The average investor made just over 5% in 2016, according to Openfolio

Nick341981 · Post by **Nick341981** » Sat Dec 31, 2016 11:22 am

This article is just sad. 25% managed to actually lose money in such a great year and the average return was a paltry 5%(I'm guessing they didn't subtract fees from this).

http://money.cnn.com/2016/12/30/investi ... =investing

livesoft · Post by **livesoft** » Sat Dec 31, 2016 11:27 am

Average investors don't calculate their performance properly and don't post it on Openfolio which has about 70,000 users who link accounts into their database.

I see a possible marketing opportunity here. Vanguard could give anonymous data to Openfolio or calculate it for themselves. Can you see the headlines: The average Vanguard investor made just over 14% in 2016 ?

And Openfolio reports that Fidelity uses their data.

KlingKlang · Post by **KlingKlang** » Sat Dec 31, 2016 11:56 am

livesoft wrote:Can you see the headlines: The average Vanguard investor made just over 14% in 2016 ?

I'm not sure where you are getting 14% from. Vanguard Total Stock Market Admiral was up 12.66% in 2016 and most investors would have had lower returns than that due to holdings in international, bond, and money market funds. According to Vanguard my 2016 return was only 5.6%.

livesoft · Post by **livesoft** » Sat Dec 31, 2016 11:58 am

Isn't it obvious I made up that number and asked a rhetorical question? Is this how fake news gets propagated?

But I can say factually that my Vanguard small-cap value holdings were up 27.5% in 2016.

bmelikia · Post by **bmelikia** » Sat Dec 31, 2016 12:31 pm

I personally invest in the Vanguard Target Date 2030 Fund and looking at my performance for the following date range:

December 1, 2015 through December 31, 2016. . .

. . .while not representative of purely 2016 - my performance was supposedly 4.6% during that time according to my personal performance tab on Vanguard's website.

I haven't been doing any goofy market timing- I just invest the same amount every 2 weeks (ultimately maxing out my Roth for the year) and have been implementing this strategy since August of 2008.

So I'm not sure if that implies that I'm not doing a good job of investing? Or rather, that the low performance is the cost of diversification across international equities and bonds (domestic and international). . .curious to know other people's thoughts about my performance if they read this. . .

livesoft · Post by **livesoft** » Sat Dec 31, 2016 12:33 pm

Vanguard has the TR 2030 VTHRX performance for 2016 (1/1/2016 through 12/31/2016) to be 7.85%, so including December 2015 changes the numbers.

But if you invested periodically, then it is like on average you were only invested 6 months out of 2016. Or the Vanguard calculation could be bogus, so calculate with XIRR() for yourself.

bmelikia · Post by **bmelikia** » Sat Dec 31, 2016 12:34 pm

Since August 2008 - when I began implementing this strategy - my performance has been 8.3% using this current approach - just FYI

iceport · Post by **iceport** » Sat Dec 31, 2016 12:34 pm

Nick341981 wrote:This article is just sad. 25% managed to actually lose money in such a great year and the average return was a paltry 5% (I'm guessing they didn't subtract fees from this).

http://money.cnn.com/2016/12/30/investi ... =investing

Hi Nick,

Are you trying to make me feel bad?

My dollar-weighted 2016 return was 6.84% (using XIRR, which accounts for the timing and value of all contributions). That's not much more than what you called "paltry," but it's actually better than my expected average annual return with a 56% equity/44% fixed income portfolio. So I'm not disappointed at all.

What's more important to me is how well I tracked my benchmark. More good news here, as I very closely tracked my personal custom benchmark, beating it by 0.05%. As a reality check, another measure of "tracking error" compared to a plain vanilla portfolio, I checked a couple of Vanguard all-in-one funds with a similar risk level.

Vanguard Target Retirement 2020 Fund (VTWNX) (57.3% equity): 6.95%
Vanguard LifeStrategy Moderate Growth Fund (VSMGX) (60.4% equity): 7.13%

So I'm in the right ballpark, even though at least one position (international real estate, VNQI, 1.95%) certainly dragged down performance.

One general observation: unlike last year, when much of the equity and fixed income markets produced similar returns, this year the overall equity allocation made a big difference in portfolio level returns. So the 5% return posted on Openfolio doesn't mean much without controlling for risk level (equity allocation).

How well did you track your benchmark? Did you beat it, trail it, or match it?

What's your expected return, and what's your equity allocation?

simplesimon · Post by **simplesimon** » Sat Dec 31, 2016 12:37 pm

Yes, diversification will lessen the performance of a portfolio in great years and improve the performance during recessions.

This is a year where U.S. equities won. Where's that Callan Periodic Table of Investment Returns when you need it? Oh here it is. I don't know how soon after year end the table gets updated.

pshonore · Post by **pshonore** » Sat Dec 31, 2016 12:41 pm

Every VG ETF had a positive return for the year with the exception of VHT (Health care) down 3.32%. Best performer was Energy up 28.93% (after a dreadful 2015). List available at https://investor.vanguard.com/etf/list# ... nd-returns

triceratop · Post by **triceratop** » Sat Dec 31, 2016 12:48 pm

livesoft wrote:Vanguard has the TR 2030 VTHRX performance for 2016 (1/1/2016 through 12/31/2016) to be 7.85%, so including December 2015 changes the numbers.

