Net Worth Update: Four Years Later

Net worth update
Financial Planning

While this might come off weird for people outside the FI community, sharing our household net worth over the internet is a Labor Day tradition that I’ve observed since I started the blog four years ago.

It’s all for transparency, accountability, and validation that the lessons I’ve been writing about works, at least for people who are walking a similar path to financial independence.

Assets are up by 14%

Thanks to the fastest stock market recovery in history, our investments are up 20% after a scary coronavirus market crash. But lower Zillow home valuation has dragged the total down to 14%. It would have been up 16%, but technology stocks plummeted a day before I prepared this report.

Take a look at the chart below and you’ll see why aggressively buying the dip in March certainly helped boost the value of our investments.

Strong recovery since March lows, thanks to overweight in tech stocks

I wrote about “How to Survive and Thrive From the Coronavirus Stock Market Crash” and sure enough, we’ve survived and hopefully will continue to thrive.

The naysayers can argue that a second wave is coming, and we’ve yet to see the worst. But I see that only as another opportunity to buy the dip.

As far as our asset allocation is concerned, we’re 81% invested in U.S. stocks, the majority of which are in Vanguard index funds. Our two single largest stock positions are in Microsoft (MSFT) and Bank of America (BAC), which I rebought at a lower price so as not to miss out on dividend payouts.

Over $1M invested in U.S. stocks. Too aggressive??

Liabilities are down by 93%

One reason why our taxable investments are lower is that I paid off our mortgage in February using the proceeds of the sale. Panic on Wall Street triggered a sell limit order against our Bank of America (BAC) stocks that quintupled in value.

I will have to pay long-term capital gains taxes. But I’m glad that I had accumulated enough cash to pay off the mortgage ahead of schedule.

The pay off has lowered our monthly expenses by 40%. As a result, our average monthly cashflow is almost $2,000 higher compared to last year:

(Personal Capital’s Cash Flow graph allows you to see your total income and total expenses across all of your accounts, month over month.)

Note that credit card balances are paid in full. It’s listed here just for completeness. We’re keeping these cards only for the perks. But, for all intent and purposes, we consider ourselves debt-free— something that has given us peace of mind during the pandemic.

Other assets not listed

Our net worth statement above does not include the assets listed below.

Automobiles and other personal property (< $20K):  I drive an eight-year-old Toyota Prius C with 155K miles. My wife drives a 12-year-old Honda Pilot. We can both agree that they both do not amount to much.

My wife’s company pension (>$200K): Pensions are hard to value. If I were to add a lump sum value, it would be at the current present value. She will probably receive $1,000 per month for life if she retires early.

To be inherited real-estate property (>$150K): Transfer of title is currently in progress. This rental property is situated in one of the densest cities in the world, Manila. My medium-term plan is to save up enough cash so I can demolish and build a four-story building for use as a dormitory.

All in all, net worth is up by 19%

As a passive investor, I have to admit this number is highly dependent on the performance of the stock market. I may look like a genius now, but I could have just as easily looked like a loser had the market went the other direction.

But it’s a way to give yourself a mental pat on the back for a job well done. A positive two-digit number helps boost your feelings of self-efficacy. Believing in your ability to achieve your goal prepares you for future successes.

See also: The Road to Riches Starts Here: Track Your Net Worth

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Net worth update
Financial Planning
Net Worth Update: Seven Years Later

Seven years ago, in August, I launched this blog with a net worth shy of $1M. On Labor Day the following year, I posted our very first net worth update. I thought sharing our net worth was a motivational boost to myself and other financial voyeurs who are on a …

Net worth update
Financial Planning
2
Net Worth Update: Six Years Later

Once again, it’s Labor Day– the day I “brag” about the fruits of my labor. Except there’s nothing to brag about this year. Our investments have been hammered like cryogenically frozen horse meat you badly want to barbecue. As a result, our household net worth is down for the first …

How to Survive a Bear Market Attack
Financial Planning
How to Survive and Thrive from a Bear Market Attack

Imagine you’re hiking in the Alaskan wilderness with a friend, and not far away, you spot two little cubs heading toward you both. Your heart starts pounding, wondering where momma bear is until you get startled by the sight of an angry grizzly ready to pounce the two of you …

%d bloggers like this: