My rate of return at Vanguard shows -14.2% as of 12/31/2018. Should I be concerned?
Yes. Sell, sell, sell. Get out while you still can!
Or, as I said before, select an asset allocation that you can be comfortable with (it may mean missing out on the best gains so you don't have to experience the worst drops). This takes some real effort and reading up.
I did when I developed my investor policy statement (ips). Were I to get concerned, my ips has a little diagram from Tyler's portfolio Charts that shows how variable the market can be. And my ips tells me what to do, which 99% of the time is STAY THE COURSE.
I prefer to stay the course.
Great!
I'm not sure about you but it is often hard to grapple with emotions even when you have that rational Jiminy Cricket right beside you.
To you (or anyone else who frets about returns) it's best to recognize that there's nothing subjective to returns for an index fund. It tracks the index minus fees/expenses. So worrying about 'better' or 'worse' performance becomes a moot issue (maybe not true for active funds) because the investments are tracking the objective standard which sets the bar for better or worse performance. Once having decided on an asset allocation (ideally with annual auto-rebalancing), the only activity for an index investor is managing one's feelings*.
I have a couple personal strategies:
1) Don't look at balances much and don't look at returns at all. I just look at my net balance semiannually-ish ("oh look, it goes up and down but on the whole it tends to go up. neat.").
2) Realize that, because most stock prices are volatile, rates of return are sensitive to arbitrary start and end dates. For example, I just logged into my returns that show returns as of 12/31/18 averaged -11 (global exUs and small caps were the lowest and I have a smallcap/emerging market tilt). I also clicked on a button for YTD that said 7% annualized return. So am I on the right track? Based on what long-term averages of my asset allocation suggest, yup. Based on arbitrary start and end dates? Is that really even relevant when I am continually contributing over time?**
3) Recognize what I can control (asset allocation, contribution rates) and what I cannot (the market).
*Side note: That's where Ramsey's suggestions can really get people into trouble, by setting up erroneous expectations.
** Nope, my actual return is the total return of all shares whose respective purchase prices vary depending on purchase date.