My investment year begins on July 1st. So now I am in a poition to review my investments of the last year.
First things first: at the start of July 2016 I had £20,000 in my pension. On 1st July this year, I had £23,977.86. For the purposes of easy analysis I will round that up by £2.14 to £24,000. That’s a neat year increase of 20%.
What Happened When I Didn’t Manage My Investments?
Over the previous year (July 2015-16), I barely touched my investments. This was because I spent the year concentrating on building my www.livelifesatisfied.com website. During that year my pension value remained at a constant level – i.e. 0% return.
In one sense this is logical, since I barely touched my investments that year. (I think I bought shares in Caffyns and did nothing else). But recently I began to compare my returns to the market as a whole. This enables me to compare my results to those of the wider market. This comparison was interesting.
From July 2015 to July 2016, the FTSE All-Share Index moved from 3571 points, to 3515. That’s a growth of -1.6%. So, when compared to the FTSE All-Share Index that year, my unmanaged portfolio did fine (it beat the FTSE All-Share). This is good news.
I Beat the Market by 30%
During July 2014-15 I actively managed my pension for the first time. Over this period, my pension increased from £15,000 to £20,000. This was a 33% increase. However, for all but 2 months of that year, I actually only invested around £12,000 of my pension pot. The increase was therefore greater than 33%.
Virtual Portfolio: Remarkable 70% Return!
Prior to beginning my active investing, I made a ‘virtual’ (or imaginary) investment. This was an experiment. I was trying to apply O’Shaunessy’s investment principles (as outlined in his seminal work What Works on Wall Street). I explain this process in full in my article How to Make a Million Pounds. Between 21st June 2012 and 13th Feb 2014, my virtual investment grew 70% (more than this if you include dividends).
2012-2017: I Have Consistently Beaten the Market
I will now list all of these returns alongside those of the FTSE All-Share Index (a composite of 600 companies listed on the London Stock exchange).
Jun 2012 – Feb 2014 My return: 70% FTSE All-Share: 26%
Jul 2014 – Jul 2015 My return: 33% FTSE All-Share: -1.6%
Jul 2015 – Jul 2016 My return: 0% FTSE All-Share: -1.6%
Jul 2016 – Jul 2017 My return: 20% FTSE All-Share: 13.9%
So there you go. I’ve consistently beaten the market over 4 years. In two of these years I have actively managed my portfolio. In a future article I will do a more in-depth analysis of my investments over the past year.