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Animation: Gain or loss in my retirement portfolio (June 2008 to May 2017)

Here is a 35-second animation of the gain or loss in my retirement portfolio from June 19, 2008, to May 25th, 2017. I made this for Kolkata DIY Investor Meet Today (few tickets available, you can pay at the venue). This is an update to The rise and fall of my retirement corpus.

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I have taken all mutual fund investments made for retirement and calculated the portfolio and total investment on each day I invested or redeemed (for rebalancing) between the above-mentioned dates.

Like I once said, we are the victims of our experience and am sure glad for more than five years after starting, I barely made any gains. The annualized return would have surely been below that of an FD. However, as you will notice below, it changed overnight. New equity investors who have made spectacular gains and I hope they do not extrapolate that into the future. If things can rosy overnight, it can thorny overnight too. The animation is meant to give a sense of expected volatility to new investors. Please do not make the mistake of assuming volatility will decrease with time or that you will get used to it.

New equity investors who have made spectacular gains and I hope they do not extrapolate that into the future. If things can rosy overnight, it can thorny overnight too. The animation is meant to give a sense of expected volatility to new investors.

Please note that I calculated this in hindsight. I did not look at my portfolio until I realized that the gains each day were about the amount I invested each month. So I checked in disbelief, a good six years after I started. I believe this (initial inaction) is the only reason for the growth of the portfolio. In the last few years, I rebalance once a year.

Retirement Corpus Gain or Loss

Corpus Growth with Total Investments (log scale)

Notice that the corpus did not register any growth for a significant period of time.

I have received requests to automate this process so that anyone can get these graphs. I will try and complete it this summer.

Please note that I am not trying to brag by displaying the corpus growth. I have hardly done anything intelligent here. Just invested as much as I can each month during a sideways market. When the tide turned, there was a big change.

As a victim of my experience, this is perhaps the reason why I love sideways markets (when the goal is far away) as opposed to bull markets. In sideways markets, many start sermonizing about wonderful gold is, real estate is, or a FD is. Momentarily true as it maybe, that is the best time to invest in equity.

During a bull market, there is plenty of overconfidence. That is when I would rebalance, rethink my asset allocation I am not worried about retirement, but since my son will finish school in about 10 years, I will have to start thinking about a de-risking strategy.

I rebalanced at the start of this financial year. The markets went up about 5% after that. With the benefit of hindsight, that is a pretty good time to have done that - take money out of a well-performing asset and shift it to a poorly performing asset (in my case PPF, and therefore, one-way).

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3 thoughts on “Animation: Gain or loss in my retirement portfolio (June 2008 to May 2017)

  1. Ankit Jain

    Gain value of 1155 looks unrealistic to me. How to you calculate Gain/Loss ? Is it 1)total profit / total investment till date * 100 Or 2) total profit/monthly investment * 100?

    Reply
    1. freefincal

      It is simply the total value - total investment at any day. The rate at which I invest has increased considerably so much of my growth is due to that.

      Reply

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