As stocks investing is filled with multiple Buys and Sells, constituting lots of Cashflows, I started computing the cash Inflows and Outflows that is similar to a normal business. It is common to say that Cash is akin to Blood and critical to any business operations. Cashflow is kind of related but not the same as Profit. In financial accounting, you can ascribe a profit and yet have a portfolio negative cashflow. It is also easier to financial engineer a profit than a positive cashflow 😅
Received a number of requests from readers of my blog post $983k profits in 20 years (2005-2024) on questions about my IRR... Drum roll please! 😂
As you can clearly see from above, my XIRR values are really not that great. If we do a multi year XIRR, the value would just be in single digits, underperforming the S&P500 markets of around 10% average per year. Why not just save all the trouble and put everything into the S&P500 ETF instead?! I guess there are a number of reasons namely:
1) Yes, yes I am finally starting to invest in S&P500 ETF (VUSD.L and IVV.US), plus they are really at all-time high levels currently
2) Investing in S&P500 index is really boring with nothing much to do 😆
3) Beware of getting caught in a 13-years long sideways USA market. If u had bought at the high of 2000, it would take beyond 2013 to register a profit
I am sure many of us share the same sentiment that Mr. Market knows when we buy (prices drop!) and when we sell (prices rise! Grrr...) It will really take a solid mind and emotions to hold for 13-years just to breakeven. Shares investing is simple but not easy! Hope this simple sharing benefits u 😎
Press on, you Mighty Man of Valour!
oh yes, forgot to mention that Bonds are also included in my entire portfolio. Hence the XIRR of 9.0% also includes Bonds ... if it's just Stocks, my XIRR should be higher .... haha hopefully :)
ReplyDeleteGreat work, Coven! Your realistic return and impressive absolute 6 figure dollars helps to encourage all retail investors ))
ReplyDeleteThanks :)
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