The high-level goal of Portfolio Charts is to offer a neutral place to study the real-world performances of all types of investing ideas. My hope is that by painting a more complete and understandable picture of how different portfolios work, the charts will help people identify a simple and effective asset allocation to help them achieve their important life goals. Here’s how the returns for each portfolio are calculated.
The underlying data is a personal compilation from a number of free public sources. While there are absolutely no guarantees of accuracy, I’ve personally checked each series to make sure it reasonably models the intended asset using proper index methodologies. To study the data sources in more depth or download numbers for your own personal use, be sure to visit the dedicated Data Sources page.
I’m simply the supplier of portfolio performance information, and the original authors deserve full credit for each portfolio idea. I do what I can to support the smart people who share their diverse investing knowledge in the following ways:
- I provide attribution to each author and encourage everyone to read their original work. You can find references to their books and blogs on each portfolio page.
- I do my best to preserve design intent and to not twist the author’s recommendation in any way. The only reasons I may change percentages are when I don’t have the right data or need to round to the nearest percent to not over-burden the tools. When that happens I try to faithfully represent the design intent as closely as possible. I always point out when I do that and why.
If you ever see something that looks like an error or that you think needs clarification, please don’t hesitate to contact me. Trust is earned, and I’m willing to do the work!
Portfolio Charts is somewhat unique in how it is able to model portfolios in multiple countries using their own currency and local inflation. When selecting a new country in any portfolio or chart, pay close attention to the domestic and international region labels. They are always clearly labeled for what they model.
Note that the default behavior for translating portfolio concepts between countries is to not simply convert US returns for the inflation and exchange rates in another country. The charts also interpret each portfolio through the lens of a local investor who substitutes domestic stocks and bonds where American investors would normally buy the US variety. I like to do this to evaluate the underlying portfolio theory independent of a specific market, but you can always model your own interpretation with the My Portfolio tool.
1) All returns are taken as a snapshot on December 31st.
2) Returns include reinvested dividends.
3) Portfolios are rebalanced annually.
4) Returns quoted are REAL. This means that all returns are adjusted for inflation. Inflation varies every year and is measured by CPI of each country.
5) Returns are expressed in the local currency of each country. For Euro Area countries, exchange rates prior to 1999 are in local currency and after 1999 are in Euro. Portfolio returns are primarily driven by changes in exchange rates, which make them neutral to the switch to the Euro.
6) For calculators like Portfolio Growth or Retirement Spending that account for annual contributions or withdrawals, those cash flows maintain constant purchasing power and adjust for inflation each year.
7) Returns ignore taxes. Individual tax situations are far too complex for a tool like this to model. Your mileage may vary.
8) Returns do not account for expense ratios, transaction fees, or other management fees. Your own fees may vary. When interpreting numbers, be sure to account for the expenses for your own personal investments.
Be sure to read the detailed notes on the individual Charts pages for application-specific assumptions and methodologies.
Verified vs. Estimated Returns
Most of the calculators include a designation of “verified” and “estimated” returns data. Historical returns come from a wide variety of sources, and reputable data is not always available all the way back to 1970. In these cases returns are filled in with similar-but-different assets to provide the best investing context available. To ensure that the results are accurate even with these alternative sources, every portfolio is tested to verify that it properly models the desired design intent.
For any given year prior to 1988, there may be one or more assets that have been supplemented with outside data. The compound growth of this “replacement portfolio” is compared against the desired portfolio over every investment period from 1988-present, measuring how well the model tracked the real thing. A “verified” portfolio account value remained within +/- 5% of the desired account value two-thirds of the time, and within +/- 10% 95 percent of the time. Basically, your brokerage account looked like this:
Note that a verified replacement “stayed in its lane” no matter what year you started the comparison. The analysis covers every available investing period and is independent of start date.
Any year that contains a replacement portfolio that does not track within the acceptable band is labeled “estimated”, and the data from that year is clearly called out on the chart. This information can still be very valuable for investing context and should not be entirely dismissed, but it is not as dependable as verified results.
Each calculator runs these calculations in the background for every investing year on a portfolio-by-portfolio basis, so you can rest assured that the historical results you see properly model the portfolio you are researching within a reasonable margin of error.
The one calculator excluded from this process is the Portfolio Finder, as the calculations are too complex to run on so many portfolios at once. So if you find a portfolio you like using the Portfolio Finder, be sure to test it in the other calculators as well.
The numbers you find here may differ from the numbers provided by portfolio authors in their own writing for the same timeframe. Usually this is due to differing data sources or minor methodology differences.
The data has no guarantee of accuracy. It is from the best free sources I can get my hands on and I take great care to double-check calculations, but I do occasionally make mistakes. Never make a decision based solely on the data you see here.
I’m not paid to list any portfolio on this site, and I have no financial interest in promoting any financial author. I only list portfolios here because I find them interesting and helpful.
Never take anything I write as promoting a particular portfolio or investment for you personally. I don’t know the specifics of your situation, and even if I did I’m in no position to tell you how to invest your own life savings. I’m not a financial adviser — I’m just a neutral engineer with good data and an interest in the truth.