Welcome to my monthly net worth update! Here is how my assets, liabilities, and net worth have changed over the past month:
Net worth: Bottom line up front, my net worth increased by $60,123.17, +3.75% this month due to marked-to-market investment gain (+$46,467.68, +2.90%) and net cash inflow ($13,655.49, 0.85%).
It is only fitting that my worst month in relative performance to the index in August is followed by the best month so far this year, as I outperformed the index by just over 1%. However, YTD I am still trailing the index by a whopping 314 basis points. Not good at all. It is extremely difficult to make up for this huge deficit in last quarter to come before the end of 2019.
Here is the breakdown of my balance sheet:
Cash: Most of this sits in my savings and brokerage accounts, with a little bit in checking account just enough to pay the bills. The moving target is around $10-25k cash for dry powder in case of a market downturn. This will drop to $10k as I need to pay off a 20k credit card balance next month when its 0% intro APR expires.
Bonds: Most of my bonds are in Groundfloor limited recourse obligations (LROs), which are senior secured balloon loans for house flippers. I earn low double digit returns on these loans, which is pretty good, considering that most of these loans have a short term of one year or less. Most of the cash inflow this month was from adding to this account. I still have a few hundred dollars in LendingClub loans, which I'm slowly winding down (no new investments and withdrawing any cash from interest and principal repayments). I also started an investment of $2,400 in Upstart unsecured P2P loans in July 2018. The Groundfloor loans are doing pretty well so far. The Upstart investment has begun to show cracks after one year, as I got 2 delinquent loans in recent months, out of 24 loans I made. I hope they will not end in default and that no more delinquent loans will happen.
Stocks: This is the bulk of my net worth, held in taxable accounts to fund my early retirement and store wealth. Most are held in brokerage accounts with the rest in direct stock purchase plans (DSPPs). The goal here is to maximize after-tax growth.
Tax-deferred retirement account: This is my retirement account associated with my work, not to be touched till after age 59 1/2. It is currently allocated 50% EAFE and 50% US Small Cap. These two are the only stock fund options besides the S&P 500 index, to which I already have a lot of exposure in my taxable accounts.
Roth IRA: This is currently all invested in IJR to keep things simple. IJR is probably the best investment with all the desired characteristics: diversified, small cap, growth, quality, low cost.
Home: Home value is from Zillow's Z-estimate, taken at the end of each month. My home value had been in a steady decline since I bought it in cash for $40,000 in March 2018. Then in June 2019, Zillow inexplicably increased my home value estimate by a whopping 17% compared to the prior month, to $42,816, the first time it is valuing my home at higher than what I paid for. This month, Zillow increased it to $44,496.
Gold: I currently have 10.77 troy oz of gold coins as part of my coin collection. Each month I multiply that by the spot gold price. I do not plan on adding to this any time soon, unless gold breaks below $800, then I will likely add some. If below $500, I will almost certainly add some. I do not plan on ever selling (transaction costs too high, and I do like to look at the shiny yellow metal from time to time).
Other non-current assets: Includes new 529 accounts I opened in anticipation of the passage of the SECURE Act paving the way to use 529 for student loan repayment. I could include other assets like furniture, car, clothes, books, stamps, coins, etc. However, since these assets are not income-producing and can also be a liability as some of them require cash expenditure to replace them, I choose not to include them here.
Current liabilities: These are accounts I owe and due within 12 months. I took advantage of interest free loans from 0% APR promo credit card offers, which I will pay in full when they expire. My credit score suffered a bit from the "high" balances, but I don't need credit right now so I don't care.
Student loan: This is loan I took out for college, now consolidated at a low 2.5% fixed interest rate. I had a variable interest rate until I consolidated my student loans last year and locked in a fixed 2.5% rate for 10 years in a graduated repayment plan. I am certainly in no hurry whatsoever to pay it back given such low interest rates. Stocks are expected to generate much higher returns. The extra leverage this affords helps to grow my money faster. My currently monthly payment is only $46.41, of which the cash (outflow) shown is applied toward principal which lowers the loan balance.
Other non-current liabilities: None at the moment.
Below is a chart of my net worth since I started tracking on a monthly basis. Due to my aggressive stock allocation, my net worth has mostly mirrored the stock market.
September saw the market rebounding as the market processed the first Fed rate cut since the Great Recession and priced in more cuts. When the Fed cuts rates without a recession, stocks tend to rally strongly. Don't fight the Fed.
My monthly performance against the S&P 500 is shown below:
September saw the market rebounding as the market processed the first Fed rate cut since the Great Recession and priced in more cuts. When the Fed cuts rates without a recession, stocks tend to rally strongly. Don't fight the Fed.
My monthly performance against the S&P 500 is shown below:
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