At the end of every quarter, I share a snapshot of my current finances. This includes what I’m invested in, their values and the change over time. The hope of sharing this information is to show it’s possible to make money investing in super-simple ways without the need to watch the latest news.
My hope is that people realize how easy it is to invest and take control of their own finances. Whether that’s reading a book on the topic, taking my free investing course, or looking at what others are doing and learning from that. When I learned to invest it was a combination of all of these, and I always wished more people shared the nitty-gritty of their own decision making. I hope this helps to highlight what I’m investing in, and get feedback from those more experienced than myself about ways I could improve.
Account Value Over Time
Nearly everyone that’s investing agrees – we’ve been on a helluva run lately. When looking at growth over the last 3 months, it’s a little hard to believe even. On January 1, 2018, the total value of my investments was $1,221,774.00, up 25% in the last 12 months! What’s even crazier is that this is up 12.2% over the quarter.
I’m cheating here on one big thing – in my Q3 Investment Report I didn’t include home equity. I treat this as an investment report, not a net-worth report. I’m not including my car either. In December we sold our house and made a few bucks from it ($33,445.63 actually). If I had taken home equity into account then, my Q3 basis would have been $1,121,454.13 and it increased to $1,221,774.00 – or an 8.9% increase over the quarter. (still !! worthy).
My total gain in investments over the last 3 months was $100,319.87, which is unbelievable. Add on top of that another $33,445.63 we picked up from selling our house and we’re up $133,765.50 in the last quarter.
Although things are pretty rosy now, we did end up selling our house for about $60,000 less than we purchased it for back in 2008. That was without a doubt my poorest financial decision, and I’m extremely fortunate that I’ve been in a position to not need to regret it. There were times when we were 50% underwater that we considered a short sale, or letting it go into foreclosure. Those could have been beneficial financial decisions, but it didn’t square with our ability to cover the mortgage, and how much we loved the house.
Here’s a snapshot of my investments and how their values compare with their values at the end of the last quarter. These positions aren’t in lockstep with my ideal asset allocation due to tax limitations of rebalancing. All new funds are being put into positions that bring this closer to that target. I don’t sell investments to rebalance because I’d need to pay capital gains taxes if I went that route. Instead, I invest new funds in underweighted categories.
|Account||Holding||Value Q3||Value Q4||Percent|
|401k||Spartan Bond Index||$76,025.86||80,449.04||6.54%|
|Roth IRA||Vanguard REIT||$47,250.69||$47,598.11||4.87%|
|Roth IRA||Vanguard Total Bond Market||$31,259.50||$31,385.88||2.55%|
|Roth IRA||Vanguard Total Intl Bond Admiral||$30,319.33||$30,648.06||2.49%|
|Brokerage||Vanguard Small-Cap Index||$70,478.52||$72,707.62||5.91%|
|Brokerage||Vanguard Total Intl Stock Index||$243,702.37||$252,043.25||20.48%|
|Brokerage||Vanguard Total Stock Market||$457,956.82||$478,614.32||38.90%|
|Brokerage||AAPL & TSLA||$52,930.63||$52,046.77||4.23%|
A few things immediately stand out from this:
I mentioned before that I reserve 5% of my investments for long-shots through speculation. Lately, those long-shots have been cryptocurrencies. I continued dollar cost averaging these both until Bitcoin broke $10,000. Around that time I’d put in about 4% of my portfolio – but things had grown since then.
Now that these two make up 9% of my portfolio (~125% growth), I need to figure out what to do (not a bad problem to have!). If I were to sell now, I’d pay short-term capital gains taxes. But if I hold these for a year what’ll happen to crypto? Will it still be around? Will it have any value then?
I fully admit this area is more gambling than I’m comfortable with. If I could get the cash today and not pay taxes, I’d do that in a heartbeat. I’m looking into starting a DAF (Donor-Advised Fund) with these, which could be a great opportunity to start one. The downside is that (from what I’ve read) contributions are only tax deductible based on their cost when using short-term capital gains. In other words, if I donated these now, it’d be based on that 4% value, not the 9% value. If I wait a year, I can donate these at their 9% value.
This is from my limited reading on the topic. If anyone else knows more, I’d love to hear it.
