calculation of my investment returns?

Post by biscuits222 » Tue Jan 19, 2016 2:21 pm

A supposed Warren Buffett quote with lots of variations: "The Stock Market is designed to transfer money from the Active to the Patient".

Topic Author
mortal
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Re: How accurate is vanguard's calculation of my investment returns?

Post by mortal » Wed Jan 20, 2016 12:10 am

Thanks everyone for your replies.

I do re-invest dividends. I suppose they do compound. I was mainly surprised this was the primary source of my investment returns. I used to not like them because I had to pay taxes on them every year, but I suppose I've made my peace with that.

I suppose my higher than normal international allocation (and a small tilt towards emerging markets), as well as a slight tilt towards small / value have contributed to my returns. Someone also mentioned that since I've dollar cost averaged most of my investments in over the past few years that may have biased my returns to more recent performance. I think there's some truth to that, but I'd be curious as to how the math works with that.

Going forward, I'm front loading my 401k in 6 months instead of 12, as I plan on looking for a job later on this year. This is certainly helping me 'buy on the dip'. Hopefully mr market evens out before I roll over my 401k to the TSP.

It's good to hear you guys find vanguard to be accurate. One thing that raised concerns for me was the fact that my account showed a 'withdrawal' this month although no money has left the account. I imagine this is simply an anomaly that will resolve itself when the trade settles.

Thanks again for all the input.

---
edit: just checked vanguard and it no longer shows a withdrawal.

samoleon
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Re: How accurate is vanguard's calculation of my investment returns?

Post by samoleon » Wed May 15, 2019 10:49 am

I consider Vanguard's results on my personal performance page to be pure fiction. In 2017 it was overstating my results so I just stopped looking at it. I looked at it recently and it was a real shocker. It told me that the account had declined in value by $806,147.99 in January of 2019 whereas by my own calculations I was ahead by $16,660.94. I spoke to my Vanguard representative and he reported that nothing would be done to correct it. I think something should be done because not only does it misinform the investor but it erodes confidence in Vanguard's bookkeeping.

Even if you do not do so regularly I encourage you to check your personal performance page and report anything that doesn't seem right.

mtmingus
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Re: How accurate is vanguard's calculation of my investment returns?

Post by mtmingus » Wed May 15, 2019 11:56 am

Move to fidelity.

pkcrafter
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Re: How accurate is vanguard's calculation of my investment returns?

Post by pkcrafter » Wed May 15, 2019 12:38 pm

mortal wrote:
Wed Jan 20, 2016 12:10 am
Thanks everyone for your replies.

I do re-invest dividends. I suppose they do compound. I was mainly surprised this was the primary source of my investment returns. I used to not like them because I had to pay taxes on them every year, but I suppose I've made my peace with that.

Over the past 5 years both total international and emerging markets have produced <2% return. Vanguard recommends 40% international, but most posters here use about 20-30%. Small value has done about 7%. Total stock market has done 10%.


I suppose my higher than normal international allocation (and a small tilt towards emerging markets), as well as a slight tilt towards small / value have contributed to my returns.

Yep. You have to have patience and endurance to capture good returns from these asset classes.


Someone also mentioned that since I've dollar cost averaged most of my investments in over the past few years that may have biased my returns to more recent performance.

Dollar cost averaged? You mean you were holding a lot of cash and DCAveraged it over time, or are you just talking about regular contributions from income (not DCA)?

Going forward, I'm front loading my 401k in 6 months instead of 12, as I plan on looking for a job later on this year. This is certainly helping me 'buy on the dip'. Hopefully mr market evens out before I roll over my 401k to the TSP.

It's good to hear you guys find vanguard to be accurate. One thing that raised concerns for me was the fact that my account showed a 'withdrawal' this month although no money has left the account. I imagine this is simply an anomaly that will resolve itself when the trade settles.
Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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