Once per quarter Mrs. Wizard and I check in on our ROTH accounts and compare them on three metrics:
1) Total Account Value
2) Total Quarterly Return
3) Total Return
Whoever wins two out of three metrics wins the quarter. The loser has to clean the fish tank for the next three months. I started out $1,650 behind in total account value because I put that much in a traditional IRA in 2014, so I couldn’t fund the ROTH with the full $5,500 that year. I got my ass kicked in December, but I’ve rallied along with the market in the last month or so and I’m back on top…for now.
These numbers will obviously vary with the market, so we try to use a consistent day for taking the comparison snapshot. I was trying to do the 15th of the month, but third Friday is a little easier because it guarantees I’ll have a whole weekend to do it. Plus it’s quadruple witching day, so IDK, seems like a good “day of reckoning”?
I actually did take the snapshot over the weekend after 3/18, but I didn’t get around to publishing it until today. We’ve been on vacation.
For funsies this time, I’ve decided to compare us both to SPY. For total return, I went ahead and made a table to calculate the hypothetical value of a SPY share had the dividends been automatically reinvested. Reinvestment is based on the opening price of SPY shares for each day dividends were distributed. That table is way off to the right of the google sheet if you’re interested. I used the SPY’s closing price on the days the accounts were funded as the “starting value”. For our accounts the starting value is simply the total contributed to date.
The quarterly table is interesting because SPY went ex-dividend on 12/18/16. Strictly speaking, had one bought shares of SPY on that day, they wouldn’t have gotten the $1.21 dividend. SPY’s performance is even worse if I use the 12/17/16 closing price. The ex-dividend appears to have exacerbated a pretty big gap down that day. I didn’t reinvest the SPY dividend in the 12/17 scenario; I’m just treating it as cash. However, it’s worth noting, that the distribution was on 1/29/16, when SPY opened at $190.02. That would have made the 12/17 scenario marginally better but still pretty crappy.
Mr. and Mrs. Wizard vs the S&P 500 – Total Return as of 3/18/16
Mr. and Mrs Wizard vs the S&P 500 – Quarterly Return 12/18/15 – 3/18/16
If I plan to continue comparing our performance to SPY, I’m going to have to figure out a consistent way to deal with the ex-div issue, since our comparison months (MAR, JUN, SEPT, DEC) coincide with SPY’s dividend cycle.
Overall, not too bad. As of last week, we were officially beating the market in imaginary cost basis bucks. Remains to be seen if that lasts or not, but it sure feels pretty good for now.