With one quarter behind me its time to take a look at the EAF portfolio's current performance for 2015.
Like so many things that sound too good to be true, my recent run of bad luck with Credit Spread options has bit me hard and sent me running back to my previous and more conservative Put selling strategy.The Options portion of the EAF portfolio has taken quite the hit. It may be possible to make up these losses through the year however I expect the portfolio performance to be heavily impacted through the end of 2015. Situations like this are exactly the reason why every investor should diversify. While I took a hit to a larger portion of my portfolio it still represents only 30% of my total investments. The pain would be much greater if I had lost 30% of the total portfolio. I'm optimistic that I will be able to recover the losses and possibly post a very small gain before the year ends.
Owing mostly to market fluctuations my Stock/Mutual Fund portion of the EAF portfolio was also posting a -3.52% loss on the last day of March however due to some moves made in the portfolio I've seen these numbers swinging 5% either way. I'm not concerned about these this early in the year.
Where we have one source of loss we have several sources for gains. The 401ks are posting good gains for this early in the year at 2.29% and 1.42%. They are on track for another good year just reinforcing their worth as a low stress investment vehicle. Some winners that I'm excited about this quarter for the EAF portfolio are the performance for both Betterment and Lending club.
Betterment immediately started posting gains from the moment that I began investing last year. Currently sitting at 1.74%, the ease of use and cost of the tool combine to make a fantastic investment vehicle. My balance is 90% stock and 10% bonds. Historically (by the charts Betterment provides) it keeps pace with the S&P 500 or is a little behind it but when you take into account the lack of trade costs for incremental investing it is an easy win. It is much easier to invest $100 a month then to save up $5000 to minimize the impact of trading costs. I also capture the additional gains made in the time it would take to raise the larger amount. I'm only three months in and it is showing a lot of promise.
Lending Club is also humming along better than expected. If you have read my previous post about Lending Club then you are aware that interest and loans are things that have fascinated me from an early age. Thankfully Lending Club puts me on the "winning" side of that proposition (more times than not anyway). Again I am only three months in but all of my loans are on time and I'm projected for a 10% year. That is great news for my first foray into P2P lending. The majority of my holdings are all in the stock market and I have been looking for additional avenues for investment that are outside of the market. I-Bonds are one example of that but the yield is far too low to rely on. Thankfully P2P lending is now a viable option to have one more investment vehicle outside of the market.
Overall the EAF portfolio has netted 0.68% profit for Q1 2015. That is not a fantastic number at all but given the losses suffered from my attempt at credit spreads I feel this is more than acceptable. This just proves once again the power of diversification where I can have one very major loss offset by the gains of the rest of the portfolio.
Next I'm on the lookout for something not traded on the market and backed by something tangible like precious metals as that is an almost guaranteed asset class to preform well when the market losses steam. I may end up purchasing bullion outright but the logistics of buying/selling and the cost of a safety deposit box are really holding me back. The bar to enter is a bit high for me at the moment and I would have to hold the assets until the next finance market stumble to realize any profit, and who knows when that will be. Things to consider going forward this year.
2015 Q1 EAF Portfolio Performance:
| Investment Vehicle | Performance | Allocation |
|---|---|---|
| Stock/Mutual Funds | -3.52% | 30% |
| Options | -19.67% | 30% |
| Betterment | 1.74% | 10% |
| Lending Club | 1.03% | 10% |
| Bonds | 0.44% | 10% |
| Cash | 0.18% | 10% |
| 401K #1 | 2.29% | |
| 401K #2 | 1.42% |
Losers: Lets get this over with
Like so many things that sound too good to be true, my recent run of bad luck with Credit Spread options has bit me hard and sent me running back to my previous and more conservative Put selling strategy.The Options portion of the EAF portfolio has taken quite the hit. It may be possible to make up these losses through the year however I expect the portfolio performance to be heavily impacted through the end of 2015. Situations like this are exactly the reason why every investor should diversify. While I took a hit to a larger portion of my portfolio it still represents only 30% of my total investments. The pain would be much greater if I had lost 30% of the total portfolio. I'm optimistic that I will be able to recover the losses and possibly post a very small gain before the year ends.
Owing mostly to market fluctuations my Stock/Mutual Fund portion of the EAF portfolio was also posting a -3.52% loss on the last day of March however due to some moves made in the portfolio I've seen these numbers swinging 5% either way. I'm not concerned about these this early in the year.
Winners: Everything Else and New Income Streams
Where we have one source of loss we have several sources for gains. The 401ks are posting good gains for this early in the year at 2.29% and 1.42%. They are on track for another good year just reinforcing their worth as a low stress investment vehicle. Some winners that I'm excited about this quarter for the EAF portfolio are the performance for both Betterment and Lending club.
Betterment immediately started posting gains from the moment that I began investing last year. Currently sitting at 1.74%, the ease of use and cost of the tool combine to make a fantastic investment vehicle. My balance is 90% stock and 10% bonds. Historically (by the charts Betterment provides) it keeps pace with the S&P 500 or is a little behind it but when you take into account the lack of trade costs for incremental investing it is an easy win. It is much easier to invest $100 a month then to save up $5000 to minimize the impact of trading costs. I also capture the additional gains made in the time it would take to raise the larger amount. I'm only three months in and it is showing a lot of promise.
Lending Club is also humming along better than expected. If you have read my previous post about Lending Club then you are aware that interest and loans are things that have fascinated me from an early age. Thankfully Lending Club puts me on the "winning" side of that proposition (more times than not anyway). Again I am only three months in but all of my loans are on time and I'm projected for a 10% year. That is great news for my first foray into P2P lending. The majority of my holdings are all in the stock market and I have been looking for additional avenues for investment that are outside of the market. I-Bonds are one example of that but the yield is far too low to rely on. Thankfully P2P lending is now a viable option to have one more investment vehicle outside of the market.
Overall: +0.68%
Overall the EAF portfolio has netted 0.68% profit for Q1 2015. That is not a fantastic number at all but given the losses suffered from my attempt at credit spreads I feel this is more than acceptable. This just proves once again the power of diversification where I can have one very major loss offset by the gains of the rest of the portfolio.
Next I'm on the lookout for something not traded on the market and backed by something tangible like precious metals as that is an almost guaranteed asset class to preform well when the market losses steam. I may end up purchasing bullion outright but the logistics of buying/selling and the cost of a safety deposit box are really holding me back. The bar to enter is a bit high for me at the moment and I would have to hold the assets until the next finance market stumble to realize any profit, and who knows when that will be. Things to consider going forward this year.
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