How Our Portfolio Performed in 2025 (Including Real Estate!)

For the third year in a row, most portfolios just crushed it in 2025. Again, everything from cash to monetization sites (although Bitcoin was different). While US stocks, up nearly 18%, did not perform as well in 2025 as in 2023 and 2024 (when stocks rose more than 20%), they still had a great year. Strong stock returns combined with a weaker dollar meant international stocks did even better.

Each year, I try to discuss the investment gains our portfolio has seen for both transparency and educational purposes.

Our portfolio

As a reminder, our portfolio (asset allocation) is 60% stocks, 20% bonds, and 20% real estate, broken down as follows:

60% stocks:

• 25% Total US Stock Market
• 15% Small value stocks
• 15% Total International Stock Market
• 5% International small value stocks

20% bonds:

• 10% Nominal Bonds
• 10% secured bonds based on capital strength

20% wealth

• 5% REITs are publicly traded
• 10% Private real estate
• 5% Real estate with private mortgages

Note that this is just our retirement portfolio, and does not include UTMAs, 529s, our children’s Roth IRAs, HSAs, savings, small businesses, etc. Asset allocation (but not overall retirement account performance) also ignores the minimum cash balance plan. If you care, 529s (19.95%) and UTMAs (24.06%) did very well this year (both are half international stocks), Roth IRAs (24.06%) did well (targeted retirement funds), and HSAs (17.14%) had another banner year (now almost 100% FZROX). Our kids’ backs worked better than ours, too, this year. At least we beat my parents (their portfolio is 50% bonds).

Investing is a one player game

On that note, this seems like a good time to remind readers that investing is a one-player game; you against your goals. So, compare your returns to the returns you need to achieve your financial goals. If you really need a bad guy to compete against, use inflation. By 2025, inflation, as measured by the CPI-U, was slightly below 3%.

Using long-term portfolio projections, what I use for my investment return is a real return (after inflation) of 5%. If I want to see how my portfolio is doing against what I need it to do to reach my goals, why not compare it to that? 3% inflation plus 5% real = 8%. I have to ask myself, did I hit 8% this year? Have I hit it in the last decade or two? But what I don’t do is compare my returns to your returns or even the S&P 500 or other popular indexes. They are all unrelated to the game I’m playing here.

More info here:

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2025 Portfolio Performance

The performance of our entire retirement portfolio (including the cash balance plan) in 2025 was 14.44%. Since we started investing in 2004, our annual returns have been 11.63%, much higher than the 5% real (8% ish nominal) I used to make my projections. Future returns are unlikely to be high, given the stable bull market of the past 15 years.

Now, 14% is less than the S&P 500’s 2025 return of 18% and significantly lower than the performance of the total international stock index fund (34%). Still, we chose to diversify, and over the decades, we’re glad we did. Diversity means you’re always unhappy with what you have.

Stock Performance

Our stock portfolio is still as boring as ever. Twenty-five percent of the portfolio is in the overall stock market through VTI and our tax loss harvesting partner ITOT, and we’ve made 17.35% in that asset class this year. Fifteen percent of the portfolio is in small-cap US stocks. Thanks to new investments and generous donations, we have completed our transition from VBR and tax loss harvesting partner VIOV to AVUV and tax loss harvesting partner DFSV. Our annualized return on new assets was 13.63%, but that was heavily influenced by the transition period, as VBR actually had a better year than AVUV.

Fifteen percent of the portfolio is in the Vanguard Total International Stock Market ETF (VXUS) and its tax loss harvesting partner IXUS. We made 32.65% there. Five percent are in small international stocks, and, in 2025, we also completed the transition from VSS to AVDV and DISV, thanks again to a large amount of philanthropy. We actually made 44.81% on AVDV/DISV this year, although, again, that return was heavily influenced by the transition period. The 2025 time-weighted gains were 30% for VSS and 49.37% for AVDV.

This was our best asset class of 2025. Too bad it’s only 5% of our portfolio.

Bond Performance

Our bond portfolio did much better in 2025 than in 2024 when the return was not as easy. There was a tightening in bond yields when the Fed cut interest rates. On the flip side (10% of our portfolio), we made just 4.48% in muni bonds and 4.42% in the cash-like G Fund. We’re making some light adjustments this year on the inflation index side (10% of our portfolio), after exiting our I Bonds and putting all the new money into the TIPS ETF rather than any TIPS. Our SCHP investment made 6.66%, our individual TIPS made 2.28%, and our I Bonds (issued in November) made 2.36%.

Building Performance

When I’ve done posts like this in the past, we’ve gone through all the gory details of all of our various private equity investments. This year, we have decided to only keep that information for those who subscribe to the WCI Real Estate Newsletter. If you are interested, be sure to subscribe. It’s free, and you can unsubscribe at any time.

In this post, we’ll just do an abbreviated version. Real estate has not had a good year, especially compared to stocks. Our share includes 5% on the mortgage side, where we earned 9.83% (the most we usually get there). It also includes 5% in publicly traded REITs using the Vanguard Real Estate Index Fund, where we earned 3.13%. Another 10% is in private real estate, mostly through mutual funds. Rising interest rates have not been kind to real estate over the past few years (the Vanguard fund still has negative cumulative returns for 2022-2025), and that is reflected in our returns on the private side. It was only 1.13% for us this year. Some investments have been made OK, and thankfully, our biggest ones have been. Some didn’t do well at all, but thankfully, those were great investments for us. Also, if you’re interested in the details, be sure to sign up for that real estate newsletter.

More info here:

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Your Crystal Ball Predictions for 2026

Overall, 2025 was a good year for many investors, including us. Our 14%+ portfolio return certainly went a long way to the 24% increase in net worth we enjoyed in 2025, despite giving away more money in 2025 than in any previous year. Our focus on the five functions of money (earning, saving, investing, spending, and giving) certainly focuses on the last two each year, but it’s a good idea to keep an eye on the third (investing) as well.

WHAT DO YOU THINK? How did your portfolio fare in 2025? What were the winners and losers?