BASE INVESTMENT or What Your Ruler

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itstoomuch
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BASE INVESTMENT or What Your Ruler

Post by itstoomuch » Tue Jul 25, 2017 3:58 pm

My Base Investment Standard is SP500 (+9% YTD). I measure performance of portfolio and individual components to SP500.
For instance, my cash holdings has a 0 return for 2017 but a negative ~9% . This is the "fee" drag.
If I hold something like a 60/40 (ie VWENX, Wellington Admiral) ytd ~7%, the "fee" drag is neg ~2%

Do you use a base comparison?
Last edited by itstoomuch on Tue Jul 25, 2017 4:09 pm, edited 2 times in total.
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bigred77
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Re: BASE INVESTMENT or What Your Ruler

Post by bigred77 » Tue Jul 25, 2017 4:03 pm

I don't really have a comparative index for my portfolio but If I had to pick one it would be Vanguard LifeStrategy Growth.

My opinion is your benchmark should be something of comparable risk and makeup.
Comparing cash to the S&P500 isn't something I'd be interested in doing. Comparing online saving accounts to MM fund to 1 year CD's is something I would find useful though.

Iliketoridemybike
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Re: BASE INVESTMENT or What Your Ruler

Post by Iliketoridemybike » Tue Jul 25, 2017 4:12 pm

I use Fidelity and they provide benchmark returns that you can use for comparison from professional managers with the same allocation. It's you versus the pros.

jebmke
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Re: BASE INVESTMENT or What Your Ruler

Post by jebmke » Tue Jul 25, 2017 4:42 pm

The only thing I look at is the total balance and whether I think it will get me to the end of the road.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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willthrill81
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Re: BASE INVESTMENT or What Your Ruler

Post by willthrill81 » Tue Jul 25, 2017 4:52 pm

I use the S&P 500 as a means of gauging my portfolio's performance since I'm all equities now and for a while yet.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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iceport
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Re: BASE INVESTMENT or What Your Ruler

Post by iceport » Tue Jul 25, 2017 4:53 pm

itstoomuch wrote:My Base Investment Standard is SP500 (+9% YTD). I measure performance of portfolio and individual components to SP500.
For instance, my cash holdings has a 0 return for 2017 but a negative ~9% . This is the "fee" drag.
If I hold something like a 60/40 (ie VWENX, Wellington Admiral) ytd ~7%, the "fee" drag is neg ~2%

Do you use a base comparison?
Yes, I do. Fortunately for me, I have a passive approach, composed nearly exclusively of index funds, except for a TIPS fund (a mere technicality that it's not an index fund, really) and a stable value fund. So my "base comparison" (otherwise known as a benchmark) is simply composed of the very same indexes I use for my asset allocation, weighted accordingly.

You might be interested in this article by Rick Ferri: Look At Me! I Beat The S&P!
If an account is holding bonds, then the benchmark for the account includes bonds. If an account has a foreign stock allocation, then the benchmark includes a foreign stock allocation. If a benchmark doesn’t exist that mirrors a client’s investment strategy, then the advisor creates a custom blend based on an appropriate mix of indexes to match how an account is being managed.
"Discipline matters more than allocation.” ─William Bernstein

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willthrill81
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Re: BASE INVESTMENT or What Your Ruler

Post by willthrill81 » Tue Jul 25, 2017 4:59 pm

iceport wrote:Fortunately for me, I have a passive approach, composed nearly exclusively of index funds, except for a TIPS fund (a mere technicality that it's not an index fund, really) and a stable value fund.
Out of curiosity, and not to derail the thread, but what's your SVF paying these days?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Dottie57
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Re: BASE INVESTMENT or What Your Ruler

Post by Dottie57 » Tue Jul 25, 2017 5:01 pm

jebmke wrote:The only thing I look at is the total balance and whether I think it will get me to the end of the road.

Me too. Especially since I am at a 50/50 allocation.

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iceport
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Re: BASE INVESTMENT or What Your Ruler

Post by iceport » Tue Jul 25, 2017 5:02 pm

willthrill81 wrote:Out of curiosity, and not to derail the thread, but what's your SVF paying these days?
Just went to 2.75%, up from 2.68% last quarter.
"Discipline matters more than allocation.” ─William Bernstein

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willthrill81
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Re: BASE INVESTMENT or What Your Ruler

Post by willthrill81 » Tue Jul 25, 2017 5:03 pm

iceport wrote:
willthrill81 wrote:Out of curiosity, and not to derail the thread, but what's your SVF paying these days?
Just went to 2.75%, up from 2.68% last quarter.
Not bad at all. You have free movement in and out?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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englishgirl
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Re: BASE INVESTMENT or What Your Ruler

Post by englishgirl » Tue Jul 25, 2017 5:05 pm

I don't compare. My portfolio aims to be about 60:40, so my base comparison would be Vanguard Balanced Index, or Lifestrategy Moderate Growth funds. Some level of fees are unavoidable, so why compare to a plain index when you can compare to a very similar low cost fund?

But as Vanguard Balanced Index and Lifestrategy Moderate Growth are what I actually invest in, no need for comparison.
Sarah

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iceport
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Re: BASE INVESTMENT or What Your Ruler

Post by iceport » Tue Jul 25, 2017 5:09 pm

willthrill81 wrote:
iceport wrote:
willthrill81 wrote:Out of curiosity, and not to derail the thread, but what's your SVF paying these days?
Just went to 2.75%, up from 2.68% last quarter.
Not bad at all. You have free movement in and out?
Yes, it's unrestricted.
"Discipline matters more than allocation.” ─William Bernstein

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Portfolio7
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Re: BASE INVESTMENT or What Your Ruler

Post by Portfolio7 » Tue Jul 25, 2017 5:55 pm

I know the proper compare should be a similar portfolio... but as one poster said, my portfolio, being all index funds, is also my benchmark. That being pointless (I get what the market gives me!), I actually do compare to the S&P500. I also compare to lazy portfolios about once per year. I compare to actual TAA performance when I remember.

I'm not trying to match the S&P500 (or the lazy portfolios), but rather to develop a more visceral understanding of what is happening inside the portfolio. Sometimes things happen which make me want to go back to my core assumptions and challenge them a bit.

e.g. Int'l equities of just about any sort are a big plus this year (after having been a drag for years), SCV is barely positive, and my FI is stable value (yielding 3.1% this year, no restrictions, 8 top insurers in the pool, as I saw interest in these details above.) Just my way of following the market, which I like to do, but doing this has helped convince me to drop a few asset classes too (esp after reading Swenson).
An investment in knowledge pays the best interest.

Random Walker
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Re: BASE INVESTMENT or What Your Ruler

Post by Random Walker » Tue Jul 25, 2017 9:03 pm

I use the S&P 500. But it's with the understanding that it's for recreational purposes only. I have a 47% equities/33% bonds/20% alternatives portfolio. Equities are equally split US/Int and torqued to SV. There isn't really an appropriate benchmark. Passive funds sort of serve as their own benchmarks. But I really enjoy seeing how the different portfolio components zig and zag relative to each other and to the S&P500. One of my favorite quotes (W Bernstein I think) is "diversification is always working, whether you want it to or not :-)

Dave

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Sbashore
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Re: BASE INVESTMENT or What Your Ruler

Post by Sbashore » Wed Jul 26, 2017 12:42 pm

I use the total stock market as my basic benchmark. Being at a target 50/50 allocation makes comparing my performance to my benchmark a simple mental calculation.
Steve | Semper Fi

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