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 share my “Chart of the Month,” which should add some color to my saving and investing strategy.
September 2018 Net Worth
We use Personal Capital to track our net worth. Personal Capital makes it 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.
September is probably my favorite month of the year. The end of summer, the cooler weather, the beginnings of fall foliage, and the ‘back to school’ atmosphere makes me feel nostalgic. The fall allergies are an added bonus.
It’s also Fair Season! We got to take Baby BF to her first “Big E,” or Eastern States Exposition. It’s a giant fair in New England, with lots of animals, food, useless crap to buy, beer, entertainment, food, and beer.
September was a relatively quiet month for our net worth, with marginal gains in all of our asset categories. We had a slight setback due to an unplanned expense, but otherwise it’s still smooth sailing.
Cash: no real change in net cash. Since we automated all of our transactions a few months ago, I haven’t had to do much with our checking account month-to-month. Really, all I’ve been doing is applying whatever excess we have at the end of the month to our mortgage principle, in keeping with our latest investing plan.
We had the great fortune of seeing our well pump crap out on Labor Day weekend. Thankfully, after about 6 hours and lots of digging we were back in business. It still cost us $3,000 that we weren’t too excited about spending. Ahh, the joys of home ownership!
Equities: we had a modest gain in our equities balances this month. We contribute approximately $4,500 per month to our various investment buckets, including our 401k/403b, and brokerage accounts. Therefore, we should expect an increase on the order of $4K per month, even without any market gains.
Home Equity: In September, we made a $1000 contribution toward our mortgage principal. We would have paid more, except for the costly well pump, which dinged our cash flow for the month.
I mentioned in last month’s update that we are debating whether we should explore alternative investments (such as rental properties), or just keep paying down the mortgage. No decision made yet on this front. We may let our cash reserves build up a bit while we decide what to do next.
Chart of the Month: Year to Date Returns
It’s never a bad idea to compare yourself versus benchmarks. Occasionally, I like to see how our group of investments stacks up against the S&P 500 index. In an ideal world, we would be invested in VTI/VTSAX and our returns would perfectly mirror the index. The following chart shows our collective performance year-to-date versus the S&P 500.
Note: I subtracted our monthly contributions from the gains in this chart. Otherwise, we’d show a return of approximately 25% this year, most of which came from contributions.
As you can see, our overall performance thus far has tracked very closely to the index. This is good news. However, you can see that we lagged (and led) the benchmark at times.
- I still own individual stocks, which make up approximately 40% of our portfolio. These are all defensive, blue-chip type companies, so I’m not overly anxious to reduce this allocation. However, ‘value’ names tend to underperform growth names in increasing interest rate environments such as right now.
- I still own too much of my own company stock. Over the course of the year, I’ve reduced my holdings from ~12% of my net worth to 7.5% now, but I’d still like to get it under 5%. My company stock had a rough Q1 but a really good Q2, hence the jump in value over those months. Since January, I am only buying company stock to take advantage of my Employee Stock Purchase Plan, and selling on the first eligible day to lock in my gains.
- Any other discrepancies may be due to the allocation of our other investments. Our brokerage portfolios include a broad index fund plus international/emerging markets ETFs to diversify our holdings. My HSA is invested in a ‘small cap value’ ETF, because I read something once by Fama and French.
All in all, I’m happy with our YTD performance. Sometimes it’s nice to check and make sure you’re not shooting yourself in the foot with your asset allocation. Looks like we’re OK!
Thanks again for following along with our monthly progress report, and please let me know what you think in the comments. Cheers!