Annual Rate of Return (long-term)

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peterson82

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I was playing around with numbers, and was shocked at how much 1% increase in an annual rate of return will affected the balance of one's investment after 30+ years. (Which is probably pretty obvious to you all!)

My question is what is your long-term average for annual rate of return, and how much did switching to "trading" increase that rate?
 
peterson82 said:
My question is what is your long-term average for annual rate of return, and how much did switching to "trading" increase that rate?
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Over the past four years, the TSPtalk traders, as a group, have done worse than the L2040. This result is in line with the expectations of financial theory.

If you examine the attached Long Term Tallies from 2-4 years, you'll notice fewer people being tracked over time and the L2040 moving toward the top. Most of the traders who started four years ago have since left the tracker.

Consequently, trading seems riskier than a well diversified, passive approach, e.g. one of the L Funds. Some traders have achieved much better than average returns and some have suffered much worse than average returns.

Are the traders good or lucky? Again, financial theory would suggest lucky. However, I'd be the last to claim Show-me, who has led the tally for the last four years, is not skilled! :laugh:

Finally, it is unlikely that the L2040 will ever achieve a yearly return higher than the best trader. However, it is also just as unlikely that it will ever be ranked last.

Good luck.-----Jim
 
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It seems like if one were to DCA their investment into one of the riskier funds they would be in the negative because of the bad market. The question is, when the market rebounds does taking that hit pay-off in the end?
 
peterson82 said:
It seems like if one were to DCA their investment into one of the riskier funds they would be in the negative because of the bad market. The question is, when the market rebounds does taking that hit pay-off in the end?
Click to expand...

You can also take the perspective that stocks are currently cheap. When they rebound (1-3 years?), they'll pay off. That's what they've done in the past. However, I'd DCA into all three stock funds, not just one. In fact, I'm currently DCAing into the Vanguard REITS and Emerging Markets funds which are both doing terrible this year.

Historically, you'll just do a little better than inflation investing in the G Fund. The F Fund has done better. However, typically, a passive, diversified investor uses fixed income (G&F) to dampen risk and equities (C, S, &I) to make money.----Jim
 
Yeah, I wish i had some money to invest because the market prices are low (Of course, I probably would have lost the money if I started earlier with this market).

I will keep track of my rate of return every year, for comparisons and for general reference. If someone 20 years from now asks the same question I did, I'll have a nice long detailed answer. (Hopefully the numbers are at least above inflation!)

Oh yeah, those reports are nice, thank you. If some of the people at the top kept up their success for years and years they will have made hundreds of thousands more than just an L-fund. That is quite amazing!
 
rokid said:
Over the past four years, the TSPtalk traders, as a group, have done worse than the L2040.
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This is true, but during bear markets, these numbers "should" change. The L2040 will not take shelter during any signifcant down turn. The only way to beat the indices or a fund like the L-fund, is to be out of stocks when they go down.

This is not to say timing is easy. Beating an index fund is tough during a sustained bull market. It's what you can do in a bear that should make the difference, and since 2008 is the first bear we've had during your study, I don't think it is a true representation of a long term projection of what timing can do - although I do understand that you state studies that show otherwise.

That said, my weakness has been that I have been overly bearish when there were very good buying opps. So yes, it is tough, but if this bear market goes on for any length of time I believe your numbers will swing. It's just tough for me to give over control of my account to the swings of the market.
 
tsptalk said:
The FRTIB just doesn't want us to do any thinking on our own. :)
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Sure Long and the FRTIB are just a bunch of political hacks that can't do anything unless they are given a job and they are just outright lying to us when they say they want to educate us.... yea educate us to the barclay brainwashing they have received, and maybe even something extra from barclaps since they rammed thru the 2 IFT limitation. :mad:

Ahhh my evening cleansing of all things vile and scummy. :D

CB
 
tsptalk said:
The FRTIB just doesn't want us to do any thinking on our own. :)
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I'm beginning to think that the most productive TSP analysis I can do is to find out what the Stepford FRTIB wants me to do with my account, and then do the exact opposite ..... :notrust:

Lady
 
tsptalk said:
This is true, but during bear markets, these numbers "should" change. The L2040 will not take shelter during any signifcant down turn. The only way to beat the indices or a fund like the L-fund, is to be out of stocks when they go down.

This is not to say timing is easy. Beating an index fund is tough during a sustained bull market. It's what you can do in a bear that should make the difference, and since 2008 is the first bear we've had during your study, I don't think it is a true representation of a long term projection of what timing can do - although I do understand that you state studies that show otherwise.

That said, my weakness has been that I have been overly bearish when there were very good buying opps. So yes, it is tough, but if this bear market goes on for any length of time I believe your numbers will swing. It's just tough for me to give over control of my account to the swings of the market.
Click to expand...

You have to both get out of the market at the right time, and then, get back at the right time. It's tough to do.

"Studies show"... isn't necessarily convincing. That's why I've been so interested in the tally. A little empirical evidence. Although, it's certainly not conclusive or statistically valid.

I'm convinced that a person's market strategy is a belief system - you can't prove it beyond a reasonable doubt. It's like religion.

I hate gambling. For me, it's a waste of time. So playing the odds, listening to the academics, and taking, a somewhat, conservative approach appeals to me. If I can get the average return without working at it or taking on additional risk, I'm happy. It's probably why I worked for Uncle Sam for 35 years. :toung:

Keep up the good work. The way you've built TSPTalk is a real accomplishment.---Jim
 
I am guessing FRTIB is the group that limited the IFTs less than a year ago. I read all about it in these forums, and it will be interesting to see if they give us some numbers that will back-up their claims.
What is the reason they are so against people having control of their own funds? Are they worried about people losing everything, or are they just looking out for themselves? (I know they claim we lose a bunch of money to trade fees, but do they have any other reason to reduce control?)
 
peterson82 said:
I am guessing FRTIB is the group that limited the IFTs less than a year ago. I read all about it in these forums, and it will be interesting to see if they give us some numbers that will back-up their claims.
What is the reason they are so against people having control of their own funds? Are they worried about people losing everything, or are they just looking out for themselves? (I know they claim we lose a bunch of money to trade fees, but do they have any other reason to reduce control?)
Click to expand...
Barclays. Answer is here, taken right from TSP.gov.

http://www.tsptalk.com/mb/showpost.php?p=164321&postcount=9

Barclays also was heavily invested in the two BSC hedge funds that went belly up last year; Barclays is in the process of suing to recover losses. That information is also posted on the MB, just search "Barclays" for a ton of information.
 
I can't say "I'm surprised by this". :(

But I am amazed at your resourcefulness and all the more the ability to rapidly tie things together - to get "the real picture".

It's hard to me to fault Bayclays - despite the huge imposition it has created for me and the others on the MB. This is the "Standard Corporate System" - and losses are always spread out to the little guys. As bad as this sounds: "If they had responded in what we would have considered a more appropriate manner" - they would have looked like complete idiots. On the Corporate level you don't worry about feelings; emotions; inconvienciences - you look only at the money and how to limit the loss. So from a Corporate Level - which the only view that really matters - they did okay to mask the real problem by focusing on "us".

And now we know "The rest of the story". Good job L2R!!
 
I did what you suggested Luv2read, and it seems Barclays' problems and the IFT limits happening at the same time is not a coincidence (as you have stated).
BTW, why is the "U.K.'s fourth-biggest bank" managing our funds anyway?
 
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