With the Presidential election this week, I thought I would do a quick portfolio check to see where our retirement portfolio is sitting before the markets react. It seems a big enough change-point, that I would keep track of where we are at – at this moment in time.
The good news is that despite the pandemic sell-off in March, we’ve weathered the 2020 storm(s) well in the last 7 months.
While the S&P 500 is up only a little in w020 (+1.2% YTD), we favorably exercised most of our remaining MegaCorp stock options when they surged in March. Those returns got reinvested in S&P 500 Index Funds when the market bottomed out near St. Patrick’s Day. As a result, year-to-date, our overall portfolio is up a solid 10% – despite a big cash buffer, bond funds, and low-interest private real estate loans.
I have to say, I couldn’t have imagined 10% portfolio growth when the 2020 Great Lockdown began. We’re not out of the woods yet – but so far, so good!
I’m guessing who wins the election tomorrow won’t actually matter a lot for our finances going forward. With our MegaCorp options largely sold off, we’ve entered a phase of our life where we don’t really have any substantial income anymore. The biggest impact might be an increase in the capital gains rate – if that comes to be.
While the market has performed well under Trump, I saw articles recently saying that Goldman Sachs and JP Morgan expect better future returns under Biden than Trump. It sounded like they believed government spending would go up more behind a ‘blue wave’, although I worry what that means for the national debt & inflation.
There are a lot of historical analyses of which party benefits Wall Street the most, but I think there are so many confounding variables it is impossible to say. This CNBC article comes up with the right answer: ‘it depends’. Whether red or blue is in charge, there is always something to an invest effectively in and always unexpected events beyond anyone’s control.
That’s a good thing given a 30-40 year retirement will span 7-10 different Presidential terms and 14-20 different Congressional changes. I’m not sure what the next one will bring, but I will be hoping for the best whoever wins.
How have you weathered 2020? What expectations do you have for your portfolio after the election?
MrFireStation 
Chief, we battened down the hatches in March, so I wouldn’t be tempted to bail. The turbulence has been wicked this year – down big, up big, then lots of ups and downs. Our broad and deep investments are built to withstand times like this. Hope they perform collectively as intended, and that all the uncertainties dissipate soon.
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Agree – no chance I would bail, regardless of who gets elected. As Trump once said, “the stock market does whatever it wants to do.”
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Our net worth is up ~6% YTD (note: this number is not annualized, but actual gains so far this year). That number also does not include our “retirement salary” spent year to date, which would mean we’ve actually generated ~9% year to date in gains (spending approximately 3% of our gains year to date—again, not annualized). It’s been a strange year to say the least. Our rental incomes have had a small negative impact from COVID for sure, with the governmental restrictions for non-payment of rents for most of the year. Those lost rents will likely never be recovered, and will end up costing us ~2%-3% in rental returns this year. Overall we’ve managed well in-spite of those rental losses, given strong stock market returns and other strong rental returns. We managed to rebalance at the low of market crash (in March by buying more equities) and rebalanced again after most gains were recognized (buying back into bonds later in the Spring). These two small rebalancing steps turned out to be significant in our overall stock market gains. Our “strictly” stock market return is ~7.1% year to date (again, not annualized). Our “strictly” rental real estate returns are 10.2% year to date. I’ll happily take both, considering the crazy year we’ve all lived through!
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A 6% portfolio return despite the setbacks on rental income due to the pandemic is a big win this year. Plus another stock market run-up (+6%) this week following the election! Crazy year indeed!
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