Wow, it’s been 2 years! 2 years since I decided to get smart about how I invest my money. In early 2016, I started to build up a little bit of savings, and started to research what was the best way to use that savings. I wanted to build a reliable, long-term investment strategy. After much reading, I decided that passive, index investing, following the Canadian Couch Potato strategy, was the smartest way to build my wealth. Later that year, I started my index portfolio with TD e-Series index funds. I now have had 2 years of experience (and data!). Let’s look at how my TD e-Series Portfolio Returns did over those 2 years.
We’ll look at what my portfolio has done year-by-year from November 2016 to the end of October 2018. I’ll go over the returns of each fund, the dividends collected, and the overall gains of the entire portfolio.
Update – 2018-12-24: Thanks to the feedback from commenter Angel_Investor, I’ve updated return percentage calculations in all tables below. Return percentages are now calculated as (Returns/Contributions).
Starting point
I started in November 2016 with a $12,000 of savings to invest. After some reading and research, I decided to create a portfolio that aimed for the following targets:
- Canadian index – 23%
- US index – 23%
- International index – 23%
- Canadian Bond index – 31%
So I made purchases accordingly and started my portfolio as so:
Year 1 TD e-Series Portfolio Contributions, Dividend Payments and Returns
TD e-Series Contributions
My plan was to contribute as much as I could throughout the year, but not on any set schedule or budget. Throughout the year I made 12 contributes to my TFSA TD e-Series portfolio, and continued to purchase the 4 assets, buying varying amounts to keep my target asset allocations. You can see my Step-by-step: How to Re-balance your TD e-Series Portfolio guide for more info on how I did this.
TD e-Series Dividend Returns
For the first 12 months of my TD e-Series Portfolio, I earned $323 in dividends throughout the year, which when looking at the end of year portfolio value, is a little under 1.8% return on the investment. Not a bad starting point! Below are the dividends each asset in my portfolio returned, as well as the contributions I made myself:
Portfolio Asset Growth
Here is what the return of the portfolio looked like after the first 12 months, with growth in value in all 4 assets:
Value and percentage increases above include the re-invested dividends. The International index fund had a great 12 months, with a return of over 17%! The Canadian Bond market was my lowest earner, with only a 1.2% return, and this is to be expected. Usually, when equities are doing well, bonds tend not to.
The first 12 months with my TD e-Series Index Investment Portfolio was a great start. I was able to make an additional $5,000 of contributions, and saw my portfolio increase a healthy 9.5%. This was good, because Year 2 was not going to be as kind.
Year 2 TD e-Series Portfolio Contributions, Dividend Payments and Returns
In this section of the analysis, I’ll look at the year 2 returns completely separate from the year 1 returns.
TD e-Series Contributions
As per the year before, I continued my contribution trend, adding almost $5,000 in additional cash to continue to grow my portfolio, making 8 purchases over the year.
TD e-Series Dividend Returns
With a higher amount of shares owned of the different portfolio assets, there was greater dividend returns, that I again re-invested as additional asset purchases. In year 2, I earned $452, an almost 2% return on the end of the year total value of my portfolio:
Portfolio Asset Growth
Unfortunately, the second 12 months of my portfolio included international trade wars, lingering worry about a North American trade agreement, and volatile world leaders that threw many curves at the market. My 2% dividend payments weren’t quite able to offset the value loss of the assets over the 12 months, and my portfolio saw a small drop in value:
The US Index fund was the winner this year! It stayed above water and earning a 7.6% return! On the other side of things, the Canadian and International index funds lost value over these 12 months. The International index showed the biggest loss, at -5.4%! Ouch.
The 2 year return of my TD e-Series Portfolio
As you can see above, since my starting point of investing, I’ve had 1 really good year, and 1 disappointing year. Let’s look at how these offset each other, and what are my overall returns:
As you can see above, an overall 6.4% return over 2 years on my investment! 6.4% isn’t bad considering what 2018 did to the global economy and stock markets. In comparison, if I had invested all of this money over 2 years in a 2.3% high interest savings account, I would have received less than $890 in interest payments, or $500 less than my TD e-Series portfolio returns.
TD e-Series Portfolio: Recap and Future
As you can see, index investing is a long term game. These last 2 years are a perfect example of why. 1 year might see great returns, followed by a year of less than stellar returns. Long term investing mean waiting out the bad so that the good will outweigh it. If you have a bad year, don’t panic, and keep moving forward.
I can’t predict what will happen with the global markets in the next 12 months. My strategy will continue to be the same, contribute as much money as I can to my portfolio, re-balance to a 23%/23%/23%/31% asset allocation, and hope that the markets turn themselves around, with 2019 being a much better year than 2018.
Again, thanks for reading, and comment below if you have any questions!