Investment Portfolio: 2007 Year-End Holdings And Performance Update

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12/07 Portfolio Breakdown
Retirement Portfolio
Fund $ %
FSTMX – Total Stock Market (~Large) $24,006 23%
DISFX – S&P 500 Index Fund (Large) $7,437 7%
VIVAX – Vanguard Value Index (Lg Value) $13,782 13%
DODGX – Dodge & Cox (Lg Value) $13,782 5%
VISVX – V. Small-Cap Value Index $12,725 12%
VGSIX – V. REIT Index $7,637 7%
VTRIX – V. International Value $8,851 13%
VEIEX – V. Emerging Markets Stock Index $10,622 10%
VFICX – V. Int-Term Investment-Grade Bond $8,037 8%
PTRAX – PIMCO Total Return (Interm. Bond) $2,393 2%
Cash (to be invested) $3,000 3%
Total $105,323

Recent Transactions
In the last quarter of the year, we ended up putting in the maximum $15,500 salary deferral in both of our 401k/403b’s. I had already put in $12,500 already in my Solo 401k, so I sent in a last-minute check for $3,000. For my wife’s 401k, it was done in big salary deferrals in October, November, and December. We were lucky that the company allows almost 100% salary deferrals.

Summary and Performance
My last portfolio update was back in September, but I figured with the end of 2007 it was definitely time for an update. It was a late decision to go ahead and contribute a lot to our tax-deferred accounts and taking away a bit from our cash hoard, so I was more concerned with getting them in on time than what I was actually investing in. Lots of changes to come soon, so I’m just posting a snapshot of what we have for now.

I did go back and track the cash inflows, and calculated our time-weighted rate of return, which ended up being 2.49% annualized for 2007. For a very rough comparison, the S&P 500 via Vanguard 500 (VFINX) returned 6.13% YTD. Part of this low performance was just due to timing, as the latter half of 2007 was a lot worse than the 1st half, and that was when we invested a lot more money. (Remember, this is the exact performance of our money, not just the averaged returns of all the funds we hold.) In 2006, our portfolio return was calculated at 24.9%. How did you do in 2007?

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  1. Jonathan,

    Can you please explain how you are able to send in a “last minute” check to your 401k? I was not aware that one could fund a 401k through a personal check. Is this something you will personally need to account for in your 2007 tax return.

    Thanks for all of your great posts!

  2. ethan: i believe he has a solo 401k that is funded through self employment earnings. the account must be funded by 12/31 unlike an ira which can go until 4/15. sending in a lumpsum check is often not a problem in situations such as this

  3. 6.6% return for me. Most of my investment happened early in the year though.

  4. i keep seeing #name? errors when i download your sheets in excel format or view in google docs…anyone know of a way around this?

  5. interesting, i was in a similar position. i contributed 40% of my net pay to my 401k for the last 3 months of the year to almost max out the $15,500 annual contribution. even though a big chunk of my contributions was done at the end of the year, my personal rate of return (as calculated by fidelity) was still 9.1% for 2007. not bad i guess…

  6. i should add that 9.1% rate of return was for my whole 401k balance, but it’s only worth about $20k right now, so the majority of it was contributed in the past year.

  7. so i used your estimation tool since i couldnt get the excel version to work and couldnt add rows in the zoho version
    i was excited to see a 13.4% return estimation for my tsp…then realized that the matching isnt included in there do you remove matching and the matching returns? this seems impossible, especially since the govt (tsp) only gives like annual statements with very little info, and until recently, could not even see the matching info

  8. My time weighted return for 2007 was 9.5%
    20% FUSEX – S&P Equivalent
    20% FDIVX – Diversified International
    15% FMCSX – Mid Cap
    15% FDVLX – Value
    15% FEXPX – Export & Multinational
    15% SSMVX – Small Cap

  9. ok last comment, thanks for the gummy stuff site, great stuff, found this..

    If XIRR isn’t available on your copy of Excel, run the Setup program to install the Analysis ToolPak.
    After you install the Analysis ToolPak, enable it by using the Add-Ins command on the Tools menu.

  10. Maybe this has been covered before, but what are your thoughts on dividend reinvesting? Here at work, one gentleman is adament about not reinvesting dividends…..he says the market is too high at that time to reinvest. He suggests taking the money and then buying back in at a later time when the market dips. My argument is that if you are leaving the money in long term, then why not reinvest because of dollar cost averaging…..and you save brokerage fees also. What is your opinion?

