Sharing My Investment Returns

I'm writing a shorter post this week as I am on vacation enjoying beautiful springtime coastal British Columbia with my family.

I've received some requests to clarify my investment portfolio returns distinct from my contributions. Since 2014, my net worth has gone nearly straight up from $120,000 to $750,000—a compounded growth of 45 percent annually. This is the product of aggressive saving and aggressive investing.

There are outstanding risk/reward benefits of investing very aggressively when young with a small portfolio and high savings rate. In fact, if I had to do it all over again with my current understanding of risk, I would have invested even more aggressively at the start.

However, over time, as savings shrink in relation to net worth, it is generally wise to shift focus from high absolute returns to greater risk control (the Bernoulli rule). This is true in my own portfolio. Even when I'm contributing $60,000 a year towards my investment accounts, it is difficult to come back from a massive drawdown on $750,000 portfolio without a little nervous sweat.

As stated, our savings rate is quite high. This is thanks to careful spending. My wife and I both work full-time in professional careers. Our salaries are healthy, but far from enormous and actually look quite slim after the many mandatory deductions on our paycheques: income tax, pension contributions, extended health plans, life and disability insurance, CPP, EI, etc.

For the past few years, our income could roughly be broken down as follows: we spend around C$50,000 per year, we pay around C$50,000 in taxes, and we save the rest either in our directly controlled investment accounts or via our workplace pension plans.

I do not include our pensions in the net worth calculation as they are difficult to value with great accuracy. For some perspective on our pensions, we both have DB plans which are split between employee and employer contributions. We contribute over 12 percent of base salary and our employers put in around 13 percent.

Although DB pensions are envied by many and have much ado made about them in the media, based on my calculations our pensions are likely to provide the returns of a short-term bond fund if we wait until they mature.

My Investment Returns

I started investing in 2008, but I pulled nearly all my money out of my account to buy a house in 2011. I didn't get back to investing seriously again until 2014 as we put a lot of money into home renovations for a few years to try "build equity".  We eventually sold our house and made a pitiful profit. I can confidently say we would be much wealthier if we rented from the start, but it was a valuable lesson.

To share my actual investment returns net of contributions and without pension estimates, I completed a chart which shows my portfolio returns since 2014. I will keep this chart updated each month and post it on my About Daren page starting next week.

Adjusted monthly for contributions. Does not include all taxes.

Comments & Questions

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Markets I Trade: March 26, 2019

In my non-registered account, I am developing my trend following strategy continuously. I don’t pretend to have all the answers. I am sharing this ongoing learning journey with you in this series.

I am always exploring new ways of trading, new markets to access, and better control of risk and opportunities. My main goal is to avoid large losses while achieving reasonable returns over time. I try to focus on trades which I believe have good reward-to-risk ratios.

You will see me trade index products, currencies, and commodities primarily with futures contracts and LEAPS options for maximum capital efficiency. I try risk small amounts of capital with each trade targeting high return multiples on that risk.

One thing that is easy to notice is most weeks have no action and trading is quite boring. The equity based positions move in relative tandem. Volatility positions are the only place where exciting things seem to happen more frequently.

Currently a number of my positions have a flattening trend forming. Depending on the moves in the market this next week, I may be exiting some positions and reducing market exposure.

*Information on this post is dated during market hours, Monday, March 25, 2019.

IWM: LEAPS Options

Source: StockCharts.com

I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. IWM lurched lower towards the end of the past week. It still has not hit new highs in my holding period, so no change to my stop level.

EEM: LEAPS Options

Source: StockCharts.com

I purchased EEM $45 call options on January 15, 2019 when EEM was trading at approximately $40.50 per unit. EEM has moved up in price at the beginning of this week and made new highs within my holding period. It fell sharply Friday and ended the week lower than last. My stop is now set at $40.75, a slight bump up which should lock my trade into profit barring a large gap down.

EWZ: LEAPS Options

Source: StockCharts.com

I purchased EWZ $50 call options on January 25, 2019 when EWZ was trading at approximately $44 per unit. My stop level is at about $40 and EWZ is now hovering right above the stop.

The price fell sharply and volatility jumped this past week on news of arrests and corruption probes by the new government. While still in a long-term uptrend, things could change in a hurry with weekly moves of this magnitude. My trade is now in a loss position.

KWEB: LEAPS Options

Source: StockCharts.com

I purchased KWEB $50 call options on February 20, 2019 when KWEB was trading at approximately $45.10 per unit. My current stop is set at $42.20.

KWEB had made higher highs and higher lows in a steady pattern since late December 2018; however, this changed as KWEB failed to make a new high on the recent upside move. The price is still above my stop, so we'll see what happens over these next few weeks.

DXJ: LEAPS Options (Closed)

Source: StockCharts.com

I purchased DXJ $55 call options on February 22, 2019 when DXJ was trading a little under $51 per unit. My stop level was set at $47.60 per unit. Before the stop was hit, this position entered signs of a downtrend so I exited my position before the maximum loss level. I lost a little less than 50 percent of my maximum loss on the trade.

VXXB: Options

Source: StockCharts.com

On March 11, I purchased in-the-money VXXB $50 put options when VXXB was trading at approximately $31.25 per unit. With the volatility jump this past Friday my trade went into a small loss. We also got very close to a signal change and will see what this next week brings.

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.