2012 Investment Portfolio Returns – A Good Year

by Mike Holman

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Time to take a look at the 2012 investment returns.  You can usually tell the performance by how early in the year this post appears.  When the market has done well, I can’t wait to calculate the return and see how much more money I have.  In bad years, I tend to delay performance calculation.  This year – the numbers look pretty decent.

My portfolio allocation

My portfolio allocation is loosely based on the Canadian Capitalist’s sleepy portfolio. I’ve made a few changes from his portfolio and this is what my desired allocation is:

Asset class ETF Target (%)
Bonds XSB 20
Real return bonds XRB 5
Canadian equity XIU 11
US equity VTI 32
International equity VEA 32

I’ve been a good little indexer this year (for a change), so my actual allocations were pretty close to those numbers.

Past returns

Here are my returns from the last seven years:

Year Return(%)
2006 14.7
2007 4.1
2008 -17.0
2009 20.24
2010 7.3
2011 -1.8
2012 13.3

My annualized rate of return over the seven years is 5.16%. At that rate, $100,000 invested seven years ago would now be worth $142,260.

The rate of inflation over the last six years has been pretty low at just under 2%, so my annual real return is about 3%, which is pretty reasonable.

I have a relatively low amount of Canadian equities (11%) which helped this year as the S&P500 (13.5%) and Europe/Pacific (14.8%) handily outpaced the TSX60 (8.1%).  This doesn’t mean anything, as there are other years where the Canadian index is the winner.  My investment philosophy is to keep my investment fees low and diversify.

How did your investments do last year?

 

 

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{ 4 comments… read them below or add one }

1 Brian Snowdon

Hi Mike – what software/excel spreadsheet are you using to calculate your returns? I bought an inexpensive ROI package but I have to enter the opening and closing values, contributions, withdrawals and dividends for every investment and again for the total portfolio. Do you have any recommendations?

2 Mike Holman

Brian, I use a very simple method which is more of an estimate. I describe it here http://www.moneysmartsblog.com/investment-performance-for-2007/

That method works well as long as your contributions and withdrawals are not a large percentage of the portfolio. Otherwise some sort of XIRR ROI should be calculated which is a pain in the butt.

3 Jungle

Hey Mike

I was wondering if you used XIRR, I think your return be higher and more accurate?

Also I am trying to gather data for 2010 returns. ( I only started doing XIRR in 2011, so I have two years data) Going back 2010 and some our data is hard to find for XIRR.

But your returns are 7.3 % in 2010. Do you recall your asset allocation in 2010? And also which funds you used? (ie us funds?)

4 Bet Crooks

We made about 4% in our largely bonds pension fund, and about 5.5% in our largely stocks other investment fund. The 5.5% is only dividends and realized capital gains. There’s a lot more there in unrealized capital gains, but we don’t count that. (No unrealized capital losses right now.) That’s down a bit from 2011, but then bonds had an amazing year in 2011. Hope 2013 brings us all joy!

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