2012 Investment Portfolio Returns – A Good Year

by Mike Holman

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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