Additional Note on Cryptocurrencies
These numbers, namely the $108,161.24 in cryptocurrencies, are a snapshot of the value as of 1/1/2018. As I’m editing this post on 1/13/2018, the value is already up to $158,845.27 – a gain of $50,000 in 2 weeks. According to my rules for investing, this has now exceeded a 5% shift, which would trigger a manual rebalancing of some kind. Being that these are short-term gains, I’m still trying to settle on a course of action here. Take the money, pay a ton of taxes, and run? Or hold out until later this year for long-term gains, and potentially make an extra $20,000 (in the form paying fewer taxes).
I haven’t made a decision on this, but I’m leaning towards dollar cost averaging the sale of some of these over time. I’d end up paying some short-term capital gains taxes in 2018, but it would distribute the risk slightly on the chance the value takes a nosedive this year. How much I end up DCAing is still to be determined.
US and International Funds Did Very Well
Companies continue their march upward. Every grouping there did very well. Years ago I decided to do a “small cap tilt” and purchased a small amount of a Small-Cap fund. Since then, I’ve come to learn I’d rather just put all my money in the Vanguard Total Stock Market fund. I can’t sell now without paying taxes on gains though, so I’m pretty much stuck with that one. Dividends are being reinvested into the Vanguard Total Stock Market fund though.
Lots of Cash
Since the sale of our house, we have a bunch of cash! I have a few things I’m hoping to use this for. I’ve started a Betterment and a Wealthfront account since the new year – both of which I’m hoping to try out for the year and reporting on each. Mrs. Minafi and I are also planning to start a joint-brokerage account too – rather than contributing to my brokerage account. This doesn’t need to happen until we both max out our 401ks and Roth IRAs for the year though.
Asset Allocation Breakdown
I like to look at these funds broken down by asset allocation comparing my current snapshot to my ideal allocation.
Items in green are overinvested in, while items in red are underinvested in. Looking at these, it’s clear that I am waaaay under-invested in bonds. Previously I was putting additional money into a brokerage account bond fund. Once we start up our joint-brokerage account, we’ll probably invest in Vanguards Intermediate-Term Tax-Exempt (VWIAX) fund. Also, US stocks are out of balance as well. I’ll be looking for opportunities to tax-loss harvest these, but that’ll be very unlikely.
Spending & Savings
This quarter has been very rocky from a spending standpoint. Our savings rate for the quarter was 23.11% – if you exclude profits from the sale of the house, it’s -52% (yes, that’s a negative sign). A lot of the spending this quarter involved things we’d been saving up for – preparing our house for the sale, pre-paying for a honeymoon in 2018, eating at some restaurants for the last time before we moved and hanging out with friends before we left Orlando.
Here’s a look at all the categories broken down for the year. I use Personal Capital to track these expenses.
|Travel & Luxuries||$6,335.00||$2,468.00||$791.00||$14,419.00||$2,001.08|
|Education & Career||$997.22||$729.17||$702.00||$1,824.00||$354.36|
This brings my total spending for Q4 to be $41,289 and my total spending for the year to be $73,420.92. More than half of my spending for the entire year was in the last quarter! That’s kind of nuts. The amount spent in Q4 is just completely out of proportion to the rest of the year. Here’s a look at why these areas are out of sync.
$19,219.00 in Home. Whew, that one hurts. This number includes 3 months of mortgage payments (including some overpayments), deposits and pet fees in the new apartment, rent in the new place for December & January, re-landscaping our yard before the sale (soooo worth it), a new couch and bedroom set (which were about $2,850 delivered) and everything else we needed to do to sell our old place or was missing after we moved. If I break that down, about $11k was related to paying for places to live, about 6k was fixing up our place to sell, and the rest was for the new place. I’m super happy with our cozy new small apartment though! Lily loves it too.
$13,282 in Travel. Back in January of 2017, we decided to splurge on an Adventures by Disney vacation to Vietnam, Laos, and Cambodia. We are extremely excited to go on this one! Q4 was the quarter we finally had to pay for it and buy airfare out to southeast Asia. We’ve never done anything like this before. In the past, we’ve always planned these out ourselves, using airfare miles, staying at hotels on points, and finding the cheapest places we could on Booking.com. This trip (coming up soon in January 2018!) will be our first time getting the white-glove treatment on a trip. They’ll pick us up from the airport, take us to the hotel, to other sites and across borders and drop us off at the airport when we’re done. We’re curious how it’ll compare to our usual self-exploration style.
