Last year was an excellent year in the stock market. Today, MarketRiders (http://www.marketriders.com/) asks: how did your portfolio really perform? With the release of the MarketRiders “2010 Portfolio Report Card,” (www.marketriders.com/report-card ) everyday investors can determine if their portfolios actually achieved market returns. The MarketRiders 2010 Portfolio Report Card measures all elements of a portfolio against multiple indices to provide everyday investors with the means to actually assess their 2010 returns.
Most investors who own a well-diversified retirement portfolio will own small, large and mid-cap US Stocks, international stocks, real estate, bonds and even commodities. The common wisdom of using the S&P as a gauge to measure market returns is insufficient; it is only one of several indices that comprise a well-diversified, standard retirement portfolio.
“Judging a diversified portfolio’s returns just by the S&P or any one index is like grading a salad just by the lettuce,” said Mitch Tuchman, CEO, MarketRiders. “A salad is made up of many ingredients – and so is a portfolio. You have to measure the interplay of all components to find out how your portfolio performed.”
The MarketRiders 2010 Report Card presents returns for model portfolios built with standard asset allocations using low-fee ETFs from Vanguard, iShares and State Street to benchmark performance. These five all-ETF portfolios serve as benchmarks for 2010 and include different allocations to all industry-accepted asset classes.
“Until now, it’s been impossible to measure a portfolio’s results with an apples-to-apples comparison, but with our Report Card you can easily figure out how your portfolio should have done last year. Now investors who are paying fees for managers to actively pick stocks and manage their portfolios can see if they are getting their money’s worth,” said Tuchman. “If investors with similar typical portfolio allocations didn’t achieve these results, then they are under-performing and may want to make some changes.”
For example, in 2010 a 90% bond portfolio should have gained almost 4% with extremely low risk. In the worst month, this portfolio lost only about 1%. Alternatively, a diversified 10% bond portfolio, should have experienced a robust 16% rise by the end of the year; however to get to that point, investors endured a loss of over 6% in the worst month – a one-year swing of 22%!
The MarketRiders 2010 Portfolio Report Card is available at www.MarketRiders.com/report-card.
MarketRiders provides investors with easy online retirement portfolio management services to implement a sophisticated asset allocation strategy used by the wealthiest families and elite institutions. With software which creates a globally diversified portfolio using low-cost ETFs and ensuring regular and appropriate portfolio rebalancing, MarketRiders customers can generate superior retirement returns without trying to beat the market or pick stocks. The software has been reviewed in the Wall Street Journal, Barron’s, USA Today, New York Times and Forbes among others, and was named one of the eight Fast Company 2009 Innovative Financial Companies to Watch. CEO Mitch Tuchman has appeared on CNN, CNBC and Fox. For more information, visit www.marketriders.com.
MarketRiders Retirement Portfolio Benchmarks
Retirement investors are faced with two basic investment choices: pay high fees for professional mutual fund managers to beat the market (called “active” investing) or invest in low fee funds that simply own all of the stocks in a given group (called “passive” investing). Reams of academic and professional studies show that over time a passive approach makes you more money than an active approach.
Calculate how your retirement portfolio is doing by comparing it to one of our 5 passive low fee portfolios. If your portfolio isn’t doing at least this well, then “Houston, we’ve got a problem!” Here’s how to use these benchmarks for any of your investment accounts:
A. Pick A Portfolio To Use As A Benchmark.
Calculate the % of bonds and cash in your portfolio. For example, if you have a $50,000 account and $15,000 is invested in bond or bond funds then you’ll use our 30% Bond portfolio for comparing returns. Alternatively, if you have all of your money invested in stocks and you have $5,000 in cash, you’ll use our 10% Bond portfolio.
B. Calculate your 2010 return.
Record your beginning balance on 12/31/09 and then adjust it by adding or subtracting funds that went in or out of the account during the year. This is your “adjusted beginning balance.” Record your ending balance on 12/31/10. Your investment profit / loss is your ending balance minus your “adjusted” beginning balance. Divide this investment profit / loss by your adjusted beginning balance and this is your 2010 return.
Compare your 2010 return with the right MarketRiders Benchmark Portfolio below. If you have a 30% Bond portfolio and you didn’t have a return greater than 12.9%, then you lost money. If necessary, you may be in the middle of 2 portfolios, so do an average.
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