$10,000 Benchmark Portfolio Update – January 2013

Time again for a Beat the Market Experiment monthly update, for the first of three portfolios started on November 1st, 2012:

  1. $10,000 Passive Benchmark Portfolio that would serve as both a performance benchmark and an real-world, low-cost portfolio that would be easy to replicate and maintain for DIY investors.
  2. $10,000 Beat-the-Benchmark Speculative Portfolio that would simply represent the attempts of an “average guy” who is not a financial professional and gets his news from mainstream sources to get the best overall returns possible.
  3. $10,000 Consumer Loan Speculative Portfolio – Split evenly between LendingClub and Prosper, this portfolio is designed to test out the alternative investment of peer-to-peer loans. The goal is again to beat the benchmark by setting a target return of 8-10% net of defaults.

$10,000 Benchmark Portfolio as of January 1, 2013. I chose to open an account at TD Ameritrade due to their 100 commission-free ETF program, including the best low-cost, index ETFs from Vanguard and iShares. I funded it with $10,000 and bought all the ETFs required to be fully invested on 11/1/12. All trades were commission-free. My target asset allocation is below.

Due to simplicity and small portfolio size, for now I am going with 100% stocks and no bonds. This is meant to be appropriate for young investors, who should try to get a long horizon for stocks and can add more bonds later on. According to popular glide paths, a rule-of-thumb is having your age minus 20% in bonds. Here are the ETF components that represent each asset class:

Here’s a screenshot from my account showing exact holdings and their market value as of 1/1/13, before market open:


(click to enlarge)

Here’s the asset allocation pie chart, tracked with a simple Google Docs spreadsheet:

No new trades over the past month as the allocations are still close to targets, just a few dividend distributions.

Total value of stocks: $10,206.08
Cash balance: $134.57
Total portfolio value (1/1/13): $10,350.65
Total return since inception (11/1/12): 3.5%

Comments

  1. Hey, that’s cheating ;)

    Account value is always calculated on the last day of month/ quarter/ year.
    What was the portfolio value on Dec 31st?

  2. Is it possible to do DRIPs with these ETFs?

  3. Thanks for all of thie time you put into this blog.

    I’d like to use a version of this spreadsheet for my mutual funds portfolio which would categorize each mutual fund holding by its Lipper category (eg emerging markets bond) and update the dollar value of each holding at the end of each trading day. Is this possible? Thanks!

  4. cupajotogo says:

    Enjoying your blog! Can’t wait to hear how your LendingClub and Prosper portfolios are doing.

  5. I enjoy playing with portfolios, and your original portfolio is very similar to what I normally do, though I’ve made it a bit less risky for the last 5 years due to 2008 and ongoing market/economic uncertainty.

    Here’s what your “normal” portfolio would have done. I’ve made a couple of approximations.

    23.5% VTI
    3.5% VBR
    6% VNQ
    27% VEU (give you a total of 6.75% emerging markets)
    20% SHY (most popular short term treasury ETF)
    20% TIP

    2012 performance = 12.05%

    Note: performance calculated using current numbers from morningstar.com. Returns are not final as dividends will not be completely distributed for a month or so.

  6. Did you open this on January 2012 or November 2012? The title says Jan. 2012 should that be Jan. 2013 maybe?

  7. @whytax – Um, the markets were closed on New Year’s Day, so the exact same thing? :)

    @Branden – If you want to do a DRIP-style investment, look into Sharebuilder and/or Betterment as they offer dollar-based investments. TD Ameritrade lets you buy as little as one share with no commission fees, however, while the other guys charge fees.

    Sharebuilder promo codes to get some free trades:
    http://www.mymoneyblog.com/sharebuilder-promotion-codes-for-5-free-automatic-trades-2-real-time-trades.html

    Betterment Review:
    http://www.mymoneyblog.com/betterment-com-review-2-application-process-updated-asset-allocation-fractional-shares-free-25-bonus.html

    @Bitzer – You can save a copy of the spreadsheet to your own Google Docs account and edit it as you wish. There is a spreadsheet function that pulls share values from Google Finance.

    @cupajotogo – Thanks for reading!

    @Stephen – Adding bonds is wise, I just didn’t really want to deal with less than a 5% slice of something in such a small portfolio (it’d be under $500).

    @jim – Good catch, it should be 2013

  8. To make a copy of the spreadsheet for yourself, log into your Google account and go to “File” > “Make a copy…”. You can then edit or tweak as you like.

  9. Right! :)

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