How does the yield on my investments stack up against other investors?
"It can be pretty hard to compute the right number. What you need to know for your actual return is called the dollar-weighted return. This is the Internal Rate of Return (IRR) http://en.wikipedia.org/wiki/Internal_rate_of_return computed for your actual cash flows. So if you add $100 per month or whatever, that has to be factored in. If you have a separate account then hopefully your investment manager is computing this. If you just have mutual funds at a brokerage or fund company, computing it may be a bunch of manual labor, unless the brokerage does it for you. A site like Morningstar will show a couple of return numbers on say an S&P500 index fund. The first is ""time weighted"" and is just the raw return if you invested all money at time A and took it all out at time B. They also show ""investor return"" which is the average dollar-weighted return for everyone who invested in the fund; so if people sold the fund during a market crash, that would lower the investor return. This investor return shows actual returns for the average person, which makes it more relevant in one way (these were returns people actually received) but less relevant in another (the return is often lower because people are on average doing dumb stuff, such as selling at market bottoms). You could compare yourself to the time-weighted return to see how you did vs. if you'd bought and held with a big lump sum. And you can compare yourself to the investor return to see how you did vs. actual irrational people. .02, it isn't clear that either comparison matters so much; after all, the idea is to make adequate returns to meet your goals with minimum risk of not meeting your goals. You can't spend ""beating the market"" (or ""matching the market"" or anything else benchmarked to the market) in retirement, you can only spend cash. So beating a terrible market return won't make you feel better, and beating a great market return isn't necessary. I think it's bad that many investment books and advisors frame things in terms of a market benchmark. (Market benchmarks have their uses, such as exposing index-hugging active managers that aren't earning their fees, but to me it's easy to get mixed up and think the market benchmark is ""the point"" - I feel ""the point"" is to achieve your financial goals.)" Generally S&P 500 will be used as the benchmark for US investors because it represents how's the US market performs as a whole. If you've outperformed the S&P 500 during the last couple years, great. However, at the end of day, you would want to look at the total growth percent that your portfolio has achieved, as compared with that of S&P 500.  Anyway, your portfolio might actually ride along with the bull market during the 2009-2010 period (more-so for the small caps). From an article I wrote a while back: “Dalbar Inc., a Boston-based financial services research firm, has been measuring the effects of investors’ decisions to buy, sell, and switch into and out of mutual funds since 1984. The key finding always has been that the average investor earns significantly less than the return reported by their funds. (For the 20 years ended Dec. 31, 2006, the average stock fund investor earned a paltry 4.3 average annual compounded return compared to 11.8 percent for the Standard & Poor’s 500 index.)” It's one thing to look at the indexes. But quite another to understand what other investors are actually getting. The propensity to sell low and buy high is proven by the data Dalbar publishes. And really makes the case to go after the magic S&P - 0.09% gotten from an ETF.
I think the strongest reason against DHA purchases (I don't consider them investments) is points 3 and 5 mentioned above. The resale market is only to other investors that are convinced its a good investment.If you can't sell to owner occupiers, you've just removed the MAJORITY of your potential pool of people to resell to - this has a devastating effect on your ability to make any capital gain from your investment - if you're not chasing capital gain...be sure to understand why! (see article below)The marketing people will have you believe that DHA is a great investment from a yield perspective...maybe so, I haven't crunched the numbers. But in my opinion, I would wonder - who cares?Yield is important to ensure you can hold the property, but if there is no capital growth and you can't sell it for a profit or release some equity to buy the next investment, then you've just put a massive road block in your wealth building path.I am at the asset accumulation phase of my investing journey, so my opinion is skewed towards capital growth investments. Unless you have a sizable equity base already, in my opinion $4-5 Million in debt free assets, then you should be looking for capital growth assets...not high yield.This article from Your Investment Property magazine, although now dated, gives a good example to illustrate my point on why capital growth is the sensible strategy during the asset building phase of your wealth creation journey: Why capital growth is still king  I think the strongest reason against DHA purchases (I don't consider them investments) is points 3 and 5 mentioned above.  The resale market is only to other investors that are convinced its a good investment. If you can't sell to owner occupiers, you've just removed the MAJORITY of your potential pool of people to resell to - this has a devastating effect on your ability to make any capital gain from your investment - if you're not chasing capital gain...be sure to understand why! (see article below) The marketing people will have you believe that DHA is a great investment from a yield perspective...maybe so, I haven't crunched the numbers. But in my opinion, I would wonder - who cares? Yield is important to ensure you can hold the property, but if there is no capital growth and you can't sell it for a profit or release some equity to buy the next investment, then you've just put a massive road block in your wealth building path. I am at the asset accumulation phase of my investing journey, so my opinion is skewed towards capital growth investments. Unless you have a sizable equity base already, in my opinion $4-5 Million in debt free assets, then you should be looking for capital growth assets...not high yield. This article from Your Investment Property magazine, although now dated, gives a good example to illustrate my point on why capital growth is the sensible strategy during the asset building phase of your wealth creation journey: Why capital growth is still king I have a couple of questions regarding Bank Loans.  