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January 2, 2012 04:57 PM
What a coincidence! S&P 500 ended the year of 2011 within 0.01% of where it was at the beginning of the year.
What it means for our household financial life is that while we had our fair share of the rollercoaster financial ride of the year, we barely received any return from our $1M-strong investment portfolio at year end (but fortunately we didn't lose either). Still, we saved our way toward a year-end net worth tally of $1,212,450 with an annual increase of $90,083, or 8.0%.
And another view of our annual net worth changes -- it is a much choppier ride as we managed thru the financial market ups and downs in recent years.
April 9, 2011 04:51 PM
In a month that is filled with natural disasters and geopolitical conflicts, our net worth survived the month relatively unscathed. In fact, our savings from job income and minimal portfolio gain more than offset the $6K drop in our employee stock option account, and helped us to end the month with a tiny net worth gain 0.2% gain or $2,362.
For the full quarter, we expanded our net worth by 2.4% or over $26K, which represents 18% of our annual net worth growth goal of $148K. We also shifted about 10% of our portfolio from cash and equivalents to investment accounts. As of March 31, we have slightly over 60% of our money fully investment in a number of asset classes.
Financial Matters for the Month
- We invested $16K in 50 shares of Apple Inc. in the month.
- We paid for the vacation in April to Seattle and Chicago.
- We filed extension to extend our tax filing due date to October.
- Waiting to see the Windy City :-)
March 5, 2011 06:57 PM
The first month of Chinese Year of Rabbit is rather uneventful. Thanks to the steady climb of the stock market, our portfolio also received a nice lift. Our net worth grew almost $20,000 in the month to $1,146,646.
Year 2011 Goal and the Journey to $3M
We are establishing our 2011 year-end net worth goal at $1,270,000. This represents about $147K or 13% year-over-year increase. We hope we can save up to $90K from our take-home pay, and our investment portfolio can have a modest 5% return.
Assuming we can consistently increasing our annual savings by 3% from the 2011 base of $90k, and over the next decade, we can count on an average of 5% investment return, we will hit our goal of $3M net worth by 2020.
- Tax season is starting now. Need to devote some good hours to tax filing.
- We are planning a trip to Seattle and Chicago in late-April and early May. We've never been to Chicago and near-by states so we are expecting the trip.
February 5, 2011 08:12 PM
January 2011 sees the 10 year anniversary of our marriage, and we celebrated this big event with a weekend gateway in a fantastic boutique hotel in Hong Kong, and a 1.4ct diamond ring from Blue Nile. It is a great trip indeed and a memorable beginning of our second decade together.
Back to the financials, our net worth inched ahead a modest $5,000 in January, despite the sizable cash outlay for the rock and the anniversary trip. We also put a lot of more cash to work in a variety of investment vehicles.
With the beginning of the new year, we are revising our monthly balance sheet format to better highlight the asset class mix in our investment portfolio. Here is our month-end tally in the new format:
January 1, 2011 02:52 PM
Happy New Year Everyone!
With the help of cross-the-board gain in financial markets, we closed the year of 2010 in a high note with over $37,000 net worth increase in the month of December. For the full year, our net worth grew a handsome $152K to a new height of over $1.1M.
As we combing financial statements and analyzing thru software, slightly more than half of the annual gain, or $82K, comes from savings. Some highlights of the year:
- We saved nearly 40% of our $200K+ after-tax income, which aligns with our annual financial plan at the beginning of the year.
- I have renewed career challenge in my current job. In 2010, I had been able to lead a huge project team of over 50 professionals to bring a product to market.
- My wife is taking her freelancing job to a new height by almost doubling her take-home pay from a job she truly enjoys.
- Our son is about 9 now. Although his private school tuition takes over 10% of our budget, it's so great to see him growing up and becoming an energetic young man with many interests.
- We continued to resist the temptation of buying a property -- our rent, at 20% of our budget, is approximately 40% what it would cost us if we bought the property we currently lived in.
- We allocated over 15% of the budget to travel. The family continued its world exploration and set foot in Dubai, US East Coast and most recently Guam and the Philippines. The family has been to over 30 countries now.
December 3, 2010 03:47 PM
(This is a bi-monthly update covering October and November of 2010.)
Our net worth continues to build up after it breaks the million-dollar mark in August. In the last two months, we have grown our asset base by $17,000, largely thanks to savings from job income and healthy investment returns during the period.
On the income side, it is worth calling out that my wife's freelancing job business is growing rapidly, and her income in 2010 already exceeded the full year proceeds in 2009 by over 70%. The steady income from that business is providing another meaningful leg to our financial house now.
On the investment side, we've substantially increased our exposure in the China market now that the market is hitting a new nadir after a recent dive. Other than that, we are adding some positions to some floating rate fixed income holdings but still park 47% of our asset in cash or cash-like vehicles. If anything, it seems the global economy will get worse before it gets better.