  11. ethan – bryan is currect, it is because I have a Self-employed (Solo) 401k where I can control the contributions. I actually have to mail in a check, there are no electronic withdrawals with my system. This has actually shown be the benefit of automation, as I am constantly forgetting to send the contributions.

    gt – Good point, I had to do that on another computer recently. Tools > Addins > Analysis Toolpak. It might ask you for the CD.

    Texan – I think it can be done both ways. Some people use dividends to rebalance throughout the year. I’m more hands-off in that I just like to reinvest the dividends, and then rebalance once a year or as needed on a set interval. That way dividend return is just part of the “total” return.

    This works out fine for me especially since my holdings are mostly in tax-shielded accounts so it doesn’t create excess capital gains.

  12. Cheapster Bob says

    I think I got about the same return as you unfortunately. I guess it is better then losing.

    My problem was I put too much faith in Dodge and Cox and they are really starting to perform poorly. I have about 48 percent of my 401 K funds in D&C as they were rockstars a few years ago. Now they are getting thrashed by the S&P.

    I recently moved forty percent of future contributions into the diversified international. I still have that load of cash in Dodge and Cox though. Should I move half to some other funds or would that be chasing the market?

    Also, in your opinion has REITS bottomed out? I’m waiting for the bottom before starting an ETF in the real estate sector. My strategy is to keep investing mass cash over the long term waiting for the next bubble and then cashing out near the peak.

    By the way, a good article idea for you would be your trying to guess the next bubble. Will it be a repeat of tech or maybe something new like Health Care due to the baby boom crush.


  13. My xirr return was 7.4%. I contributed fairly evenly throughout the year. I have a fairly wide asset mix incl us large, small, value, emerging, large int’l, reit, comm (pcrdx), tips, bonds, cash (13.5% in cash! i’m trying to slowly move cash to my optimal asset mix).

    btw, anyone know why there are varying #s on 2007 performance of S&P 500 and/or VFINX – all the way from 3.53% to 7+%. I’m using year begin and year end vfinx adjusted prices from y! finance and using xirr to get ~ 4.8% or so.

  14. I also have a solo 401k with TRoPrice and I was told by their rep that I can contribute for 2007 until tax deadline in April. The deadline to establish solo 401k is Jan 31 of the year, but contributions can be made for that year until the tax deadline (in the following year)!

  15. Regarding S&P 500 numbers, I believe 3.53% is from just the index value, which doesn’t include dividend yield.

  16. irina – I think the deadlines can be different depending if you are a corporation or a sole proprietorship, as well as whether it is a salary deferral or profit sharing contribution.

  17. S&P 500 returns for 2007 are 5.49% including dividends (3.53% before dividends).

    My 401k return was only 3.2%, but thanks mostly to a couple of Janus funds in a taxable account, my overall portfolio return is 10.4%.

  18. I had like 55% of my portfolio in DODGX which did a poor 2.6% or something for the year!

  19. According to Fidelity, my personal rate of return was 7.6% (don’t know how different the calculation is from Jonathan’s)

  20. I’m with Fidelity too. My personal rate of return 19.8%. I am very pleased and not surprised over 80% of my portfolio is in emerging markets.

  21. My return for 2007 was just over 13%. My retirement funds earned 10% and my taxable return was 19%. This difference was due to the fact that my taxable accounts have more risky investments (emerging markets, natural resources) that did really well in 2007.

  22. Don’t be fooled by Fidelity’s Personal Rate of Return calculations. They take into account the contributions you made through the year so even if you had a mutual fund that did absolutely nothing (no gains or losses and not including expenses), then of course you’re going to show an increase in return because due to your contributions, you’re always going to have more than what you started with.

    If you really want to see what the Fidelity funds are yielding you, look at the YTD or annual return for that particular fund minus expenses. Amazing the look on Fidelity account owners faces when you don’t add personal contributions made over the year to the calculation. That 19.8% may not be too rosy after all.

  23. Bob in MI says

    Ed you are correct. I think a lot of the investment companys include your contributions when they average out the yearly returns, I had 28%. Which I was thinking was great. I figured out what Lincoln did, my rate dropped to just below 10%.

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