Saturday, August 1, 2020

Net Worth Update July 2020: $1,903,017.54 (+$107,965.98, +6.02%)

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 7/1/2020
+ Cash inflow
+ $ P/L= Ending Balance
on 7/31/2020
% P/L% Equity
Current assets
Total current assets1,391,024.2819,665.7274,758.341,485,448.345.37%78.06%
Tax-deferred retirement account261,433.9710,662.96272,096.934.08%14.30%
Roth IRA86,758.843,708.4090,467.244.27%4.75%
Other non-current assets562.8140.0029.51632.325.24%0.03%
Total assets1,800,907.4219,705.7292,313.211,912,926.355.13%100.52%
Current liabilities327.154,052.950.004,380.100.23%
Long-term liabilities
Student loan5,528.710.000.005,528.710.29%
Other non-current liabilities0.
Total liabilities5,855.864,052.950.009,908.810.52%
Equity (net worth)1,795,051.5615,652.7792,313.211,903,017.545.14%100.00%
Net worth: Bottom line up front, my net worth increased by $107,965.98, +6.02% this month due to marked-to-market investment gains ($92313.21, 5.14%) and net cash inflow ($15,652.77, 0.87%).

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. I have now replenished my cash reserve.

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 little over a 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 has deteriorated with charge-offs and delinquent loans, contributing to the negative return. It was a mistake. I should have learned my lesson from LendingClub never to invest in unsecured p2p loans. Well, sometimes it takes 2 stings to learn a lesson, and I have definitely learned mine now.

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% Foreign 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 Realtytrac. I had used Zillow before, but Zillow has not provided an estimate for my home for many months now. For whatever reason, my home value estimate increased back from $42,000 to $43,000 this 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, currently suspended on COVID forbearance until October 2020.

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.

The recovery continues, with the tech giants leading. My net worth, almost wholly invested in stocks, has fully recovered along with the market, reaching new high this month.

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

2020My Portfolio ReturnS&P 500 TRExcess Return
This was another bad month for me, underperforming the bogey by 50 bp, which brings my YTD performance further into the hole to -399 bp. I am hurt by being underweight in the leading FANG tech giant stocks and my bets on COVID recovery stocks have underperformed.

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