October 5, 2010 08:07 PM
Our net worth took a great leap forward in September, thanks to the bull run in the stock market and a lower-than-expected tax on my annual cash bonus. With the September monthly gain of over $47k, the largest in three years, we have grown our assets by almost $100,000 since the beginning of the year.
We are maintaining a cautious stance in managing our investments, parking almost 60% of our portfolio in safest money market accounts or alike that yield between 1% and 2%. Of course, this is not an offensive strategy, and certainly means some missed opportunity in the recent bullish market environment, but it also gives us many good nights of sleep. With so many clouds over the world economic, we are not seeing a clear risk worth taking at the moment.
After all, we probably didn't miss a lot -- the stock market ended the September at the level where it started the year, but those with a committed stock holding probably had a rollercoaster ride so far.
September 17, 2010 02:34 PM
Every August, our net worth will predictably jump up since it is when the annual cash bonus is announced and annual stock grants are vested. This year is no exception. A handsome bonus and a batch of new vesting activities pushed our month-end tally by over $34,000 to a new record high of $1.02M despite the punishing environment in the equity market.
At the same time, it's great to see that my wife's freelancing career is reaching new heights with over $5,000 billable work in August alone with about 3 working days every week.
So, with 8 months in 2010 behind us, our net worth has increased by over $50,000 so far this year. Let's hope that this time, we will hold on to our seven-figures much longer compared to the two-month stint earlier this year.
August 2, 2010 11:55 PM
a nice rebound of $25k in July and ended the month at $986k.
The July rebound is certainly nice, but with 58% of our portfolio parked in various money market accounts, we will be happier if the market will make a (big) correction so we can commit more capital to equity. Before that happens, we are comfortable staying in a defensive position today -- yes, we missed the nice 10% climb in the last few weeks, but our portfolio is also spared from the fast drop in May and June.
July 9, 2010 04:21 PM
Our net worth retreated $4,421, or 0.5% in the month of June. In particular, our employee stock option account extended its distressed journey -- it has lost 75% of its value since the beginning of the year. Conversely, our investment overall fared well, led by a 13% surge in Berkshire Hathaway stock price and fixed income fund gains.
With 2010 half way through, our wealth tally ended the first half a tad below where it started. And after briefly claiming millionaire club membership for a couple of months, we have been back to the $900s for three months now.
It could have been much worse -- the overall market lost about 10% in the last six months, yet we still preserved most of our capital. Chances are, if more investment opportunities present themselves, we are in a very cash-rich position to take advantage of that.
June 7, 2010 04:34 PM
The renewed global economic uncertainty and ensuing stock market "correction" dealt a big blow to our portfolio. Our net worth retreated to 6-figure with a monthly drop of 4.5%.
Most damage was done to our vested employee stock option positions, which behave disproportionately to the change in the underlying company stock. Our partial hedge helped, but not much. On the other hand, our continued "light" exposure in equity positions spared us from more severe damage.
So, how does it feel as a millionaire club drop-out?
Actually, I feel very good. Why? Since the beginning of the year, we chose to be very risk-reverse with the belief that the bull market had grown teeth and politicians cannot solve a debt problem by issuing more debt. During the same period, we have steadily lowered our equity exposure from over 30% to less than 18% at the end of May. With over $600k cash at hand and another $150k+ in low-risk fixed income funds, all we can pray for is for the market to take another skydive and present much more valuation opportunities.
May 9, 2010 11:03 PM
Thank you for all the nice words in response to my last post. Life is as usual even though our net worth is in 7 digits, but certainly the sense of achievement tastes good.
As this uneventful month unfolds, our investment grew a bit and my employee stock option rose impressively thanks to a good quarterly earning release. On the other side, we chose to take advantage of a 5% discount by prepaying my son's private school tuition of $12,000 for the next year. All in all, we are still happy to report a net worth growth of 0.7%, or $6,626.
April 7, 2010 11:49 PM
I started PFBlog seven years ago to document the journey toward a publicly-announced net worth goal of $1,000,000. With a starting tally of $47k in 2003, my wife and I were well prepared for a prolonged 13-year fight -- our realistic projection back then envisioned us boasting 7-figure net worth by 2016, or when we will enter our 40s.
A mix of luck and hard work brought our net worth to half a million bucks by August 2006, and we reset our goal to accumulate the million by 2012, and hence we changed the tagline of this blog to "Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million."
Since then, it was quite a drama: a quick ascent in 2006 and most part of 2007 put us within a stone's throw of the million dollar mark, but the following nosedive in 2008 almost wiped out a quarter of our asset base.
But finally, a few days before my 34th birthday, our personal accounting software finally had to accommodate an additional digit in our net worth report. In the end, we closed the month of March 2010 at $1,004,389!
