Keeping track of your investments is always a good idea. I used to monitor our portfolio every month but found that to be a bit too frequent. I’ve now settled into the routine of going over our finances every quarter, specifically when it comes to our retirement savings. This also gives Random Gal and I a chance to look things over and make sure that we are on the same page. Given that I already track this information, I figured that I would share it with you guys. I’m hoping this will be a regular feature on this blog. I’ll also review how our investments did overall in 2016.
Our Holdings – A Brief Summary
We invest primarily in index funds and ETFs. We also try to minimize fees and expenses as much as possible. Currently, our overall asset allocation is 75% equities and 25% bonds which is what our target allocation is. For our equities, we have a mix of domestic stocks, international stocks, and REITs. We also have a slight tilt to small cap value stocks within our domestic equities. Our bonds are all index funds and ETFs that are available in our retirement accounts. I don’t include LRG’s 529 plan in our quarterly checks and updates as I consider that money his and not ours.
2016 Fourth Quarter Review and Annual Review
Our investment portfolio grew by about 10% during the quarter from 10/1 through 12/30. This growth includes both capital contributions and investment gains. During this time period, our investment return was 1.45%. Looking at a graph of our holdings for the quarter, we were pretty much in the red until the first week of December.
For the year, our portfolio saw a return of about 9.1% compared with an 11.96% total return of the S&P 500. Overall, I’m pretty happy with the performance of our portfolio. Sure, I could chase higher returns by taking on more risk, but Random Gal and I are comfortable with our current asset allocation and how it fits with our overall risk tolerance and financial plan.
Upcoming Changes for 2017
This report doesn’t include our Schwab brokerage account with all of the expensive mutual funds. Our plan for this account will be to consolidate all of the funds into one total stock market index fund. We decided to just bite the bullet and pay any capital gains taxes up front. This will likely happen within the next few weeks. Doing this will alter our asset allocation towards equities, so I’ll either adjust our bond holdings in our retirement accounts or purchase municipal bonds in our Vanguard taxable account to bring us back to our target asset allocation.
Thanks for reading. I’m excited for this coming year, and it will be interesting to see how our portfolio does in the first quarter of 2017.