Last week, October 9-13, 2017, all U.S. stock indices reached new all-time highs. The NASDAQ is leading the charge in 2017, with a year-to-date return of nearly 23%. Interesting note; the NASDAQ has logged its 57th all-time high.
Stocks have been setting new highs and interest rates remain low, pushing investment returns well-above their long-term averages. Over the past five years, U.S. stocks returned almost 15% per year, which is roughly twice as much as projected long-term returns most financial experts are predicting (approximately 7% annually).
Last Week’s Stock and Bond Index Performance (October 9-13, 2017)
- NASDAQ 0.2% (YTD 22.7%)
- Dow Jones Industrial Average 0.4% (YTD 15.7%)
- S&P 500 Index 0.2% (YTD 14.0%)
- U.S. Aggregate Bond Index 0.5% (YTD 3.6%)
Last Week’s Retirement Portfolio Performance Report
(October 9-13, 2017)?
Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost!) last week.
How Did My 401k Do Last Week?
Last week my retirement accounts were up 0.52%, whereas the S&P 500 was only up 0.20%. Overall this year, which is 288-days into 2017, my retirement portfolio is up 14.6%. So I am actually slightly beating the market. Slightly.
The Vanguard Target Retirement 2040 Fund (VFORX) is up 14.9% so far in 2017. This is my personal benchmark because I could invest all my retirement portfolio into one account or choose a number of index funds to diversify. I am doing the latter and this year I am losing to the 2040 Target Date Fund. Again, slightly. But, more on why I am not using the 2040 retirement fund later.
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”.
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. In addition to the S&P 500, I like to measure my portfolio performance against Target Date Retirement Funds. I specifically like to use the Vanguard Target Retirement 2040 Fund (VFORX) because that is what I used to invest in before I went to all index funds. But if I can’t beat the Vanguard 2040 fund, then why not simply invest in it (one fund) versus the 10+ mutual funds I am in now? Well in 2016 the Vanguard 2040 fund was up only 8.73%. So it under performed the market (S&P 500) by nearly 1%, and I personally beat it by nearly 5%. So that tells me I am on the right track with my well diversified portfolio.
Millennial Personal Finance Blog
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.