More Than Portfolio Performance


Profit comes from more than just portfolio performance.

If we have good habits that take care of our health, spend less than we earn and look after our savings, we’ll probably end up with plenty to retire.  But life really is about more than just the money.

A mantra at this site is that the idea of retirement is not a good idea. 

trout

Believe it or not, for me, this is work.  I love fishing so one of my micro businesses is to raise trout.

A recent Wall Street article “When good habits go against you” (1) says: Imagine spending a lifetime acquiring habits that offer the promise of a longer, happier and more fulfilling life. Then imagine that to have that fulfilling life, you suddenly must abandon all those habits.

Not easy, is it? But that’s what happens when people go from work to retirement, from saving money to spending it. Too often, the same personality traits that facilitate saving for retirement become impediments when it is time to spend that money.  The mental tricks we employ while working become mental mistakes when we move into the next phase of our lives.

Let’s take this thought one step further and ask “Why should we wait until age 65 or any arbitrary age to develop habits to have that longer, happier and more fulfilling life?”

The idea of retirement at age 65 is wrong.  This concept was a political trick used by Bismarck to win elections at a time when few people lived to be age 65.  The idea of working most of our lives just to have a happier more fulfilling life after age 65 is wrong as well.

We should all have a pinnacle career, where we do what we love and figure out how to profit financially from the activity as a byproduct.  Age should not be a barrier.  In fact this is an era where technology makes our experience worth more than the cost of getting it… the more years we have lived, the better we should be in our career.

When we have a pinnacle, we do not want to retire.  Fulfillment is more important than the money and when we are fulfilled we live longer as well.

This is why we created an investing course (the Purposeful investing Course or “Pi”) that allows us to protect our investments and increase our profits by diversifying in multi-currency good value stock markets without spending a lot of our time in the process.

We created the course and started our personal Pifolio in December 2015.   The US market is NOT a good value market and the US dollar contains a lot of risk, so all the markets we chose were non US markets.

Timing was poor in that there was a dip in global markets literally after we made the investment.  You can see the dip (the red X is our date of purchase) in the share performance of the Vanguard International Equity Index ETF which I use as the bellwether for measuring our portfolio performance.

motif

Performance chart of  The Vanguard International Equity Index Fund  at www.finance.yahoo.com (2)

This Vanguard ETF Vanguard International Equity Index Fund (Symbol VT) tracks stock markets all over the globe, with the exception of the United States.  As an index product, the fund targets stocks from this universe that constitute the largest 98 percent based on market cap.   This fund offers perhaps the easiest way for investors to make a low cost equity investment in both developed and emerging international economies.

This ETF has risen from $59.92 December 1st 2015 to $66.28 on April 30th, 2017.   This is a 10+% rise.

The Good Value Portfolio we created has risen over 14+% in the same period so it is strongly over performing the bellwether at this time.

This portfolio is really hopping in 2017 and is up over 10% in the first 5 months of this year.  Let’s hope it keeps that pace.

motif

The lesson we share here is not about the great performance but about how little time was required to gain such strong performance and added safety.

Frankly, if we compare the the bellwether ETF VT to  the Dow Jones Industrial Index (Red) or S&P 500 Index (Green) below, the profits from December 2015 till now have been higher in the USA.

Had one invested in either index over this period (Dec.  2015 to now) their performance would have been slightly better, due to the strength of the US dollar.

stock chart

Our good value portfolio is diversified into 18 good value equity market ETFs  denominated in 13 currencies.

This is the current breakdown of each ETF as a percent of the total Pifolio.

Developed Countries

Market Australia   Symbol EWA  Percent of portfolio 8.4%   –  Austria EWO  9.0% – France EWQ 8.3%  –  Germany EWG 9.3%

HK  EWH 8.2%  –  Italy EWI  6.7%  –  Japan EWJ 7.5% –  Norway NORW 7.5%  –  Spre EWS 7.9%  –  UK EWU 7.0%

Developing Countries

Brazil EWZ 3.9%  –  Chile ECH 3.1%  –  China FXI 2.7%  –  Colombia ICOL 3.1%  –   Malaysia EWM 1.7%  –  South Korea  EWY 2.8%

Taiwan EWT 2.9%

During this entire period there has only been one trade, when in 2017 I used dividends earned to add the Platinum ETF, PPLT which represents 4% of the portfolio.

To me, the greatest value of this type of investing is not the added safety nor the extra profit.  These are important features,  yes, but the extra time I have to devote to things I love-writing, buying and fixing real estate, raising fish, growing oranges, importing roses, gardening, is the really big profit.

I certainly enjoy life more and will hopefully live longer, plus I am pretty sure that the income these activities generate are greater than if the time was spent fiddling with my investments.  In fact, most studies about investing suggest that the fiddling reduces portfolio profits.

The big profits in Purposeful investing are improved health, added longevity, more fun and fulfillment.

Time, that’s the greatest asset of all!  Create your purposes so you invest it well.

Gary

(1) wsj.com: When Good Habits Go Against You

(2) Vanguard share chart at finance.yahoo.com


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