What’s Under the Hood?
After my recent post titled "Well, Well, Well," I received a sharp but appropriate question from a handful of readers. Here's how one reader phrased it: "If the stock market is at an all-time high, shouldn't my retirement account also be at an all-time high?"
Yes, yes it should. As of this moment, the U.S. stock market is still hovering around its new all-time high. Even if you haven't contributed any money in the last few years, your investment portfolio should be at an all-time high. However, if you've been consistently investing through the recent market turmoil, you should be crushing your previous all-time high,without question.
If you're one of the many people who are still not at all-time highs, there are a few reasons this could be (none of them good):
You're paying ridiculous, unnecessary, and possibly invisible fees.
You're implementing a sub-par strategy. I say "sub-par" through the lens that no strategy exists that will reliably match the returns of the overall stock market over the long run.
You're investing in the wrong funds. There's a LOT of trash out there, and most people (probably 90%) are invested in trash. Nearly every investing platform has a great S&P 500 index or total U.S. stock market index. These are broad, beautiful, and simple options.
You (or someone managing your money) is trying to time or game the market. This is a losing strategy.....period.
If you're interested in one additional piece of information to compare your portfolio to, here you go. Here is the annual return of the entire U.S. stock market over varying periods of time, as of 6/30/2025:
To put this into context, the annual return over 15 years was 14.43%. That means, over a 15-year period of time, the market increased an average of 14.43% every year. A $1,000 investment would have turned into $7,500. That’s huge! And it was right there for each one of us.
Those are some pretty ridiculous numbers. I encourage you to open your most recent statement and compare your portfolio's performance with these. If they are close, excellent! If they deviate from what you see here, please know a few things:
You are leaving tens of thousands, hundreds of thousands, or millions of dollars on the table.
You deserve better.
Having better is as easy as a few clicks on a screen. In today's financial system, nearly all investment platforms (including your company's 401(k)/403(b) offer at least one solid broad index option.
In my opinion, this is the simplest and biggest needle-mover most families have at their disposal. Money isn't always an easy topic, but in the case of investing, this is actually the easiest component to get right. Please don't let paralysis prevent you from maximizing your opportunity with the resources you've worked so hard save.
Perhaps it's time to log into that investment account and see what's under the hood.
For those who have asked, I only have one thing under the hood of my portfolio. VTSAX, which is Vanguard’s total U.S. stock market index (3,600 different companies). 100% of my family’s retirement resources are in this, and have have been for many years. Before that, my 401(k) lived in an S&P 500 index fund. As simple as it gets!
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