Annual return % on cash

[goldenpath]

Hello guys, first time poster here. I've been reading some the articles on PP and I don't quite understand the true annual return on cash.

https://web.archive.org/web/20160324133 ... l-returns/
Are these numbers on the annual return % accurate? Where are these return % obtained?  Based on the data, cash (short term bond) has a 3.8% return in 2006, 7.9% return on 2007 and 6.7% return on 2008. But when I checked on the return of these short term bill/money market funds of those 3 years on Yahoo Finance or any other trend plotter, the actual returns are no where even close to the numbers I saw in the PP article.  What am I missing here?

Thanks

[Ad Orientem]

Hi Goldenpath
Welcome to the forum. I am replying on the fly here and haven't checked those numbers in quite a while but I think they were based on short term Treasury notes as opposed to T Bills or money market returns. My memory is not infallible though. A large number of PPers substitute short term T Notes for the MMF for the extra yield. The vehicle of choice for those is SHY (as opposed to SHV which is T Bills). Also remember that the return is not just yield but also the variance in yield. STTs have done remarkably well over the last 30 years.

[Bean]

I Bonds are also worth looking at.  They have great, if not the greatest cash equivalent traits.

The real value comes from the stability to the portfolio when you need it and it has significant transactional value right when you need it.  Dry powder to buy the other asset classes when they are distressed.

[Tortoise]

Hello guys, first time poster here. I've been reading some the articles on PP and I don't quite understand the true annual return on cash.

https://web.archive.org/web/20160324133 ... l-returns/
Are these numbers on the annual return % accurate? Where are these return % obtained?  Based on the data, cash (short term bond) has a 3.8% return in 2006, 7.9% return on 2007 and 6.7% return on 2008. But when I checked on the return of these short term bill/money market funds of those 3 years on Yahoo Finance or any other trend plotter, the actual returns are no where even close to the numbers I saw in the PP article.  What am I missing here?

Thanks

Yahoo Finance plots only show changes in share price and do not include dividends. So be careful when interpreting those plots. Unfortunately, I don't think there's a way to include dividends on a Yahoo Finance plot, but if you click on "Historical Prices" to the left of the plot, the prices in the right-most column labeled "Adj Close" are adjusted to include dividends.

You might also want to use the ETF Portfolio Backtesting page on www.etfreplay.com to calculate total fund returns for comparison purposes. That site's plots include dividends (as it explicitly says on the page).

[MediumTex]

I believe that the data on Craig's site for cash returns are based on 2-3 year treasuries.