I am going to write a series of articles going through the investments that I have or had at one point. I am going to start with my first investment which is Vanguard Small-Cap ETF (VB). This is actually the first non-401k investment of mine. I decided back in July of 2010 that I wanted to put some money in the market since interest rates are next to nothing in a savings account. I figured a safe way to start was with an ETF fund that tracked an index. VB seeks to track the performance of the MSCI® US Small Cap 1750 Index. Obviously, there is more risk with small cap stocks, but there is also the potential for greater reward. Additionally, the expense ratio was very good on this ETF (0.12%) and I have a brokerage account with Vanguard, so there are no commissions on trades of this ETF.
Originally, I was going to use a value averaging technique (I will discuss this in a later blog post) on this ETF, but later decided against it to avoid the short term gains with higher tax rates.
Now let’s take a look at how my investment has performed. Below is a look at my investment performance compared to the S&P 500 return from July 2010 to February 2011. I didn’t make my initial investment in VB until late in July, so I used only partial month returns for the S&P 500 in July 2010.
As you can see, VB started out with a pretty tough month in August but hasn’t had a negative month since then. Overall, I have a time-weighted return of 26.05% since I started with this investment. Not to bad for 8 months. Here are the the monthly return charts for the S&P 500 and VB.
* July 2010 is a partial month