Saturday, June 5, 2021

Net Worth Update May 2021: $2,638,819.77 (-$10,849.29, -0.41%)

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 5/1/2021
+ Cash inflow
/(outflow)
+ $ P/L= Ending Balance
on 5/31/2021
% P/L% Equity
ASSETS
Current assets
Cash(40,492.44)(3,338.28)0.00(43,830.72)0.00%-1.66%
Bonds13,056.61(52.42)(1,149.32)11,854.87-8.80%0.45%
Stocks2,115,930.824,347.86(28,130.24)2,092,148.44-1.33%79.28%
Total current assets2,088,494.99957.16(29,279.56)2,060,172.59-1.40%78.07%
Tax-deferred retirement account351,822.843,855.12355,677.961.10%13.48%
Roth IRA149,894.304,377.52154,271.822.92%5.85%
Home44,850.008,073.0052,923.0018.00%2.01%
Gold19,062.901,303.1720,366.076.84%0.77%
Other non-current assets1,139.5318.771,158.301.65%0.04%
Total assets2,655,264.56957.16(11,651.98)2,644,569.74-0.44%100.22%
LIABILITIES & EQUITY
Liabilities
Current liabilities66.79154.470.00221.260.01%
Long-term liabilities
Student loan5,528.710.000.005,528.710.21%
Other non-current liabilities0.000.000.000.000.00%
Total liabilities5,595.50154.470.005,749.970.22%
Equity (net worth)2,649,669.06802.69(11,651.98)2,638,819.77-0.44%100.00%

Net worth: Bottom line up front, my net worth decreased by $10,849.29,  down 0.41% this month due to marked-to-market investment losses (+$11,651.98, -0.44%) partially offset by net cash inflow (+$802.69, +0.03%). 

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 zero to avoid cash drag, as long as I have ready access to cheap margin loan as needed.

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. My LendingClub loans are mostly wound 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 deteriorated with 5 charge-offs, but has now stabilized at around 10% XIRR.

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, if ever, at low or zero tax rate.

Roth IRA: This is mostly 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 taken from Zillow, or Realtrac, if Zillow fails to provide an estimate.

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 since April 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.

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

2021My Portfolio ReturnS&P 500 TRExcess Return
Jan0.81%-1.01%1.82%Good
Feb6.25%2.76%3.49%Good
Mar3.65%4.38%-0.73%Bad
Apr3.36%5.34%-1.98%Bad
May-0.41%0.70%-1.11%Bad
YTD14.28%12.63%1.65%Good

Another lousy month for me, narrowing my YTD edge over the index to only 165 bp. 

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