Quarterly Financial Performance Update
Three quarters of 2009 are in the books. Time to update the Mr. and Mrs. ToughMoneyLove financial performance metrics. I actually review this information at least weekly but no need to bore you with updates that often.
For the past twelve months, our average annual rate of return for our entire portfolio was -3.28% which compares favorably with the Dow which suffered a 12.8% decline over the same period. You may recall the pain of the market drop that continued through the early months of 2009. The subsequent market bounce has been nice but there is still room for improvement!
Our best performing investments over the past year have been the Lehman International Treasury Bond ETF (+11.3%), Vanguard International Emerging Markets ETF (+12.2%), our I-Bond portfolio (+6.5%), and the Vanguard Inflation Protected Securities Fund (VIPSX) (+3.4%). There is a pattern to be discerned from this. Three of these four investments include features that make them inflation-fighting assets. This helps to explain both why we own them and why they have performed relatively well under the circumstances. Inflation is under control for now but the smart money says it won’t stay that way. We remain intentionally over-weighted in the VIPSX fund (which invests in TIPS) but that will change as I shift some of that money into actual TIPS holdings to fund our guaranteed retirement income plan that I wrote about last week.
Our net worth increased by 7.1% in the third quarter and is up 3.0% compared to a year ago. We are now at our highest net worth ever. This is a good feeling because it helps us pretend that our retirement portfolio has fully recovered from the market losses of 2008 and the first quarter of 2009. That’s actually not quite true and now I am concerned (as are others) that the rally has stalled and the markets are teetering on the edge of another decline.
Gold is up and if our diplomatic efforts to keep Iran and North Korea from becoming nuclear powers remain ineffectual, gold could become even more popular. I am taking another look at how we might exploit that. I still don’t like the idea of investing in bad news but in some cases you have to go with the flow.
As a final performance metric, our credit scores are now ….. well, I actually have no idea what they are. I have never known our FICO scores and don’t care. I did pull free copies of our credit reports last month. No problems were noted so I stopped investigating right there. I’ll add this for the FICO fear-mongers: If some business de-values me as a customer because of a credit score, two things will happen. First, I will find out and correct the error that caused our credit history to take a hit. Second, I will take my business elsewhere.
So do any of you critically examine your financial performance on a regular basis (and I don’t mean checking credit scores)?