Investment Retrospect H1 2025 - part 1

It’s July - the beginning of the 2nd half of the year 2025. I have been posting how our investment is doing for each month so far, and figure this is a good time to visit our performance in the 1st year for thoughts. You can all the 2025 monthly updates here.

First of all, the asset grows from 100 to 113 in 6 months. While it looks promising, there’s a big catch: this value captures not only the growth from investment, but also our income - the portion of our salary where we allocated for investment. To be specific, it is calculated as the current total asset value divided by the initial asset value. Note the growth rate numbers in the updates consider only the investment growth - this is confusing, I know. What I only realize during this H1 retrospective is exactly I might be reporting the wrong metric.

What’s the right metric then? It’s what usually called Performance Index, and it is calculated as initial_asset_value x (1 + growth_rate). Since the growth rate is monthly, to get the index value relative to the one at the beginning of the year, it would be initial_asset_value x (1 + jan_growth_rate) x (1 + feb_growth_rate) ... until the current month of the year.

One might ask how growth rate is calculated - my version is simply (end_value - beginning_value - net_contribution) / (beginning_value + net_contribution_at_beginning). The idea is to use the portion of money that grows from the investment divided by the portion of money used to grow it. This is also why the former excludes any new money coming in during the period, and the latter includes the new money added before the period begins.

Now that we get all calculations out of the way, here’s the performance index of our total asset for the 1st half of 2025: 101.95. That’s frustratingly low!

What does it mean? It means if we have invested 100 units of money using our method, it grows only 1.95% throughout the 6 months - an average monthly growth rate of 0.32%!

To put it into perspective, if we have invested the same money to a simple money fund with a typical rate of 4% - we’d be 126.53 at this time.

The primary reason is during the liberation day drop our fund primarily consisted of individual stocks (as much as 65+%), and we sold some of them during their lowest position in that period. Selling them at that time was the correct decision given the uncertainty at the time and the fact that the fund had a too much heavy exposure to stocks (plus 25% in stock funds). That prompted us to shift a big portion of stocks into money funds for mental sanity. With the latest allocations, we do feel a lot more comfortable making risky decisions on the stocks portion.

Still, the performance index of S&P 500 is at 106.2, and NASDAQ Comp. at 105.85 for the 1st half of 2025. Both significantly outperforms ours. The biggest takeaway here would be that for us, the optimal strategy is to rely more on the index rather than our own stock picks for the moment, just like many have experienced before!

We will follow up with a part 2 of retro for other aspects and more breakdowns.