Thursday, July 9, 2015

2015: Quarter 2 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 Catholic school 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.  The account lost 6/10 of 1% between April 3 and July 3.  To put that in perspective, the S&P 500  is down 3/10 of 1%. .

My 401(k):

This is a major portion of our assets and is invested in a diverse mutual fund portfolio.  About 35% of it is in a bond fund, 65% in four different stock funds. This quarter I saved 16% of my income and the firm gave me 5% of my pay.  I've played with several retirement calculators that said we do not need to be saving that much for retirement, and since we are having to dip into savings for tuition, we decided to cut back to 6% of my pay going forward.  This quarter, the account lost about 1%. 

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.

Our Roth IRAs:

These are invested in Vanguard's 500 Index Admiral Fund.  They are about even.  Share prices is down slightly this quarter but we got a dividend that makes up for it.   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.  We have also suffered our first default.  Lending Club shows my adjusted (hypothetically, using their estimates of loss) net annualized return to be 10.49% for the lifetime of the account.  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 10.38% using actual values (this assumes that all loans not currently charged off will be paid in full) and 7.88% assuming that the loans currently late will be written off at a rate that has been average at Lending Club.  Another way to look at it is that the adjusted value of the account has increased 2.3% over the last three months. Annualized, that would be about 9.2% per year.  


We have not added any new money to this account either.  Prosper is showing my annualized return to be 13.01%  Unlike Lending Club, Prosper does not estimate losses for you.  The XIRR calculator shows my returns to be 12.2% assuming all notes pay.  Assuming none that are late pay, the XIRR decreases to 8.62 %.  Over the last three months the value of the account has increased by 3.2% without accounting for late notes, or, if you assume that I will lose all of them, it has increased by 1.7%.  Annualized, that means my returns are somewhere between 6.9% and 12.8%.  We suffered our first default this month, and I suspect more are coming soon.  Prosper advises you not to get comfortable with your returns until your notes are "seasoned", more than ten months old.  That won't be until September.  

Motif Investing:

To recap, I transferred $5,000 to this account in March.  It is now worth $4970.77.  Since then I have invested in the following motifs:

Things I Like:  This was self-designed. On April 15, I invested $1000.00.  As of July 3, it is worth $1008.77, and, as of this moment, is beating the S&P 500.  I've also gotten $2.57 in dividends.  
Buyback Leaders:  Stocks in companies that are buying back their stock.  Purchased $1000 worth on May 4.  Now worth $1000.34. I have received $1.23 in dividends.  Currently beating the S&P.
Cyber Security:  Anti-hacking stocks.  Bought $1000 on 6/2.  Now worth $989.84.  Still beating the S&P.  
High Yield Dividends:  Bought $1000 on 3/20.  Now worth $970.49.  The S&P is doing better than this motif, though the share prices don't tell the whole story, as $9.73 in dividends have been received.  
Online Gaming World:  Stocks of companies involved in Multi-Player On Line Role Playing Games.  Bought $500 worth on May 11.  Now worth $520.79.  Yes, that beats the S&P 500.
Online Video:  Bought $250 on 5/27.  Now worth $231.60.  The S&P did better.

I still have a little less than $250 in cash in this account.  Since the minumum amount to invest is $250, once my dividends make that amount reach $250, I'll start looking for another Motif of the Week that looks interesting.  

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 invested $300 in six loans.  One has been paid back completely, plus 8% interest.  Two have made partial payments.  If you value the unpaid loans (which are not overdue) at $50.00 each, and plug all this into the XIRR calculator, right now I have annualized returns of 7.11%.  The main problem I see with this site right now is a lack of investing opportunities.  The returns seem to be great and the risk seems less than with unsecured personal loans.  We shall see.  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, though I will say I've read a little more about Kickfurther and gotten some returns and will be putting more money towards it.

Right now my Prosper returns are higher than my Lending Club returns.  Part of that is because I specifically set up a portion of my Lending Club account to have high cash turnover.  I bought resale notes, some of them rather small, in an attempt to diversify my account when it was new and low.  I have continued to buy resale notes partly to limit the risk (most loans that are going to go bad do so in the first year) and partly to keep monthy payments high.  This has the advantage of making it possible for me to easily extract more money from the account if I need it for other things.  It has the disadvantage of lowering yield as the service fee eats up a bigger percent of your interest at the end of the loan as opposed to the beginning of the loan.

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 .

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