We two newly anointed millionaires went out in a good Saturday evening planning to celebrate this special occasion at the best restaurant in town. But after running an errand first, we found ourselves stuck in a remote area of the city and couldn't get a taxi. After a failed 30-minute attempt, we caved in to our empty stomachs and walked around trying to find a decent enough food outlet with no success. We finally set our feet in a mom-and-pop noodle house with only three tables, and $5 being the highest price tag on the menu. Our final bill for the celebration meal: $9 including drinks :-)
March 12, 2010 12:46 AM
This March conveniently marks both the one-year anniversary of the stock market trough during the Great Recession and the ten-year anniversary of the dot.com bubble peak. As such, the trailing 1-year and 10-year performance readings of all mutual funds just had a facelift.
Morningstar gives us a timely reminder:
For the trailing 12 months:
A look at the one-year returns for all of Morningstar's fund categories shows how incredibly strong, and also remarkably broad, the rally has been. The category returns should make one realize how unlikely it is that such performance will recur on more than the rarest occasions.
..., it's always tough to predict the markets, but I'd guess that investors should not assume they'll be getting returns of this magnitude every year. With that in mind, perhaps the best approach right now might be to smile, take a moment to be grateful for such gains, and then forget that the past 12 months ever happened.
March 10, 2010 06:52 PM
Many people may wonder: who is Carlos Slim Helu?
He was just crowned as the World Richest Man by Forbes. Slim, whose amassed his $53.5B fortune in Mexican telecom market, beat Bill Gates by half a billion dollars, or merely 1%, to come up at the top of the list.
Bill Gates comes at second with $53B and his old friend Warren Buffet was third with $47B in his pocket.
Here is the 10 richest of the richest on earth:
March 10, 2010 01:16 AM
More than one news outlets (USA Today, WSJ, AP) reported that Bank of America will formally end its practice to charge overdraft fees that go as much as $35.
Starting from June 19 for new customers and starting from August for existing customers, BofA will:
1) Disallow overdraft at point of sale
2) When customer's ATM withdrawal will result in negative balance, BofA will ask customer permission on the $35 charge before they will get the money.
3) Customer can still opt in for overdraft protection.
BofA made the move following Federal Reserve regulation that forbid banks from charging such fees unless with customer permission. It is widely believed that many other banks will follow the lead of BofA, which issues 15% of the nation's debit card, and adopt similar policies. (Citi already ended overdraft fee.)
Like many others, I always keep at least a few hundred bucks in my checking account, so I never had to pay a dime on overdraft protection charge in my life. Actually, although this new change makes no difference to me on the surface, it might bring unintended consequences. As reported by Eileen Aj Connelly at Associated Press:
March 8, 2010 07:17 PM
Wall Street Journal published a good article today discussed oppsing views of the market's prospects. What makes it interesting is the two heavyweight scholars that take drastically different sides: Robert Shiller as the bear and Jeremy Siegel as the bull.
Prof. Shiller, whose book "Irrational Exuberance" correctly predicted the .com bubble, and whose name is associated with the monthly housing price index, thinks the market is due for a correction:
Mr. Shiller has compiled market data back to 1881, measuring stock prices month by month relative to corporate profits. To avoid short-term profit distortions, he uses an average of profits over the previous 10 years. Over the long run, by his measure, stocks trade at an average of about 16 times annual corporate profits—that is, their price-to-earnings ratio, or P/E ratio, is about 16.
He has found that when this ratio has gotten above 20, as it is today, it has signaled that the market was expensive and sooner or later would hit a stretch of subpar returns.
The way Mr. Shiller sees it, the problem today isn't just that the current P/E is above 20. It is that since 1991 it has spent only seven months, in late 2008 and early 2009, below the average level of 16. At the start of 2000, it was above 40. No one can say how much longer the P/E can keep rising or when the past year's bull market might end, especially with the government providing heavy stimulus. But past trends, and the law of averages, suggest that at some point the P/E is likely to fall below 16, pulling stocks with it.
March 7, 2010 09:28 PM
The Oracle's Annual Letter to Berkshire Shareholders is always a good read. Finally, I found some time during the weekend to go over the letter and the 2009 annual report. Owning 600 Class-B shares, I'm of course happy with the stock's performance and especially recent stock price spike. I've been owning Berkshire since 2005, and I am sure I will be happy shareholders for many more years.
Predictably, the annual letter started with the Berkshire Hathaway book value change with comparison to S&P 500 index, and certainly, the Oracle is taking pride in BRK's consistently market-beating performance:
"[W]e have never had any five-year period beginning with 1965-69 and ending with 2005-09 – and there have been 41 of these – during which our gain in book value did not exceed the S&P’s gain."
This time, thanks to the recent BNSF acquisition, Buffett went to length to re-introduce each of Berkshire's business segments. If you are a new shareholder, you might want to read the Owner's Manual as well.
