Investment update – End of 2017

Well, with 30 months left till FI, and the beginning of the new year, I wanted to go back and see how my investments did, to give you an idea of how my allocations seem to be working out.

For the year, my investments (not savings or real assets) went from $823K to $983K.

  • I added about $63K throughout the year
  • Got about $22K in dividends (2.7%)
  • Got about $75K in capital gains (9.1%)
  • Total returns on investments for the year, round 11.8%

The return is about average for the FIRE community. There are certainly some who really “smacked it out of the ballpark”, but I think that is because they are more invested in the assets that really took off this year.

Since I’m older and closer to FI, my allocation is a little more conservative:

  • 30% Bond intermediate Index Fund
  • 17.5% S&P 500 Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% International Index Fund
  • 17.5% REIT Index Fund

As one would expect, my bonds and REITs didn’t do as well this year (1.5% and 1.2% counting dividends) and they make up almost half of my assets. The stock portion (S&P, small cap and International) really kicked butt, getting around 20.1% on average. In the end I am very happy, as historically, this allocation would net me around 5.24% after inflation (which I expect to be around 2% for the US this year). Thus, my expectation was 7.24%, and I ended up around 11.8%.

As you might expect, my “set it and forget it” investment portfolio in my 401Ks and IRAs (both regular and Roth), where I just invest in index funds with the above allocation, did the best. I just regularly put in money, and surprisingly, the index funds do OK.

My father’s Inherited IRA, which I set up with an eye towards income, has returned 3.6% in dividends in 2017, which is a little more than I expected. Perhaps the rise in interest rates in the US (up 0.75% in 2017) had something to do with it. The capital gains for the stocks have been substantial, but that is only 25% of the portfolio. The REITs (25%) and bonds (50%) had a poor year for capital gains, so overall, it ended up just generating the 3.6%.

My “fun money” account, was somewhat of a disappointment as well. While one of my stock picks (Gilead Sciences) really shot up, the other two value picks (TAHO and CSS) did not perform well. I will revisit them in another email and I try and decide my ongoing value strategy. This portfolio also has 33% REITs and 33% bonds, which didn’t do well. Again, this is a small portion (5%) of my overall investment portfolio, so its more for me to try new things than to really make lots of money. I keep the majority of my investments in index funds and let them grow.

In a future posting, I’ll go into my value strategy, so folks can get some additional ideas and see if they work for them.

Hope your New Year has gotten off well!


Mr. 39 Months.

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