I’m a little late with our quarterly net worth review. I was distracted by a graduations, a car purchase, family moving in, and lake house reunions. These were all good things (except for the big cash outlay for the car). That’s all behind us so let’s get to the numbers.
My 401k account (all funds and TIPS) provided a personal rate of return of +1.23% during the second quarter, and +3.65% YTD.
I am content with these numbers and more so because of the relative lack of volatility. During the quarter, the Dow dropped by as much 3.67%. The NASDAQ low point was -5.76%. By comparison, our portfolio reached negative territory once, and that was only -0.30%. This suggests that my “couch potato” asset allocation strategy is working. We are capturing most of the market increases but not nearly as much as the market drops. Key components of this strategy were our position in VIPSX (Vanguard’s inflation protected securities fund) which was up 1.98% for the quarter and BWX (Barclays non-hedged international treasury bond ETF which was +3.23% for the quarter. Neither fund entered negative territory during the period.
You may recall that I bought five and ten-year TIPS at Treasury auctions last October and September. The values of those securities have increased by 3.3% and 6.7% respectively. This really isn’t that important to me because we intend to hold them until maturity. What is more important is that they continue to increase in value based on the interest rate and inflation adjustments to the principal.
The real asset return fund that I added to our 401k portfolio in April was somewhat volatile but nevertheless was +0.99% for the quarter. I think this asset will be very helpful in the months ahead, give world political conditions and inflationary pressures.
Before the end of the month I will revisit the stop loss positions I have set on our 401k holding holdings so that we can protect as much of our gains as possible against a major market drop.
Finally, last night I updated information used by the Financial Engines retirement income planning tool that our 401k provider makes available to us. It forecast a greater than 95% probability of achieving our desired retirement income if I were to completely retire at age 66. That’s good to know and is just one way that I regularly stress test our retirement planning. I have learned about some new “will I be able to retire?” tools that have been published lately. I will be looking at those later this month also and reporting my findings.
How did your second quarter go?