$3,864.00 in Food. Just 3 months ago I mentioned how $1,700 was a lot to spend on food, and now we more than doubled it! Of that, $1,444.00 was in groceries and $2,529 (!) was in restaurants. How the hell did we spend this much in restaurants?! We spent $500 at Kadence, another $250 at Epcot Food & Wine, then the rest was a combination of going-away dinners and welcome-to-Utah dinners. Many of which were us trying places we loved one last time or places we were most interested in. I’ve found that by moving, I feel like I’m on vacation, which makes me a little less likely to control my spending on food. I’m going to need to change that now in 2018. We do plan on eating out more than we used to (being able to walk to restaurants is nice!) but we’ll need to get this one under control with more cooking at home.
$1,698 in Transportation. Between buying new all-weather tires for my car and buying gas for the drive from Orlando to Salt Lake City, this one was a lot higher than expected. I’m also paying for a monthly public transit pass here in Utah, as well as $75/year for unlimited bike access around downtown — which is an amazing deal.
$1,401 in Entertainment & Alcohol. In addition to the restaurants’ side being high, the bars side was higher this quarter as well ($749). This was partly because we hung out friends one more time before the move, and new friends after it – but more than anything it was restocking some of our bar after the move. Did you know it’s illegal to bring alcohol into Utah? Well, it is. Even if you’re driving into the state and have a bottle of wine in your car you could get charged with a Class B Misdemeanor which is punishable by up to $1,000 in fines and up to 6 months in jail. We’re cheap, but not so cheap as to tempt fate, so we didn’t bring anything in (you believe me right?).
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Q4 Spending Retrospective
I’m not exactly excited about spending $41,289 in 3 months. If I normalize these numbers to remove a few one-time expenses the number looks a lot better:
- -$13,282 vacation which blows or normal yearly budget for travel.
- -$5,700 in mortgage overpayment, paying for 2 places at the same time, apartment deposit, temporary housing, double rent payments.
- –$3,000 in home furniture and general home goods after our move
Those one-time purchases put the spending down to $19k, which isn’t far off from Q1. The total amount spent in 2017, $73,420.92, is still under my Financial Independence with Options number of $77,500 – which is also the number that I’ve been penciling in with my FI calculations. To spend this luxuriously the past 3 months and not hit that number for the year feels a relief, but it does feel like we went a bit overboard. In my goals for 2018, I mentioned cooking more at home and taking things a little slower – both of which should help manage those costs going forward.
3 days before we moved, my MacBook Pro decided it was time to finally die. I took it to the Apple Store and found out it would be $575 to fix it, or I could buy a new one for 3x that price. My 2012 MBP is still going strong, and I didn’t see any reason to upgrade to the latest, so I went the repair route. Apple has a flat rate “We’ll fix anything that needs fixing” rate which is handy. They were able to fix it and ship it me in Utah, which saved the trouble of transporting a broken laptop. It turned out the entire logic board failed and needed to be replaced. It took less than a week, and it works like new!
I anticipate our 2018 travel budget being relatively small. We’re hoping to drive to all the national parks at our disposal which is much more reasonable. We’re penciling in a Scotland trip and of course Fincon in Orlando as well.
I haven’t set a budget for 2018, but I’m aiming for something closer to Q2-Q3 2017.
Savings Rate Over Time
This isn’t going to be good. I’ve been using savings rate as a lifestyle inflation canary for a while. This quarter that canary is in some serious trouble. My existing SR graph is thrown so much out of whack by this spending that I need to readjust my formula. Trailing 12 months SR is a better way of looking at this.
The savings rate is based only on spending and income (job + blog + any side income + selling anything). It does not include returns on investment or dividends, but December does include the sale of our house.
The Road to Financial Independence
With a yearly spending of $73,420.92/yr, that would mean I’d need $1,835,523 to be FI at 4%. With my $1.22m investments I’m still a few years away. It is interesting to look at what percent I am at in proportion to 4% and other more aggressive numbers.
Looking at what my safe withdrawal rate is given my current investments is always an investing one too. It’s been nice seeing this dip below 5%!
Goals for Q1 and 2018
It feels amazing to have most of the large expenses and life events out of the way in 2017. In 2018 we won’t have any weddings or honeymoons or house maintenance or much in the way of furniture or super-expensive travel.
- Bring restaurants and bars spending down by cooking more at home.
- Travel close to home and explore the national parks of the west.
- Continue not buying new electronics unless I absolutely have to.
- We may sell both our vehicles and go down to a single 4-wheel drive car, but that shouldn’t impact much.
What are your financial goals for 2018? How did you do in 2017?