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.
The scoresheet is published back at the mother ship.
For the second quarter in a row, Mrs. Wizard has totally kicked my ass.
And unlike last time, I can’t fall back on a slight edge for “total return”. She is beating me soundly in all three categories, and there’s no getting around it.
We like to compare ourselves to the market as well, and it looks like Mr. SPYder beat us both, although at least my wife put up a bit of a fight. I’m basically just treading water…
Since I’ve selected quadruple witching as our quarterly day of reckoning, there is some weirdness about SPY’s share price, since that’s the day they go ex-dividend.
In the past, I looked at two scenarios: either before or after ex-dividend and including (or not) a dividend payment as cash (not reinvested) accordingly. Going forward, I’m just picking one way to calculate it, and staying consistent. That way the weirdness should come out in the wash.
Going forward this is how I will calculate the SPY quarterly return: take the closing price the day before ex-dividend as the starting and ending point, then add the dollar amount of the dividend paid that quarter as cash to the value.
Mr. and Mrs Wizard vs the S&P 500 – Quarterly Return 09/15/16 – 12/16/16
Last quarter I compared the total return for each of the three separate investment dates of when we’ve added funds to our accounts (2/28/15, 8/17/15 and 8/16/16).
That was getting cumbersome, so I’ve decided to switch to a total “internal rate of return” comparison. In other words I calculate how many shares of SPY I would hypothetically own if I had bought one share of SPY on the “investment dates” (at closing price), and then dividends were reinvested.
So since we started tracking all this, I would have hypothetically ended up with 3.068897 shares of SPY by buying one share on 2/28/15, another on 8/17/15 and the last on 8/16/15 (all at that day’s closing prices which were $210.66, $210.59 and $217.96 respectively, for a total “investment” of $639.21).
Meanwhile I would have accumulated the additional 0.068897 shares by reinvesting dividends along the way.
Those 3.068897 hypothetical shares of SPY were worth $225.04/share at Friday’s close (a total of $690.62). That represents a total gain of $51.41 or 8.04%
Look over to the right of the competition tracker published back at the mother ship for more details. I can’t promise that it’s easy to figure out, but I can promise that the math’s all there.
Mr. and Mrs. Wizard vs the S&P500 – Total Return as of 12/16/16
So we are definitely not “beating the market”. Not even close.
Is it time to start feeling depressed? Time to just index invest and forget about all this.
Can I get a hell no?