1.) can they ever trade above par? From my understanding, most get called due to refinancing.  2.) if a bank loan has a floor attached to it that's tied to LIBOR, say 100bps, and that floor is pierced, does the floor automatically disappear, or does that specific loan need to be refinanced before the floor can be done away with? Additionally, should an investor be more cautious when investing in a bank loan without a floor? With regard to the second half of my question, I would think an investor would demand a higher yield without the assurance of a floor. Do developing country equities have a higher return and/or lower risk   than emerging market equities?  Generally in finance you get payed more for taking risk.  Riskier stocks over the long run return more than less risky bonds, for instance.  Developing market equity is expected to give less return over the long run as it is generally less risky than emerging market equity.  One way to see that is the amount you pay for one rupee/lira/dollar/euro worth of company earnings is fewer rupees/lira and more dollars/euros. when measured in the emerging market's currency?  This makes this question interesting.  Risky emerging currencies like the rupee tend to devalue over time against less risky currencies euro/dollars/yen like where most international investment ends up, but the results are rather wild.  Think how badly Brazil has done recently and how relatively well the rupee has been doing.   This adds to the returns (roughly based on interest rates) of foreign stocks from the point of view of a emerging market investor on average but has really wild variations. Do you have data for this over a long timeframe (decades), ideally for multiple countries? Not really, unfortunately.  Good data for emerging markets is a fairly new phenomenon and even where it does exist decades ago it would have been very hard to invest like we can now so it likely is not comparable. Does foreign equity pay more or less when measured in rupees (or other   emerging market currency)? Probably less on average (theoretically and empirically) all things included though the evidence is not strong, but there is a massive amount of risk in a portfolio that is 85% in a single emerging market currency.  Think about if you were a Brazilian and needed to retire now and 85% of your portfolio was in the Real.  International goods like gas would be really expensive and your local currency portfolio would seem paltry right now.  If you want to bet on emerging markets in the long run I would suggest that you at least spread the risk over many emerging markets and add a good chunk developed to the mix. As for investing goals, it's just to maximize my return in INR, or maximize my risk-adjusted return. That is up to you, but the goal I generally recommend is making sure you are comfortable in retirement.  This usually involves looking for returns are high in the long run, but not having a ton of risk in a single currency or a single market.  There are reasons to believe a little bias toward your homeland is good as fees tend to be lower on local investments and local investments tend to track closer to your retirement costs, but too much can be very dangerous even for countries with stronger currencies, say Greece. "Say the price is $200K. Would I, as a real estate investor, want to buy such a house? If the rent is $600, that's $7200/yr. ""the local property tax rate is levied on the tax base, and the applicable tax rate ranges from 0.40% to 0.76%"" so, I'll assume .5%, just $1,000. There are rules of thumb that say half the rent will go to maintenance and other costs, if that seems high, say just $2000.  We're left with $4000/yr. Less than 2% on the $200K investment. Italian bonds are yielding 8%.  As an investor, if I couldn't get more than $2000/mo gross rent, I would not buy the house for $200K.  As a parent, I'd have the money invested, have $16K/yr of income and help support you without taking all the risk the real estate investor has.  Note: your question and my answer are in dollars, but I acknowledge the Italy tag, and used Italy property tax. My tax is 1.6% of home value in my US city.  Edit: per the comment below, the 8% is incorrect. The return on the house purchase doesn't change, of course, but the safe yields are not that high, currently, 1%." https://www.hussmanfunds.com/wmc/wmc171009m.png  &gt;The following charts will provide a sense of where the U.S. equity market currently stands. The first chart shows our margin-adjusted CAPE, which as noted above has a correlation of about -0.89 with actual subsequent market returns across U.S. market cycles since the 1920’s.  https://www.hussmanfunds.com/wmc/wmc171009.htm  It will turn, downside potential is historic. In my experiences most hedge funds won't have a benchmark in their mandate and are evaluated based upon absolute returns.  Their benchmarks are generally cash + x basis points.  So, no attribution and no IR.  No experience at all with CTA's though, so not sure how things are there. If the expense ratio of the fund is 0.00% then yes.  However, if the fund has expenses of 1% then if the NAV of the fund is $10/share the expenses would cause you to see only $.002 a share and thus you'd have $.10 in total as the expenses first cut down the yield. If it's anything IG that's likely an annualized figure. I previously sold CP over short term windows at 1% annualized. Else, it would generate a high long term gain, but you need to weigh a variety of factors versus gains, particularly if you're investing any meaningful sum of money. I'm not a bond trader.   Unless it's some kind of payday loan...