Vanguard Report

From: Andrew Koenig <ark@acm.org>

Date: Mon, Dec 4, 2017 at 11:59 AM

Subject: Vanguard account

To: fullboard@folkproject.org

As of the end of November, 2017, the Vanguard balance stood at $141,646.50. This is an increase of 13.39% since the beginning of 2017 and 15.81% for the past 12 months.

Of that $141,646.50, $115,740.14 is earmarked for future Getaway subsidies; the remaining $25,906.36 is part of general funds.

If the Spring 2018 Getaway were held today, it would be eligible for a subsidy of $1,736.10.

A few facts about the Vanguard fund:

• We established the fund in April, 2008, with an initial deposit of $74,000.

• We withdrew $10,000 in January, 2015 because we were low on cash.

• Therefore, the fund currently consists of $64,000 in money we invested and $77,646,50 in earnings and capital appreciation.

• The effective rate of return since the fund was established is 7.9% per year, over a period that includes the 2008-2009 recession.

Here’s a picture of how the fund has performed since we opened it:

The top of the blue area represents the total balance; the red and green areas represent investment returns. The red area shows the negative returns due to the recession. The drop in the blue area at the beginning of 2015 is not mirrored by a corresponding drop in the green area because it represents the $10,000 withdrawal.

This is a good time for my usual warning: The markets have been on a tear lately, and that will not last forever. At some point there will be another recession. However, the only way to profit from that knowledge is to do a better job than most other investors in forecasting not only when the recession will start, but also when it will end. Lots of people think they can do that, and they can’t all be right.

Therefore, I’m going to continue to say that I think that we’re invested in a way that offers a reasonable balance between risk and reward with a minimum of fuss. It’s probably not the best of all possible alternatives, but I’m quite confident that it’s far from the worst.

Going forward, I note that Vanguard has recently introduced a new version of the Wellington Fund that includes international stocks as well as domestic ones. In theory, such a fund should offer about the same long-term returns as the current fund with slightly lower risk. However, because of higher expenses in trading international securities, its expense ratio is higher than the current fund—0.35%/year as opposed to 0.16%/year.

I don’t think it’s worth thinking about this fund until it has been in operation long enough to evaluate it seriously—probably not until late next year at least.

Regards,

Andrew Koenig