Well done! Especially paying down the mortgage. My focus this year has been primarily on growing multiple sources of cash flow to supplement my earnings, so net worth growth hasn’t been as robust. But now I have monthly / quarterly payments coming in from conservative investments in royalties, rental property, dividend stocks, treasury bills and private equity. I’m worried about the stock market too so I invest conservatively like a retiree.
Net Worth Update: Three Years Later (since I started the blog)
- By : Menard
- Category : Financial Planning
- Tags: Net worth
Financial Planning
2
It’s Labor Day again. Do you know what that means?
That means it’s time for me to share our net worth. Net worth reporting for Personal Finance bloggers is like show-and-tell in kindergarten except you’re not showing a toy— you’re showing a potentially embarrassing report card.
I’m starting to doubt the wisdom of tracking your percentage increases (or decreases) every year. As a passive investor, you’re basically at the mercy of the returns of the stock market.
Total assets up by 7%
Our investments are up mainly because of contributions. We are still maxing out our 401-Ks and Roth IRAs in spite of aggressively paying down our mortgage.
The US stock market has been highly volatile due to the trade war with China. It ended up only slightly higher compared to September of last year.
Our emergency fund is intact, but total banking assets are down compared to last year. We’ve spent money on minor medical and dental cosmetic procedures not covered by insurance.
Notice that our large-cap equity allocation has substantially increased compared to last year. Small-cap and international equity allocations are way smaller.
That’s mostly because of the following factors:
- One-year strength of the S&P 500 compared to Russell 2000, the small-cap index
- Sold a portion of our small-cap and international funds.
- Bought utilities and healthcare sector funds (mostly large-cap)
With the yield curve inverting, I’m getting more defensive. Small-cap historically lags during recessionary periods.
I’ve also increased our fixed-income allocation to diversify. Bonds can provide some stability in your investment portfolio as they don’t move in lock-step with stocks.
For the younger investors out there, none of these adjustments matter if you have like 20 years before retirement. You should be 100% invested in stocks.
My shares of Microsoft (MSFT) in my Roth appreciated from 110 to around 138. My other holding, Bank of America (BAC), is down by more than 10% in spite of strong fundamentals. With the Fed ended up lowering interest rates, the financial sector, as a whole, is out of favor. Perhaps that’s a signal for me to buy more.
Our home value has increased by 10% due to a red hot real estate market. You know it’s hot when you get random calls from realtors asking if you want to sell your home.
Liabilities down by 33%
As mentioned in a recent post, we are aggressively paying down our mortgage by shelling out an extra $1,500 towards the principal. The goal is to be able to retire with a paid-off house. That way, we have lower income taxes when we retire because we are drawing fewer funds from pretax retirement accounts.
Credit card balances are always paid in full. I’ve listed them here just for completeness.
All in all, net worth is up by 10%
Historically, our net worth has grown by 20% since 2004. But that’s the compound annual growth rate— fluctuations are ignored and presented at a steady upward (or downward) phase.
This year seems low in comparison, but numbers can be deceiving. Having a lower growth rate could mean that stocks are down— you are buying more at lower prices, for example.
My strategy remains the same–– invest in stock mutual funds inside tax-advantaged retirement accounts.
Overall, I’m happy with our progress. I hope you are also doing well with yours.
