Rate of return

[joenorm]

Hello all,

I was just glancing at my vanguard account looking at the Performance tab. It says that since 2015 until now I have had a 0.4% rate of return on my investment. I only own VTSAX and reinvest dividends.

Is this just what things look like right now with the dip? Or have I done something wrong?

thanks

[dividendman]

Did you invest all at once or was the money coming in and out?

Quick look at https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#performance-fees shows that 5 year annualized return is ~9.8% and 10 year is ~12.4%... so you should be in there somewhere if you just put in a lump sum at 2015 and reinvested any distributions.

[SeattleCPA]

That seems pretty believable if most of your money went in in the last three years.

[ChpBstrd]

Look into how "performance" is calculated. Did you make any withdraws, and do those count against your "performance"? This is one of my complaints about Personal Capital. They just calculate account value at time x versus account value at time y.

[joenorm]

This is with random(but steady) inputs over the last 7 years, with a few bigger lumps in the past three years. No withdrawals.

[MustacheAndaHalf]

This is with random(but steady) inputs over the last 7 years, with a few bigger lumps in the past three years. No withdrawals.

What percent of your investment happened in 2021 and 2022?

Investing $100/month in the stock market since 2015 (total of almost $10k) would have left you with $15k now.  You must have invested in a very lumpy manner to have such a small return.

[Heckler]

This is with random(but steady) inputs over the last 7 years, with a few bigger lumps in the past three years. No withdrawals.

What percent of your investment happened in 2021 and 2022?

Investing $100/month in the stock market since 2015 (total of almost $10k) would have left you with $15k now.  You must have invested in a very lumpy manner to have such a small return.

or at peak exuberance points in time.  (GME Top is in, BTC Top is in, etc)

[Heckler]

I prefer to not look at Rate of Return, but total current value.  Mine has always kept rising (except when it falls), I'm happily globally diverse though, only 30% VTI.

[Heckler]

https://www.google.com/finance/quote/VTSAX:MUTF?sa=X&ved=2ahUKEwjX3rT2n9T7AhVBBTQIHT3ECCwQ3ecFegQIHxAf&window=MAX

Anything you invested before end of December 2020 would have a positive return to today.  Anything invested after (except for June and October 2022) would have a negative return.

The investments you made in 2015 have doubled (depending on the date)

[joenorm]

Funny. In my head it has been slow and steady but I just checked and it's been mostly from 2020 until today. The years previous were pretty meager in comparison.

[secondcor521]

I'm fairly certain that the Vanguard performance tool effectively calculates IRR.  So it does take into account the timing and amount of any contributions and withdrawals when giving you a performance figure.  It'll also take into account the timing and size of any earnings.

[vand]

Time weighted return vs money weighted return can vary drastically depending on the timing of your cashflows.

If you lumped in lot over the last couple of years when the market was higher then its quite possible then your money weighted returns will be poor even given the average 10% growth in stocks over the last 8 years.

[MustacheAndaHalf]

For those making active investment decisions, if your IRR falls below that of a passive index fund, that's evidence you'd do better investing passively.  Over 2019-2021 the stock market doubled, which is like a 26%/year return for 3 years.

I started "an experiment" when the stock market (VTI) had dropped but not yet recovered.  That recovery saw VTI (the benchmark) soar +53%/year for 18 months (1.53 ^ 1.5).  But my experiment was even more extreme, rising +120%/year for 18 months (2.2 ^ 1.5 = 3.26).  These cases are also the simplest use case of IRR: no distributions.