I have now been documenting my investing decisions and results for 12 months. It’s time for a little analysis. So, how did I do?
Overall my investments are down 7.6% in the past 12 months. On the face of it this is bad. However, it’s be an awful financial year and the best way to assess my performance against a comparative index.
One comparative index is the TSX (^GSPTSX), which is down 16.6%. So I beat the TSX by 9%. But this is not a fair comparison for two reasons: I have not included the dividends from the TSX stocks in my comparison, which are probably around 3%; and the TSX contains only one asset class (stocks), so it is not a reasonable comparison.
Another comparative index is my TI Index, which I established for the purposes of measurement and comparison. The TI Index is down only 5.4%. It outperformed my portfolio by 2.2% and the TSX by 11.2%!
One more point for comparison is a five star rated mutual fund or ETF, such as the iShares Balanced Income Fund (CBD.TO). It is down 2.2% for the year but it also paid a 3.2% dividend, for a total return of 1%. This is better than my portfolio by 8.6% and better than the TSX by 17.6%!
This begs the question, why not just invest in a balanced ETF? I don’t have a very good answer for this – I suspect that I enjoy active investing. But is this enjoyment worth losing 8.6% of my portfolio every year?