This past week, June 26-30, the U.S. stock market was slightly down, while Europe stocks continue to do well. The Europe index is up 16% on the year, despite its own political and financial turmoil. This means Europe is outpacing U.S. stocks by approximately 6%, which not many saw coming, especially after Brexit. This obviously reiterates global diversity in your stock portfolio. I’m not going to lie, I had a home biased until last year. But now my equities are 80/20 versus 100% U.S..
The other big news of the week that may impact the stock market is Trumps corporate tax rate cut. He promised to lower the tax rate to 15% but now it’s looking like he’s backpedaling and 20-25% is more likely. We’ll see how this all flushes out in the near future.
Other news of note that may have impacted last week’s stock market (June 26-30, 2017)…
- The EU hit Google with a record $2.7 billion dollar fine for anti-trust laws (for bumping its own shopping services ahead of others)
- The economy grew 1.4% between January to March, which is higher than previously estimated
- Personal income was up 0.4% in May, while consumer spending was only up 0.1%
- Pending home sales drop for 3rd straight month in May
- 30-year fixed-rate mortgage dips slightly to 3.88% this past week (from 3.90%)
- One year ago a 30-year fixed-rate mortgage was 3.48%
- The all-time low for 30-year fixed-rate mortgages was 3.31% back in November of 2012, while the all-time high was 18.63% back in October of 1981
- Oil is down 14.3% in the first half of 2017 (oil is down 68.3% from record high in July of 2008)
Last Week’s Stock and Bond Index Performance (June 26-30, 2017)
- NASDAQ -2.0% (YTD 14.1%)
- Dow Jones Industrial Average -0.2% (YTD 8.0%)
- S&P 500 Index -0.6% (YTD 8.2%)
- U.S. Aggregate Bond Index -0.5% (YTD 2.4%)
How did my retirement portfolio perform last week (June 26-30, 2017)?
Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (and lost!) last week.
The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. I currently invest 15% of my income into my company Roth 401(k), and that doesn’t include the company match I get. All accounts are held with Vanguard (so as you can see I primarily invest in Vanguard funds because of this).
- Vanguard International Growth Fund (VWILX) -1.4%
- DFA U.S. Small Cap Value Portfolio (DFSVX) -1.2 %
- Vanguard 500 Index Fund Admiral Class (VFIAX) 1.2%
Can I Beat the Stock Market?
I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. Through lots of reading and research on my part, I’ve found that a number of these assets classes “zig” when the market “zags”. I am purposely over-weighted in Small Cap Value, which at times helped me beat the market and at the same time lag the market.
With that said, if I can beat the market I will absolutely take it (obviously)! Last year in 2016 my retirement portfolio returned 13.01% versus 9.54% from the S&P 500. The primary reason I was able to beat the market last year was due to the strong performance of my Small Cap Value holdings, which I am weighted heavily in.
Thus far in 2017, which is 183 days, my retirement portfolio is up 7.2% versus 8.2% from the S&P 500. So while I beat the market in 2016, I am now lagging it in 2017. But I am investing for the long term so this doesn’t concern me, as long as I am within reason of the market (roughly 1%). I use a free account with Personal Capital to track my investments like this.
I am a Millennial, a liberal arts major, and I am my own financial advisor. I am strongly considering using the services of robo-advisor Betterment, however. The more I read and research Betterment, the more I like their product, services, and overall costs. But at this point, I am managing my own portfolio.
My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.
Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.