Once per quarter Mrs. Wizard and I check in on our ROTH accounts and compare them on three metrics:
- Total Account Value
- Total Quarterly Return
- 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 four consecutive quarters, Mrs. Wizard has been totally kicking my ass. She is beating me soundly in all three categories, and there’s no getting around it.
Looks like Mr. SPYder continues to beat us both in terms of our total returns, but we got ‘im this quarter by gum.
I’ve been basically treading water for most of this experiment, although this last quarter was a marked improvement.
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 it goes 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. Eventually I decided to just pick one way to calculate it. That way the weirdness should come out in the wash.
So this is how I 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 03/16/17 – 06/15/17
In order to compare ourselves to the SPY for total return, I’ve decided to use a total “internal rate of return”. In other words I calculate how many shares of SPY we would hypothetically own if we had bought one share of SPY (closing price) on the “investment dates” (days we funded our accounts), and then dividends were reinvested.
So since we started tracking all this, we would have hypothetically ended up with 3.10027762 shares of SPY by buying one share on 2/28/15, another on 8/17/15 and the last on 8/16/16 (all at those days’ closing prices which were $210.66, $210.59 and $217.96 respectively, for a total “investment” of $639.21).
Meanwhile we would have accumulated the additional 0.10027762 shares by reinvesting dividends along the way (this assumes we buy shares at the opening market price the day of the dividend distribution).
Those 3.10027762 shares were worth $242.64/share at Friday’s close (a total of $752.25). That represents a total gain of $113.04 or 17.68%
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 06/16/17
So we are definitely not “beating the market”. Although we’re gaining some ground.