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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?

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    How did you calculate your annualized return? Are you reinvesting dividends? – D Stanley Nov 21 '18 at 23:07
  • 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 Nov 22 '18 at 2:16
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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)

enter image description here

  • 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 Nov 22 '18 at 1:47

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