2017 was a great year for equities, CAPE ratios are raising all around. Great but that might suggest future performance will be expected to be poor given the popular theory of reversal to the mean CAPE. Or will momentum play a bigger role for the next year leading to further highs?
I doubt anyone has a crystal ball of that sort that could predict the future or where the next crisis will arrive but our best bet is to focus and be steadfast on the simple and enduring values and principles that will hold true help us steady the ship and sail along despite the storms. Come what may!
Towards the end of Dec 2016, my unitized portfolio Unit value was at 113.11. This grew to 137.75 per unit on 4th Jan 2018. A growth of 21.78%! I must say I am pleasantly surprised but cautiously suspicious of the reasons for this performance. I must admit I am no genius or brilliant in my methods just following the passive route to wealth building.
A lot of this performance I gather is due to the weakening pound/dollar currency exchange in 2017. At this stage of wealth accumulation with a long way off decumulation, this volatility shouldn’t be too much of an issue but it is a good lesson to note how currency fluctuations can affect your portfolio and note how currency hedging can help wealth preservation in the latter stage of life.
Part of the reason I tracked my returns in a unitized fashion was so I could capture data of some resemblance to standardized methods and therefore I can compare to various funds or indexes. Looking at the FTSE World Index:
Between 30th Dec 2016 and 31st Oct 2017:
FTSE World Index (Net Tax) grew from 2531.6 to 3026.9 (19.56% increase)
FIREplant portfolio grew from 113.11 to 133.09 (17.66% increase)
The lack of up to date data on the FTSE Russell website means I could only compare to Oct 2017. Losing by 1.9% to the FTSE index will probably a reflection of the allocation of my portfolio. I am content with that. Perhaps in another year, the FP portfolio will outperform but we know average is good enough.
Dividends has been steady growing as expected. 1st year of breaking the 1K Dividend barrier. Hurray! Time will tell whether this chart will become exponential and if the laws of mathematics will hold true.
I only just met my savings target for the 2017 semi-motivated by the thread on MSE forum. Saving is such a lonely journey sometimes, people tend to be quite protective about their financial situation perhaps quite rightly. However, it is quite liberating to chat and talk to people about how you are doing in terms of your monthly savings and your failures and successes. It helps us introduce a reflective practice and accountability to our choices and actions and also learn from the mistakes and failures of others.
To be successful, learn not to commit the mistakes of others.
In the end, my total savings rate sat at a dismal 46.5%. Not hellish but could be a lot be better. I think it tells a lot about how much more potential I have to streamline and smooth out the edges in terms of spending and practice active minimalism. Let’s hope I can improve on this in 2018.
Enjoy a photo I took in Château de Versailles in 2017: