Friday, October 9, 2015

Quarterly Report

Quarterly reports seem to be the thing to do for financial bloggers, so I'll take my turn.

This quarter we withdrew money from savings to pay my daughter's college tuition and to renovate our bathrooms.  Our investment performance has been lackluster but we have managed to save some money.  Here is how things went this quarter.

HD Vest:

This is the account we have with a financial planner.  It is invested in a diverse portfolio of mutual funds.  We did not add to it this quarter.  We lost 3.1% this quarter, for a year-to-date loss of 6.4%. To put this in perspective, the S&P 500 lost 6.4% so we were pretty average.  

My 401(k):

This is a major portion of our assets and is invested in a diverse mutual fund portfolio. My firm invests 5% of my pay in this account; I invest 6%.  While not following the precise direction in The 3% Solution (a book I read and reviewed), I did follow the basic advice of reviewing my portfolio at the end of a time period and selling stock funds if they had risen in value, and transferring money from bond funds to stock funds if stocks had fallen.  As a result of this technique my year to date loss was 3.25%.  Our loss this quarter was 7.59%. 

My husband's 401(k)

My husband saves 5% of his pay, and his company gives him 3%.  It is a relatively small account and is invested in a growth stock mutual fund.  Fees are high; choices are few.  We lost a small amount on this account but have purchased shares so when the market goes up, we'll go up too.

Our Roth IRAs:

These are invested in Vanguard's 500 Index Admiral Fund.  They are down 3.74% for the year.   We are taking $1000 per month from our savings account and adding it to these accounts, with the goal of maxing them out this year and next year.  

Lending Club:

We have not added any new money to this account.  Lending Club shows my adjusted (hypothetically, using their estimates of loss) net annualized return to be 8.74% as opposed to the 10.49% it was last time I reported.  This was to be expected as the majority of the money in the account as reached to point when it is at most risk for default.  As of the end of June, one loan had defaulted; now eleven have.  Based on what I've read, if I do not add to this account (and right now I do not plan to do so) the returns should stablize at close to 8% annually.   XIRR is considered by many to be the most accurate way of accounting for money into and out of an account like this, along with the cash drag that happens because loans are always being paid off and it can take time to re-invest the proceeds.  This XIRR calculator shows my annualized return to be 10.13% using actual values (this assumes that all loans not currently charged off will be paid in full) and 7.68%, assuming that the loans currently late will be written off at a rate that has been average at Lending Club. Three months ago those figures were 10.38% and 7.88%  Another way to look at it is that the adjusted value of the account has increased 1.6% over the last three months. Annualized, that would be about 6.75% per year.  


We have not added any new money to this account either.  Prosper is showing my annualized return to be 13.00% on all my notes, and 14.11 on my "seasoned" notes.   Unlike Lending Club, Prosper does not estimate losses for you, however, they tell you to expect returns to drop significantly until the group of notes is at least ten months old, or "seasoned".  My first notes became "seasoned" this month.  Those notes were all C rated or higher, which explains why the seasoned yield is higher than the overall yield.  The second batch of notes I bought were primarily As and Bs.   The XIRR calculator shows my returns to be 11.86% assuming all notes pay.  Assuming none that are late pay, the XIRR decreases to 7.20 %.  Three months ago those figures were 12.2% and  8.62 %.  Over the last three months the value of the account has increased by 3%.   Annualized, that means my returns are somewhere between 7% and 12%.  I now have eight notes that have defaulted.  

Motif Investing:

I invested $5,000 to this account in March, and another $2000 in September.  It is now worth $6775.87.  My year to date dividends are $44.03 and the estimated yearly income on the account is $129.30 or about 1.8% of the money I invested.    I have invested in the following motifs:

Things I Like:  This was self-designed and is beating the S&P.  
Buyback Leaders:  Stocks in companies that are buying back their stock. .  Currently beating the S&P.
Cyber Security:  Anti-hacking stocks. S&P is beating it.
High Yield Dividends:  The S&P is beating it, but barely.
Online Gaming World:  Stocks of companies involved in Multi-Player On Line Role Playing Games.  Bought $500 worth on May 11.  Beating the S&P by quite a bit.
Online Video:    The S&P did better.
Low Beta:  I invested 252.20 on July 15.  Today it is worth 250.56 and that definitely beats the S&P. 
Growing Dividends:  Invests in shares of companies that have increased dividends in the last few years. I invested $1980.28 on September 18, and it is now worth $1961.64 and is beating the S&P. 

Overall, my Motif account is down 3.2% since purchase.  

Generally speaking, it costs a $9.95 sales fee to purchase a motif (a group of stocks).  However, it is not uncommon for them to run a promotion of a "Motif of the Week" for which they waive the sales fee.  All these motifs, except "Things I Like" are Motifs of the Week.

If you are interested in investing with Motif, use this link; we both get $100 out of the deal.  


You can read about Kickfurther here and here.  In short, I have increased my investment from six deals to  thirty-seven.  Five have been paid back completely, plus earnings.  Seven have made partial payments. Three have not paid anything, and are overdue.   If you value the unpaid accounts at the amount invested, and plug all this into the XIRR calculator, right now I have annualized returns of 37.02%.  Yes, you read that correctly.  However, if you subtract out the value of the delinquent accounts, my returns go negative.  The deals that have paid have paid either 4% or 8% of the amount invested.

The two problems with this site are lack of investing opportunities (many are filled in less than an hour, so you have to be able to get online at 4 p.m. Central and make a quick decision); and, because it  is a new concept, so there is no history of losses to help you really determine the risk, or the likely long-term returns.  Logic says that 37.02% can't last.  Most of the companies in whose products I invested (if you read the fine print, you'll see that these aren't loans, the backers are purchasing the products and then giving them to the companies to sell on consignment) have not reached the point of making their first payment.  While the contracts give Kickfurther the right to re-possess the inventory if payments are not made timely, I have to wonder what we'd do with it after we got it, since the lack of payments would indicate that the company selling it couldn't move it.  If you'd like to invest, use my affilate link and you get $5.00 and I may win more.


The stock market was down this quarter and our returns showed it.  I'm glad I found Lending Club and Prosper; they are pretty much the only things that are making money for us.  I've earned $20.00 through Kickfurther, and may put some more money toward it this month, but I'm leaning toward just reinvesting payments and seeing how some more of those deals work out.

We still haven't decided whether or not to fire the financial advisor.  The returns are neither so good or so bad as to make the decision a no-brainer but we are definitely leaning toward going it alone .

*Part of Financially Savvy Saturdays on brokeGIRLrich, A Disease Called Debt*

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