How to Measure Investment Performance

In you are anything like me, you are always wondering how your investments are doing and could you be doing better. Most financial experts suggest you measure your investment portfolio against “the market”, aka the S&P 500. I totally agree with that, however, I would suggest a couple other indices to measure yourself against.

All-In-One Funds for Millennials

In addition to the S&P 500, I also like to measure my retirement portfolio against a few other all-in-one funds out there that make really good sense for a Millennial investor.

I am specially referring to the Vanguard 2040 Target Date Retirement fund, the Vanguard LifeStrategy Growth fund, or the Vanguard Balanced Index fund. The latter ‘Balanced’ fund would be much more on the conservative side for a Millennial, but still a viable option for a Millennial who saves aggressively and is afraid of market risk and volatility.

As you can see from the chart below, I am losing handily to the market and my other Millennial indexes. Oddly enough, I used to be invested exclusively in the LifeStrategy Growth fund via my work 401(k). And my wife and I used to be exclusively in the Vanguard Target Date 2040 fund via our Roth IRAs.

I will keep a very close eye on these benchmarks over the next couple of years, because it may make more sense for me to invest in one simple “all-in-fund”. These rebalance automatically and make investing very simple and cut-and-dry. But I do like diversifying myself and adding more asset classes that aren’t weighted nearly as much in these typical funds, which would include REITs, Emerging Markets, and Small-Cap Value. With that said…diversifying with these classes isn’t helping me just yet.

But, investing is a long-term strategy and I feel like my portfolio is just hitting its stride and beginning to take shape for the long haul. I am a good 20+ years away from retiring.

Funds YTD 1-Year 3-Year 5-Year
My Portfolio  8.10% 12.50% 8.10% 10.80%
S&P 500 (VFIAX) 11.90% 16.79% 10.79% 14.61%
Total US (VTSAX) 11.21% 16.76% 10.36% 14.59%
TDF 2040 (VFORX) 12.78% 15.71% 7.23% 11.26%
LifeStrategy 80/20 (VASGX) 11.90% 14.29% 7% 10.41%
Balanced 60/40 (VBIAX) 7.90% 9.70% 7.37% 9.55%




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