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sschullo

2020 Annual Return

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Just when we thought 2020 was over and a new better year would begin in earnest, all hell breaks loose in DC. 

For what it's worth, there are three things I am pleased: 1. my wife and I are healthy, 2. a new administration in one week, and 3. my portfolio's performance for 2020--9.34%

What is incredible is that I am not taking a lot of risk and yet, I am compensated well above the risk I am taking. I know the standard deviation (SD) of my individual investments but not the entire portfolio.  About a third of my portfolio, taxable equities, have a standard deviation of 18 to 25 (high), and 2/3 of my portfolio is 7 or less (low). SD is the measure of market volatility. Both stocks and bonds performed better than expected in 2020. 

For those of you who are new to this site, I share my portfolio allocation, my costs in percentages and dollars and the returns of my individual securities. So many of you come here and want to get out of such and such annuity but need to know where you are going, and when you get your diversified portfolio set up, how does it work. That's why I share my portfolio every quarter.

I did the same thing decades ago by getting out of 2 of those horrible annuity products and into genuine stock and bond investments. My portfolio is easily replicated by the broadest asset classes of the Vanguard choices, Treasury Direct and TIAA. 

Here are the particulars of my portfolio as of December 31, 2020. All the data and statistics are from the portfolio feature on Morningstar. I created the following graphs and tables from Excel. 

Hope this will be useful for those of you still learning about constructing your balanced and diversified portfolio. 

 

End of 2020 Returns.jpg

End of 2020 Costs.jpg

Asset Allocation 

End of 2020 Allocation.jpg

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12.9% TOTAL 2020 return this year even with a heavy dose of bonds and an all index fund portfolio  and a 0.08 expense ratio. I think 50% but I will have to check as things probably have shifted.  I'm rather surprised actually . I was expecting a market collapse this year( been through two market collapses and didn't want to go through another) and  way back in January 2020 I shifted over to more bonds. I was wrong which proves you can't predict the market. Best not to be  overly pessimistic or optimistic about the market.

I am forever grateful to 403 bwise for opening my eyes and introducing me to Vanguard and their awesome index funds.A shout out to Steve Schullo for educating me years ago on bonds and risk and opening my eyes to all the BS being sold out there in 403b land. !

Considering all we have been through last/this year at least the stock market didn't add to our miseries.

Pray that we can unite as a nation despite our differences going forward. Be open minded  and respectful of varying opinions. We are all in this together. No one of us is 100% right or 100% wrong all the time. We need to find common ground

 

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Steve, I love reading your updates.  You helped me develop my amazingly simple plan.  While working we will be 60/40.  When retired we change to 40/60.  From your posts I know even 40/60 can provide nice results.  All while keeping costs low.  Hopefully all while trying to enjoy life and blocking all noise out.

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1 hour ago, Bashdash said:

Steve, I love reading your updates.

He pust me  to shame with his impressive  elaborate and informational charts. 

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Thanks guys,

Here is another chart I created to show how fees eat into your investments in DOLLARS. Many times when we say to our colleagues that 2% is way over the top in costs, some people think that 2% is very low! I have posted this chart before but I think it's worth posting again. 

For the record I pay a miniscule $1132.00 in 2020 for my entire portfolio! And that $1132 is calculated by the value of my portfolio at the end of the year. Vanguard as with most companies get their costs by the quarter. The value of my portfolio is about 10% lower at the end of Q1 last year because of the pandemic correction. But its too much work calculating my costs every quarter when the primary point is clear enough that my costs are extremely low. That's the point. 

If I paid 1.0% AUM for a financial adviser, for example, instead my current cost of $1132.00, I would be paying over $17,000!  Oven ten years, that's $170,000 lost to fees and that's just 1.0%! ONE PERCENT FOLKS! Jack Bogle said it a long time ago and kept saying it until he died two years ago at age 89 on January 16, "FEES MATTER!"

Costs Comparison to .07% of my cost.png

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