Net Worth Update – June 2018

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

Net Worth, via Personal Capital

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.

Month-Over-Month Comparison

June 2018 MoM comparison

June was another solid month of gains, with modest increases across all of our investment buckets.

Investment Breakdown

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.

Breakdown of our investment composition

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!

10 thoughts on “Net Worth Update – June 2018

  • that looks very similar to our portfolio breakdown. we have 42% individual stocks overall if you don’t count our house. it’s paid off but i don’t count it. i tried to subscribe but got an error, by the way. i don’t think my subscribe button works on my site lately as the traffic is up but haven’t gotten a new subscriber in a month. nice blog and investing strategy.

    • Thanks for the heads up! I have next-to-no subscribers, but I thought that was just because no one cares about my site haha.

      By the way, I include home equity in our net worth but I don’t consider it a true part of our wealth and definitely not as an investment. I look at it as a potential future ‘bargaining chip’. In other words, if we make a decision to move and/or downsize as part of our FI plan, we can turn the home equity into a large down payment (hopefully 100%) on our next property. The higher I can push our home equity, the more useful it becomes as part of our next move.

  • I like how you are viewing the home equity as a bargaining chip! I get the arguments for and against a home being an asset, but one cannot simply deny the true cash value in a home.

    Great month for you, well done!

  • 3% month over month with a number that high is amazing! My problem with the quick home equity pay down is that it takes FOREVER in the northeast to see it hit your budget. Even if i pay a ton towards my mortgage my monthly nut would change for a very, VERY long time.

    I think you’ll appreciate those individual held stocks next time there is a correction and they all don’t get whooped!

    • I know, it’s a little bit disheartening to know that the mortgage pay down will take a long time before I actually feel the impact (paid off). I pay more attention to the percentage of my monthly payment that goes to principal. Right now roughly 66% goes to interest. When that number goes south of 50%, it will be nice to know the majority of my payment is reducing my debt.

      Also agree about the stock holdings. I will plan to keep the defensive stocks, because certainly CLX or JNJ will perform better than most when (not if) things go south. I will feel good to still be collecting the dividend and also having a reduced downside.

  • Love the moves you are making here Brewing Fire! This is my first time stopping by, so I can’t speak for where you were 5-6 months ago. However, that was a great improvement in your net worth this month. And I like how your increase was pretty simple and you didn’t have to do much to see a jump. Just the power of the market increasing and some nice savings. Keep up the great work!

    Bert

    • Thanks Bert! It’s definitely nice to see solid progress just due to regular contributions and steady market gains. I can’t really expect to see 3% increases in net worth every month, but our monthly contribution (including 401k, HSA, and taxable accounts) is nearly 1% of NW, so maybe we can keep it up for a while.

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