Should returns from my S&P Index fund (SWPPX) match the S&P 500 index?
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I have been purchasing ~ $300 worth of SWPPX twice per month since March 2015. My annualized return appears to be 8.22%. I used the annual returns for the S&P500 from here:
https://ycharts.com/indicators/sandp_500_total_return_annual
to calculate the average return since 2015 as 9.55%. Can anyone help me understand why my return is over 1% less than the average S&P500 return for this period? Am I losing money to fees?
index-fund dollar-cost-averaging
asked 5 hours ago
Joe_P
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up vote
2
down vote
favorite
I have been purchasing ~ $300 worth of SWPPX twice per month since March 2015. My annualized return appears to be 8.22%. I used the annual returns for the S&P500 from here:
https://ycharts.com/indicators/sandp_500_total_return_annual
to calculate the average return since 2015 as 9.55%. Can anyone help me understand why my return is over 1% less than the average S&P500 return for this period? Am I losing money to fees?
index-fund dollar-cost-averaging
asked 5 hours ago
Joe_P
111
New contributor
Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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2
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago
add a comment |
up vote
2
down vote
favorite
up vote
2
down vote
favorite
I have been purchasing ~ $300 worth of SWPPX twice per month since March 2015. My annualized return appears to be 8.22%. I used the annual returns for the S&P500 from here:
https://ycharts.com/indicators/sandp_500_total_return_annual
to calculate the average return since 2015 as 9.55%. Can anyone help me understand why my return is over 1% less than the average S&P500 return for this period? Am I losing money to fees?
index-fund dollar-cost-averaging
asked 5 hours ago
Joe_P
111
New contributor
Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
I have been purchasing ~ $300 worth of SWPPX twice per month since March 2015. My annualized return appears to be 8.22%. I used the annual returns for the S&P500 from here:
https://ycharts.com/indicators/sandp_500_total_return_annual
to calculate the average return since 2015 as 9.55%. Can anyone help me understand why my return is over 1% less than the average S&P500 return for this period? Am I losing money to fees?
index-fund dollar-cost-averaging
index-fund dollar-cost-averaging
asked 5 hours ago
Joe_P
111
New contributor
Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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asked 5 hours ago
Joe_P
111
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Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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asked 5 hours ago
Joe_P
111
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Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
asked 5 hours ago
Joe_P
111
asked 5 hours ago
Joe_P
111
111
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Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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New contributor
Joe_P is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
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2
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago
add a comment |
2
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago
2
2
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago
add a comment |
1 Answer
1
active
oldest
votes
up vote
3
down vote
Because you're buying at different times.
Total annual return looks at the value today of $X invested on Jan 1 2015. But you don't have $X invested on Jan 1, 2015, you have:
- $Y on Jan 1, 2015
- $Y on Jan 15, 2015
- $Y on Feb 1, 2015
- etc. where the sum of the Y values is X that you're trying to compare
You have a different average unit cost and that impacts your return. Your first contribution will match that return very closely less the expense fee and possibly dividends. Your second contribution hasn't enjoyed all of the time and price appreciation as your first contribution and will have an appropriately different return; in fact the return on your most recent contribution is certainly not 8.22%, it's probably negative.
This is a chart that I made for a different answer but it applies here because it illustrates that each contribution has it's own rate of return. This is a monthly $100 deposit in to VOO
Orange - Your very first $100 (green got lost in the blue)
Yellow - A deposit that went in and immediately lost value
Red - Your most valuable $100. (this $100 was contributed at the lowest unit cost of the bunch)
answered 4 hours ago
quid
32.6k463111
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
add a comment |
1 Answer
1
active
oldest
votes
1 Answer
1
active
oldest
votes
active
oldest
votes
active
oldest
votes
up vote
3
down vote
Because you're buying at different times.
Total annual return looks at the value today of $X invested on Jan 1 2015. But you don't have $X invested on Jan 1, 2015, you have:
- $Y on Jan 1, 2015
- $Y on Jan 15, 2015
- $Y on Feb 1, 2015
- etc. where the sum of the Y values is X that you're trying to compare
You have a different average unit cost and that impacts your return. Your first contribution will match that return very closely less the expense fee and possibly dividends. Your second contribution hasn't enjoyed all of the time and price appreciation as your first contribution and will have an appropriately different return; in fact the return on your most recent contribution is certainly not 8.22%, it's probably negative.
