Rate of return in 2012

[spotty_dog]

So, how did your investments do last year? 401k/403b, IRAs, and other vehicles?

I didn't keep very good records. I will try to dig up enough numbers to do an accurate analysis across all our accounts (as a spreadsheet nerd I'm way too excited to try WhitecoatInvestor's Excel method to calculate an accurate rate). However, just for the stuff we're holding in Fidelity accounts, they tell us we made 10.48%. And my TIAA 403(b) that's still left over from when I was working back in Ohio, made 10.1% while my Roth that's still languishing in a high-fee actively-managed natural-resources sector fund (that crashed and burned in 2008/2009) did a not-so-terrible 9.3%. I hope that moving toward a more rigorous investing policy will help us to minimize fees, and we can move some cash out of low-yield accounts to start working for us.

My target asset allocation is roughly 70/30 equity/fixed income.

I will keep better records in 2013 for sure!

[Deebs]

We made 12% in a Charles Schwaab fund that is a group of mutual funds. We started a SEP in the last quarter for tax purposes, and it's pretty much flat, though we are doing options so we haven't lost anything. Better than I anticipated, but hoping for a better 2013.

[spotty_dog]

What made you choose options for your retirement money? Do you manage that account yourself? I'm trying to get out of common stock that we've bought and held because it's too time consuming to make sure the companies haven't done anything stupid, nevermind market timing to decide whether to purchase a call or put and when to exercise it! Oof!

[Deebs]

We did options because I wanted to start playing in the market a little myself, but it's a much more conservative way to do so. We're not going to get a huge return on anything, but if the stock doesn't reach the option price, we just keep it, so in theory (assuming the stock will go up at a later sat), we've lost nothing. I do have some shares to just hold in companies I really believe in (Apple, etc), but it's a small part of our portfolio, and it's kind of where I exercise the emotional part of investing. We've just recently had the money freed up that I felt comfortable adding that piece to our portfolio.

[Deebs]

My uncle, who passed away when I was in college was a broker, and had a best friend who is our broker. He gives us a family rate which ends up the same as if we utilized Ameritrade or something similar. That said, at times the amount of time I'm spending does get overwhelming, but I don't know that it would be if I didn't want so much involvement.

[spotty_dog]

Ah, that's nice. I was wondering how the commission would eat into your profits on the option. I'm still having trouble wrapping my head about options being lower risk than buying equities outright, since there's a risk of the option expiring and losing commission and premium alike, right? But I guess I've drunk the efficient market kool-aid and have zero confidence that I know anything that isn't already built into the price of the equity (or option). Plus, between buying a call option that expires when the stock plummets and stays down, and buying the stock and riding the fall, at least the latter carries the small salve of harvesting the loss (not inside an SEP-IRA though of course).

But I am going to look into this more because my DH would love for me to be spending more time on speculative investments that could pay off big!

[spotty_dog]

OK, I went through all the accounts and calculated a proper annualized internal rate of return. I get 10.9% on the sum of all the retirement accounts. I wanted to include our cash emergency account, since it feels like having all that money sitting around doing nothing should count against our total, but I was way too lazy to calculate all the inflows and outflows, LOL. Anyway, that money isn't part of the calculation I use for our asset allocation.

By contrast, the kids' accounts are in very simple 3-fund portfolios through New Hampshire's 529 plan. Between the two of them (DD's portfolio is a bit more aggressive than DS's since she has 2 extra years before she should need it) they got 13.1% this year. This is what I'd like to use as a benchmark, because their allocation between them is just a tiny bit more aggressive than I prefer, but otherwise the distribution between foreign, domestic, and bonds is about what I shoot for. So...onward and upward, 2013!

[ladymoreta]

Okay, finally got around to looking this up. Ugh, I've got to figure out my 401k from all my old jobs. The only one I have a significant amount of money in made 15.2%. That was from about 8 years ago, so I probably need to put them into some less risky funds. That's on the to-do list for this year - tracking down and consolidating/reallocating retirement accounts!

[spotty_dog]

Yeah, out of sight out of mind can be a good thing in investments to a certain degree, but at some point you really should check in and make sure everything is allocated as you want it. It's also a good idea to have enough tabs on everything that you can look at it as one overarching portfolio: everything that you and your DH expect to rely on together in retirement, should be lumped together for asset allocation considerations as well as for rate of return calculations. Last year I dug up the information on my 403(b) from the job I left in 2006. My $6000 of contributions, plus a small employer match, had almost doubled since I'd left it sitting there. Whoo! Except it'd nose-dived in the interim, and I think it wouldn't have been so bad if I'd bothered to figure out what I was invested in, and if I actually wanted to own it, before the bubble burst in 2008. Oh, well. I called it part of our total retirement package, and re-allocated it completely into one asset class that I didn't have in our other accounts.

Was that 15.2% mostly in equities? One of DH's actively managed funds returned 19.95%. (But even that strong performance only pulled it up to the break-even point since we bought it in 2008 -- d'oh!)

[oceanchild]

My defined contribution state retirement plan, which is mostly in a target retirement date fund, went up 13.53% in 2012.

This year is my last chance to decide whether to keep my account as a defined contribution or switch over to the defined benefit plan. Which is so not a decision I am prepared to make.

I also have a Roth IRA, which, if I've done the math right (questionable), went up about 8.3% in 2012.