The annual letter has been put under microscope by all financial journalists in the last weeks or so, so more repetition won't add much value. I will just quote some interesting paragraphs:
March 3, 2010 08:38 PM
Here comes the monthly tally time again. Our financial life has been uneventful lately. We continue to save about $3,000 a month, and the rest of our fate is governed by the financial market. For this month, the market lifted all boats and my portfolio included, bringing our net worth number much closer to the million dollar figure.
I have moved away from the days when I kept streaming quotes on my desktop and spent hours and hours reading individual companies' annual reports. In the last two years, I'm adapting to a lifestyle where I predominantly only invest thru mutual funds (with Berkshire Hathaway as the only stock holding), and only look at my portfolio two or three times a month. (I do still read WSJ every morning to keep myself up-to-date of what's happening in the business world.) If anything, the financial turmoil in the last two years at least helped me to adapt to a much healthier lifestyle, even though it set me back for more than a year financially.
Without further ado, here is the month-end balance sheet:
March 2, 2010 06:57 PM
When the credit card overhaul was signed into law last year, many predicts that the banking industry will find new ways to replenish billions of lost revenue. Since then, this is becoming more and more of a reality, and it finally happened to me, even though I have a pristine credit history and have a 780+ credit score.
To be specific, Citi just sent me a letter saying I need to pay for my credit:
"We're writing to let you know about an important change we're making to your account. Effective April 1, 2010, an annual fee of $60 is being added.
The reason we are making this change is to maintain the quality of our service amid the rising cost of doing business. However, because we value you as a customer, we wanted to give you an opportunity to have the annual fee credited back to your account.
(02/05) Monthly Update - January 2010 ($970,356, +$452)
(02/05) Fidelity Offers $7.95 Commission and Free ETF Trades
(01/25) Losing 37% a Year for 10 Years Straight
(01/21) Berkshire Hathaway Completed 50-for-1 Split
(01/11) Income Tax Law Changes in 2010
(01/11) Maximizing Stock Option Value: The Tax Consequences
(01/08) Morningstar Announced Fund Managers of the Year 2009
(01/06) Writing Option to Improve Option Value
(01/06) Maximizing the Value of Expiring Employee Stock Options
(12/30) Net Worth Trend: '07-'09
(12/30) Decade's Winners and Losers
(12/28) Decade of Progress
(02/04) How Much Are Credit Card Issuers Charging Merchants?
(02/03) 100 Best Companies to Work For (2009 Edition)
(02/02) What You Should Know About 2008 Individual Income Tax Returns
(02/01) Monthly Update - January 2009 ($796,679, -$11,654)
(01/31) How A Year Is Lost
(01/20) Investment Plan 2009, Part 1: The Macroeconomic Assessments
(01/10) What Is the White House Worth In the Market?
(01/09) Why Did I Sell All My Stock? (And Not)
(01/07) Best and Worst Performing Stock Markets of 2008
(01/03) Free Credit Score for Everyone
(01/02) The $1M Goal Revisited: Should I Take Risk?
(01/01) Annual Update 2008 ($808,333)
(12/31) Bye Bye 2008
(06/03) Monthly Update - May 2008 ($885,297, +$12,932)
(06/01) Portfolio Update - May 2008 (Up 0.12%)
(05/10) Monthly Update - April 2008 ($872,365, +$39,068)
(05/08) Portfolio Update - April 2008 (Up 3.98%)
(04/12) A $215 Refund
(04/08) Monthly Update - March 2008 ($833,298, +$5,976)
(04/08) Monthly Update - February 2008 ($827,321, -$25,287)
(04/06) Portfolio Update - March 2008 (Down 1.37%)
(04/06) Portfolio Update - February (Down 2.78%)
(02/12) Morningstar Fund Manager of the Year 2007
(02/09) Monthly Update - January 2008 ($852,608, -$42,790)
(02/07) Portfolio Update - January 2008 (Down 3.02%)
(01/15) The Unfamiliar Names Among The World's Five Richest People
(01/14) Portfolio Review 2008, Part 1: Where Is The Alpha?
(01/13) Portfolio Review 2008: The Introduction
(01/12) 2008-2010: The Upcoming Golden Age for Investors in Low Tax Brackets
(01/11) 2008 Financial Goals
(01/10) How Much Will You Marry For?
(01/09) What's My Total Investment Cost in 2007?
(01/08) Supercharge Your Frequent Flier Mileage Account by Applying for Co-Branded Credit Card
(01/07) How to Play the Dollar/Yuan Carry Trade
(01/06) Courtesy Overdraft: A Courtesy Service or A Profit Center?
(01/05) 2007 Net Worth Growth Goal vs. Result (and Brief Annual Income Statement)
(01/04) How Americans Invest in 401(k)
(01/03) Invest Like Harvard and Yale
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