Friday, November 1, 2019

Net Worth Update October 2019: $1,723,338.10 (+$60,381.92, +3.63%)

Welcome to my monthly net worth update! Here is how my assets, liabilities, and net worth have changed over the past month:

Beginning balance
on 10/1/2019
+ Cash inflow
/(outflow)
+ $ P/L= Ending Balance
on 10/31/2019
% P/L% Equity
ASSETS
Current assets
Cash29,729.68(16,093.06)0.0013,636.620.00%0.79%
Bonds14,660.55(43.24)180.8314,798.141.23%0.86%
Stocks1,259,573.994,157.7339,087.261,302,818.983.10%75.60%
Total current assets1,303,964.22(11,978.57)39,268.091,331,253.743.01%77.25%
Tax-deferred retirement account234,287.801,975.036,572.49242,835.322.81%14.09%
Roth IRA92,043.223,098.1495,141.363.37%5.52%
Home44,496.000.0044,496.000.00%2.58%
Gold15,827.59478.1916,305.783.02%0.95%
Other non-current assets150.6440.0044.72235.3629.69%0.01%
Total assets1,690,769.47(9,963.54)49,461.631,730,267.562.93%100.40%
LIABILITIES & EQUITY
Liabilities
Current liabilities22,069.24(20,849.51)0.001,219.730.07%
Long-term liabilities
Student loan5,744.05(34.32)0.005,709.730.33%
Other non-current liabilities0.000.000.000.000.00%
Total liabilities27,813.29(20,883.83)0.006,929.460.40%
Equity (net worth)1,662,956.1810,920.2949,461.631,723,338.102.97%100.00%



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. Cash decreased this month as I paid off my $21k credit card balance at the expiration of 0% promo APR. The current cash holding is about right.

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. The Groundfloor loans have been doing pretty well. 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 Upstart investment is deteriorating, as I now have three delinquent loans.

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 did not show an estimate, so I kept the same value from last month.

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, mostly credit card accounts.

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 making new all time highs, as the Fed cut rates without a recession. Don't fight the Fed.

My monthly performance against the S&P 500 is shown below:

2019My Portfolio ReturnS&P 500 TRExcess Return
Jan8.51%8.01%0.50%Good
Feb2.97%3.21%-0.24%Bad
Mar0.80%1.94%-1.14%Bad
Apr3.96%4.05%-0.09%Good
May-7.38%-6.35%-1.03%Bad
Jun7.66%7.05%0.61%Good
Jul0.57%1.44%-0.87%Bad
Aug-2.82%-1.58%-1.24%Bad
Sep2.90%1.87%1.03%Good
Oct2.97%2.17%0.80%Good
YTD20.90%23.18%-2.27%Bad
October was another good month for me as I beat the market by 80 bp. A strong rebound in BIIB (my biggest individual stock position) helped. However, YTD I am still trailing the index by 227 basis points. Not good at all. It is very difficult to make up for this large deficit in last two months to come before the end of 2019. Not impossible though! Time will tell.

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