My Terrible 2013 Investment Returns

Here is a breakdown of my investment returns for 2013. Although the stock market returned about 32% for the year I managed to do much worse. I don’t think I’ve ever given any advice here on investing in stocks and bonds, but if I did I hope you didn’t take it. I calculated the returns using the portfolio personal rate of return calculator at My Money Blog. The calculator doesn’t give your exact return, but it is close enough.

I have three different investment accounts. My Roth IRA which was invested in a bond fund. My Traditional IRA which is invested in index funds and my dividend stock account which consists of individual dividend stocks. I’ll share how each of them did and why I think they had sucky returns for the year.

I will start with the worst. My Roth IRA which was invested in a bond fund managed to lose 9.09%. This was quite a feat considering the bond fund I invested in lost 8.77% for the year. Somehow I managed to lose just a little more. It could have been even worse. I bailed out of the bond fund and into a money market fund about halfway through the year and it ended even lower than when I bailed out. I’m guessing my return was worse then the bond fund’s return because the additional investments I made early in the year were when the fund had appreciated a bit from the beginning of the year. I knew the bond fund would take a big hit when interest rates began to rise and I had been thinking of switching out of it, but I waited too long to do anything. I’m not sure what I’m going to do with this money now. The money market fund actually has a slight negative return after expenses so I don’t want to leave the money there. I’ll probably put the money back into a different, shorter-term, bond fund, but I am still a little wary of doing that. What would you recommend.

The second worst was my dividend stock portfolio. It managed to return 5.9% for the year. That is pretty bad when the overall market returned 32%. My worst mistake here was not being diversified enough. Part of the reason I wasn’t diversified enough was not having enough money. Since it costs $4.95 to buy a stock, I like to wait until I have a $1000 to invest before purchasing a stock. The most stocks I’ve had in the account was 10 which is still not diversified enough. I had to sell some of them in 2012 because I needed the money so for 2013 I only had seven stocks. A couple of the remaining stock positions were well under $1000 because I had sold part of them when I needed money. The two REITs I had in the portfolio were full positions and their value went down quite a bit due to the entire REIT sector going down over fears of higher mortgage rates. I stopped investing in that account last year and started buying stocks through LOYAL3 . This allowed me to diversify a little more since they don’t have any transaction fees and I can invest as little as $10 in a stock. When you have a small investment amount like I do not having to pay $4.95 to buy and sell the stock makes a difference. The big drawback to Loyal3 for me is that they do batch orders for buying and selling so you can’t be sure what price you will get. I’m holding off on buying any more individual stocks for now because I want to max out my IRA and build up my cash savings a bit.

My traditional IRA account was my best performing account for the year although it still lagged the overall stock market by quite a bit. This account returned 20.64%. The account was invested in a couple of domestic dividend stock index funds, a preferred shares fund, and an international dividend stock fund. The preferred shares fund and international fund both had small losses which dragged down the overall return. This year I’m not going to invest in the preferred shares fund. Also, the two domestic dividend stock funds have a lot of duplicate holdings so I’m just going to invest in the lower cost one from now on. Investing in both is an unnecessary extra cost.

My overall portfolio return for the year was measly 3.51%. I could make that much with a savings account. I’m hoping that with a change of strategy I’ll do better this year.

12 thoughts on “My Terrible 2013 Investment Returns”

  1. Buffett says most people should stick to a plain vanilla index fund that mirrors the broader market, SPY for the S&P 500 as an example. It’s boring investing but doing this will allow you to beat most professional investors. If you aren’t going to pick individual stocks, I definitely suggest keeping things simple.

    You should consider going to Omaha in May. It’s good medicine not just for investing but for how to live a successful life in general. Let me know if you do and maybe we can split a room.

    • I’d really like to attend the shareholder meeting, but I already have a hike planned a couple weeks ahead of that with nonrefundable airfare. My plan is to hike more than a couple of weeks although based on past experience, I might actually be back in town by the time of the meeting. I’ll let you know when it gets closer.

  2. I’m trying to figure out how you lost so much in an index fund. They mimic the movement of the market and as you said, it was up big this past year. Have you looked into Vanguards index mutual funds? We have some of them in our Roth IRA’s and we got good returns this past year.

    • There are some accounts connected to prepaid cards that pay more than that. They do have fees that you have to watch out for. I might do a post on one of these accounts later.

  3. I’m very sorry to hear that you made losses.. sometimes the best investment you can make in learning equity investing is learning how to do it…

    I spent circa 2-3 years reading up before I tried to do it myself.
    I’ve managed to find a few multi baggers(so far most is up 500%)
    I write a bit about it on my blog, more so now as sinc 2007-2008 I’ve actually seen a + return!

    In 2013 I think overall my portfolio was up circa 70%.
    I ‘lost’ a bit in 2007, but didnt sell- so no real loss.
    Since then the portfolio is up around 180%-200% (inclusive of dividends), while I’m not a professional, I’m not unhappy with my results. I made mistakes, had I not it may have been up more like 300%, but I’m still learning….

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