2013 Investment Portfolio Returns – Another Good Year

by Mike Holman

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New year and time for a new post!

I like to measure the performance of my investment portfolio every January to see how I’m doing.  This year was a banner year for equities and my portfolio went up 19.9% which is pretty good for  a 75% equity/25% fixed income mix.

It’s been said that investors who are in the accumulation phase should be happy when markets go down, so they can get more for their investment dollar.  While I don’t disagree with that idea – in practice, it might not work out so well.

As someone who works in the financial industry, I know that my job prospects go down exponentially with the markets.  A prolonged bear market might be good for a long term investment strategy, but if the investor doesn’t have a job, then it’s not really going to matter much, because they won’t be able to make any contributions.

Even if you don’t work in the financial industry, the markets are often loosely tied to the general economic health of a country.  Think of the great stock market crash in 1929 and the ensuing depression.  Did those people in bread lines really appreciate the incredible investing opportunity they were missing out on?  ;)

Market returns in 2013

For a more complete set of returns – check out http://www.canadiancapitalist.com/asset-class-returns-for-2013/.

Here are the relevant equity returns for my portfolio:

  • Canada 13%
  • United States (in Canadian dollars) 41.5%
  • Europe/Asia 31.3%
  • Canadian dollar lost 6.5% against the US dollar.  This helps increase any non-Canadian holdings

My allocation

My portfolio allocation is 75% equity and 25% fixed income.  Here are the exact allocations:

Asset class ETF Target (%)
Short term bonds XSB/BSV 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, so my actual allocations were pretty close to those numbers.  My overall return in 2013 was 19.9%.

Past returns

Here are my returns over the last eight years:

Year Return(%)
2006 14.7
2007 4.1
2008 -17.0
2009 20.24
2010 7.3
2011 -1.8
2012 13.3
2013 19.9

My annualized rate of return over the seven years is 6.9%. At that rate, $100,000 invested eight years ago would now be worth $170,569.

The rate of inflation over the last six years has been pretty low at just under 2%, so my annual real return is almost 5%, which is pretty reasonable.

I have a relatively low amount of Canadian equities (11%) which helped this year as my non-Canadian equities performed much better. 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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{ 5 comments… read them below or add one }

1 Canadian Capitalist

Thanks for the mention Mike. You make a very good point about poor stock markets implying poor job market conditions. In both the previous bear markets, the job situation in my industry (technology) was very poor. So, investors, like everyone else should probably be careful what they wish for.

2 Wes

Hi Mike,
Thanks for publishing your investment returns for 2013.
I’m a just retired DIY investor who follow financial writers such as yourself, Norm Rothery, Rob Carrick etc for timely investment information. I used to have Financial Planners but all they ever did was sell me mutual funds which really didn’t do much for my portfolio. After 20 years with them, I started going solo and invest solely in ‘blue chip’ dividend paying stocks.
In 2013 my portfolio returned 26.8 % and this year I’m looking at an annual dividend income of $15500.00 to supplement my living expenses.
In short, thank you for all the valuable financial information that you guys have contributed.

Wes

3 Potato

Shouldn’t 2% inflation and 7% returns work out to 5% real returns?

4 Mike Holman

@Potato – Yes, it seems my math skills have eroded. I fixed it. :)

5 Ryan G

Hi Mike,

Thank you for being open and honest about your investment returns. I am curious to know why you invested with ETF’s and not indexed mutual funds. If you have could provide some insight into a well rounded Resp indexed mutual fund portfolio that would be greatly appreciated. Given how low our dollar has fallen against the greenback, any suggestions for investing in a US index?

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