Each month, I share a net worth update for the Brewing FIRE household. This brief summary of our financial standing serves as a progress report on our journey to financial independence.
In addition to giving a snapshot of our net worth, I will compare our progress to the previous month. I will also comment on any notable changes to our finances. Finally, I will give some color on our saving and investing strategy, as appropriate.
June 2018 Net Worth
We use Personal Capital to track our net worth. Personal Capital makes it very easy to track all of our banking accounts, investing accounts, credit cards and loans all in one place. In addition, Personal Capital has a “Cash Flow” feature which compares your income and expenditures over time, helping you make sure you’re balancing your budget. Personal Capital also has numerous other functions for analyzing your investment holdings, asset allocation and performance, as well as some great retirement planning tools.
June was another solid month of gains, with modest increases across all of our investment buckets.
Cash: I’ve mentioned in previous net worth updates that I’ve been quasi-obsessed with consolidating the many separate accounts that Mrs. BF and I are still inexplicably using. Well, I’m proud to say that I finally did it! As detailed in my latest post, I finally simplified our accounts and streamlined our bill paying and investing process. It’s only been a couple weeks, but I already feel more relaxed. Automation is beautiful!
In the coming month or so, we plan to draw down a portion of our cash balance. We have a number of sources we could draw from in an emergency, including our brokerage accounts and our Roth contributions. Although this may not be desirable for various reasons including tax implications, the money is available if we need it. Therefore, we can put some of the cash to work.
Equities: Nothing especially interesting this month. We contributed some, we gained some. A couple drinks. A couple aspirin. Repeat.
Approximately 40% of our investments are held in individual stocks. Wow, that sounds like a lot now that I say it out loud. I was a follower of the dividend growth investing strategy since 2010 or so, and this is how I accumulated so much equity in stocks. I own almost exclusively companies that have existed for a long time, pay a dividend, and have increased that dividend for many consecutive years. Think companies like Altria, Clorox, and Johnson & Johnson.
More recently, I’ve started coming around to the passive investing philosophy of just buying index funds that track the market as a whole. Read jlcollinsnh’s Stock Series to learn everything you need to know about this strategy.
The majority of newly invested money now goes to index funds. I’ve also been selectively selling individual stock that don’t quite fit the buy and hold forever category. I don’t plan to liquidate all of my stocks, but they will certainly play a minimal part of my investing strategy going forward.
Home Equity: Almost every month I talk about our efforts to reduce debt as part of our investing hierarchy. In fact, this is an ongoing debate throughout the personal finance blogosphere. Here’s my take on this topic.
Last month, I promised that I would include a new chart or graph each month as a visual representation of some aspect of our journey. So here’s a pie chart! This is a breakdown of our net worth distribution as of the halfway point of 2018.
In a future post I will talk about how I want this pie chart to look when we retire. Hint- a lot less home equity, which is fairly illiquid.
Thanks for following our progress as we strive for FI. Let me know what you think in the comments below. Cheers!