But if you invested periodically, then it is like on average you were only invested 6 months out of 2016. Or the Vanguard calculation could be bogus, so calculate with XIRR() for yourself.

As of this morning, the Vanguard number still reflects the reality as of 11/30/2016. It is an XIRR-based return. I have found the calculation to be very accurate to 1 decimal place when compared to longinvest's spreadsheet which calculates an approximation (due to inexact timing of cash flows) of the XIRR number as well.

livesoft · Post by **livesoft** » Sat Dec 31, 2016 1:17 pm

triceratop wrote:As of this morning, the Vanguard number still reflects the reality as of 11/30/2016.

Check again please. Maybe Vanguard serves up different pages in your location? Or maybe you mean the Vanguard "personal return" number not the performance of the fund by itself?

triceratop · Post by **triceratop** » Sat Dec 31, 2016 1:24 pm

Correct, I mean the latter, personal return number.

jhfenton · Post by **jhfenton** » Sat Dec 31, 2016 1:28 pm

Our dollar-weighted IRR was 12.51% for 2016 for our heavily-tilted, 50% international portfolio. At year-end, we're exactly 89.0% equities, 11.0% fixed income, but I've been increasing the fixed income steadily all year to catch up to where I decided we should be. (The target for 12/31/17 is 12%-13.5%.)

Our best performing position was our largest, Vanguard Small Cap Value, up 24.78% (calendar year fund return). Our worst were Vanguard Ohio Long-Term Tax Exempt, up 1.0%, and Vanguard Intermediate Term Government Bond Admiral, up 1.1%. The small value and emerging market tilts added to our return. The developed international detracted from it (mostly to currency impacts). The various non-US total market tilts largely canceled each other out.

Holdings (in order of size) (fund return)
Vanguard Small Cap Value +24.78%
Vanguard Developed Markets +2.45%
Vanguard ex-US Small Cap +4.26%
Vanguard Emerging Markets +11.73%
Vanguard Mid-Cap Value +15.26% (401k)
Vanguard 500 Admiral/Fidelity 500 Index Institutional +11.93% (HSA/401k)
Brokered CDs ???
Vanguard Intermediate Govt Index +1.10%
PIMCO Total Return Inst 2.6% (401k)
Vanguard Short-Term Corp Index +2.63%
Vanguard Ohio LT Tax Exempt +1.00%

Overall +12.51 (portfolio IRR)

(Our portfolio return also includes a 5% REIT allocation from January through June/July, but I sold it off because of perceived valuations and the lack of a REIT fund in my wife's new 401(k) making it complicated to maintain. That turned out to be excellent, lucky timing.)

sometimesinvestor · Post by **sometimesinvestor** » Sat Dec 31, 2016 1:37 pm

hardly surprising since international did so bad and bonds mediocore emerging markets poor and high yield not great plus lots of people probably were invested overweight in health care. I was

ClevrChico · Post by **ClevrChico** » Sun Jan 01, 2017 10:36 am

I'm not surprised. I was up 7.8% for the year. For the average investor, take away fees and add in active management, 5% is very believable.

I know of family panicking around October becase they were "losing money". I had to talk them into staying the course.

carolinaman · Post by **carolinaman** » Sun Jan 01, 2017 1:43 pm

Our portfolio returned 6.38% on a 40(equity)/60(FI) AA versus benchmark of 5.96%. I am very happy with that in our low inflation environment.

BolderBoy · Post by **BolderBoy** » Sun Jan 01, 2017 1:47 pm

triceratop wrote:Correct, I mean the latter, personal return number.

Guess they just needed another day. My personal 1-year return number shows 5.8% (which is way more than I spend) as of 12/30/2016. This with mostly a 2-Fund, 35/65 portfolio all year.

I'm a happy camper

sketchy9 · Post by **sketchy9** » Sun Jan 01, 2017 2:04 pm

Is this where we're posting our 2016 results? My portfolio breakdown:

60% equities, with the following allocation:
30% Total Stock Market
10% small cap value
15% Intl Total Stock Market
5% REIT

40% Bonds:
30% Intermediate term treasuries
10% TIPS

I returned just a whisper over 8%. Calculation made using XIRR in excel.

iceport · Post by **iceport** » Sun Jan 01, 2017 10:28 pm

sketchy9 wrote:Is this where we're posting our 2016 results?

I was hoping so, but apparently most folks would rather post in the thread that asked the question "What are you up YTD?", posed on the auspicious date of Tuesday August 26, 2014.

letsgobobby · Post by **letsgobobby** » Mon Jan 02, 2017 1:51 am

Deleted

unclescrooge · Post by **unclescrooge** » Mon Jan 02, 2017 2:09 am

Nick341981 wrote:This article is just sad. 25% managed to actually lose money in such a great year and the average return was a paltry 5%(I'm guessing they didn't subtract fees from this).

http://money.cnn.com/2016/12/30/investi ... =investing

Your conclusion of average returns might be misleading.

I have several accounts linked in Openfolio. My Roth returned 12% (80% global equities, 20% bonds), but my low-cost 401k returned -1%

(even with similar asset allocation). Also my emergency fund is in munies and returned 3.6%.

So they're probably just averaging all of the results. In that case a "paltry" 5% isn't half bad.

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