This is a chart that I made for a different answer but it applies here because it illustrates that each contribution has it's own rate of return. This is a monthly $100 deposit in to VOO
Orange - Your very first $100 (green got lost in the blue)
Yellow - A deposit that went in and immediately lost value
Red - Your most valuable $100. (this $100 was contributed at the lowest unit cost of the bunch)
answered 4 hours ago
quid
32.6k463111
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
add a comment |
up vote
3
down vote
Because you're buying at different times.
Total annual return looks at the value today of $X invested on Jan 1 2015. But you don't have $X invested on Jan 1, 2015, you have:
- $Y on Jan 1, 2015
- $Y on Jan 15, 2015
- $Y on Feb 1, 2015
- etc. where the sum of the Y values is X that you're trying to compare
You have a different average unit cost and that impacts your return. Your first contribution will match that return very closely less the expense fee and possibly dividends. Your second contribution hasn't enjoyed all of the time and price appreciation as your first contribution and will have an appropriately different return; in fact the return on your most recent contribution is certainly not 8.22%, it's probably negative.
This is a chart that I made for a different answer but it applies here because it illustrates that each contribution has it's own rate of return. This is a monthly $100 deposit in to VOO
Orange - Your very first $100 (green got lost in the blue)
Yellow - A deposit that went in and immediately lost value
Red - Your most valuable $100. (this $100 was contributed at the lowest unit cost of the bunch)
answered 4 hours ago
quid
32.6k463111
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
add a comment |
up vote
3
down vote
up vote
3
down vote
Because you're buying at different times.
Total annual return looks at the value today of $X invested on Jan 1 2015. But you don't have $X invested on Jan 1, 2015, you have:
- $Y on Jan 1, 2015
- $Y on Jan 15, 2015
- $Y on Feb 1, 2015
- etc. where the sum of the Y values is X that you're trying to compare
You have a different average unit cost and that impacts your return. Your first contribution will match that return very closely less the expense fee and possibly dividends. Your second contribution hasn't enjoyed all of the time and price appreciation as your first contribution and will have an appropriately different return; in fact the return on your most recent contribution is certainly not 8.22%, it's probably negative.
This is a chart that I made for a different answer but it applies here because it illustrates that each contribution has it's own rate of return. This is a monthly $100 deposit in to VOO
Orange - Your very first $100 (green got lost in the blue)
Yellow - A deposit that went in and immediately lost value
Red - Your most valuable $100. (this $100 was contributed at the lowest unit cost of the bunch)
answered 4 hours ago
quid
32.6k463111
Because you're buying at different times.
Total annual return looks at the value today of $X invested on Jan 1 2015. But you don't have $X invested on Jan 1, 2015, you have:
- $Y on Jan 1, 2015
- $Y on Jan 15, 2015
- $Y on Feb 1, 2015
- etc. where the sum of the Y values is X that you're trying to compare
You have a different average unit cost and that impacts your return. Your first contribution will match that return very closely less the expense fee and possibly dividends. Your second contribution hasn't enjoyed all of the time and price appreciation as your first contribution and will have an appropriately different return; in fact the return on your most recent contribution is certainly not 8.22%, it's probably negative.
This is a chart that I made for a different answer but it applies here because it illustrates that each contribution has it's own rate of return. This is a monthly $100 deposit in to VOO
Orange - Your very first $100 (green got lost in the blue)
Yellow - A deposit that went in and immediately lost value
Red - Your most valuable $100. (this $100 was contributed at the lowest unit cost of the bunch)
answered 4 hours ago
quid
32.6k463111
edited 4 hours ago
answered 4 hours ago
quid
32.6k463111
answered 4 hours ago
quid
32.6k463111
answered 4 hours ago
quid
32.6k463111
32.6k463111
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
add a comment |
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
I think I see - that graphic is really helpful. If that graphic was split annually, the average return on all the 100 dollars payments made through the year (24), which would be about the mid range of all the lines at the end of the year, would not be the annual return - is that right?
– Joe_P
2 hours ago
add a comment |
Joe_P is a new contributor. Be nice, and check out our Code of Conduct.
Joe_P is a new contributor. Be nice, and check out our Code of Conduct.
Joe_P is a new contributor. Be nice, and check out our Code of Conduct.
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2
How did you calculate your annualized return? Are you reinvesting dividends?
– D Stanley
4 hours ago
Now you're asking the tough q's D Stanley! Truth is, I read my rate of return off my statement. My account provide a 'portfolio performance' output that summarises investment and returns. It states I have net contributions of $20,272, and a change in value of $2,604.93 having begun investments 03/23/15. Apparently that equates to 8.15% but I'm unclear how that %age is derived.I am reinvesting dividends.
– Joe_P
1 hour ago