What is your performance target?

Hello,

I’m wondering what performance target do you personally have for your investments in shares/managed funds? I mean, what percentage of growth will be satisfactory and will fit your investment strategy?

Do you set performance target for your “whole” portfolio, where some more spectacular gains are offset by other investments that didn’t perform as you would like to? I guess this is a case where you diversify your investments, perhaps in different asset classes.

I think that having right expectations of performance and a target that is part of the whole investment strategy is very important. As I have not formed my strategy yet, I hope you could help me with some guidelines.

Thank you.

I'm fairly optimistic - aiming for minimum 10% income and 5% growth from my shares/funds portfolio.

I know it won't always achieve this - but I'm expecting it to average out to those kinds of levels long term.

Minimum average total return (income + growth) is around 8% ... below that I will be eating into capital to fund my interest payments. I'm happy to spend growth to fund it if the income returns are lower than I need, but I try to avoid spending my own capital if I can.

At 10% total return, I'm comfortable, but that's not enough to live off (yet) ... at 15% I'm getting pretty close ... and if I can sustain 20% total return, we're retiring tomorrow.

Unfortuately, nobody seems willing to provide a guarantee that I'll get 20% return every year ... so I'm still building up the portfolio - another 18 months hopefully (enough time for a couple of other investments to mature and for another round of house loan refinances) and I'll be able to survive very comfortably on 10 - 12% total returns, and still cope during periods where returns are a lower. Any returns in excess of this will be "spending" money (although are more than likely to just get re-invested!).