Wealth Management Scorecard

One or twice a year I take some time to reflect on my investments and investment decisions.  This time I’m writing up this process for the world to see.  Here goes…

Questions I’m asking myself this time (5 point scale, 1=poor, 5=excellent):

  1. In the last 10 years, how has your personal portfolio performed against the S&P500 in terms of return?
  2. … In terms of volatility?
  3. How have your returns compared against money markets? (softball benchmark usually, but no so much in 1999-2009 period)
  4. Rate your investment tax efficiency.
  5. Rate your diversification.
  6. Rate your objectivity of investing decisions (esp. for big-scale asset allocation changes).
  7. Rate your savings rate. (1=negative, 2=none, 3=up to 10% of gross income, 4=20%, 5 =>30%)
  8. Progress toward retirement goals?
  9. Understanding of  your portfolio and its performance?
  10. Paying reasonable fees and expenses?

And here’s how I score myself:

  1. 5.  I definitely crushed the S&P500 over the last 10 years. (S&P went from 1422 down to 1105 in this period)
  2. 4.  Much less volatile than the S&P500, but still volatile.  Could have made better use of options to dampen volatility.
  3. 3.  My overall returns have, in aggregate, not performed dramatically better than 10-year money market returns.
  4. 4. Good, but not great.  Managed cap gains very well (keeping them long-term and largely unrealized). Still payed lots of tax on interest income. Could have made better use of municipal bonds.
  5. 5. Broadly diversified including international exposure, real estate, bonds of various durations and styles, etc.  Almost completely avoided the tech bubble.
  6. 4.  Steady and disciplined decisions.  Reasonable and contained risk taking.
  7. 5.  At least 30% AGI on average saved.  If anything I saved a bit too much.
  8. 5.  I am on track to “retire” early.  Maybe by age 50 or 55.
  9. 5.  I understand my investments and follow their performance.
  10. 4.  My average expense ratio is approx 0.7% including commissions for trades.

So how did I score?  I gave myself 44 out of a possible 50 points, or 88%.  In my book that’s a B+.

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