Net Worth – March, 2017

Each month I’ll be keeping track of our net worth on this blog. The reason for making our net worth public is to not only hold myself accountable, but to provide a record so I can review my progress over time. I’ll be giving a brief analysis on our results for the month and what changes I’m thinking of making.

FebruaryMarch$ Change% Change
Assets
Checking$31,807.83$48,256.18$16,448.3551.7%
Retirement accounts$608,090.78$625,734.37$17,643.592.9%
529 accounts$17,182.46$18,185.20$1,002.745.8%
Brokerage accounts$1,401,563.63$1,409,278.06$7,714.430.6%
Private equity$200,000.00$200,000.00$0.000.0%
Rental properties$904,962.50$917,171.00$12,208.501.3%
Primary residence$1,580,000.00$1,607,000.00$27,000.001.7%
Total Assets$4,743,607.20$4,825,624.81$82,017.611.7%
Liabilities
Credit cards$1,014.69$882.47-$132.22-13.0%
Rental mortgages$522,635.63$521,613.35-$1,022.28-0.2%
Primary mortgage$755,292.61$751,860.48-$3,432.13-0.5%
Total Liabilities$1,278,942.93$1,274,356.30-$4,586.63-0.4%
Net worth$3,464,664.27$3,551,268.51$86,604.242.50%

 

S&P 500 performance for March, 2017 = -.04%

Assets

Checking – Big increase here due to receiving both our state and federal tax refunds. We like to keep a sizable chunk of money in cash for a few reasons. First, we have a number of rental properties and a large cash reserve is a cushion against the situation where multiple properties are either vacant or have repair issues in one month. Second, I’m slowly building our cash reserve as a defensive move. As I’ve pointed out many times in the last few months, I strongly feel the market is overvalued today and I’d rather hold cash than invest at these valuations.

Retirement Accounts – This includes a 401(k), a few IRAs, and a few Roth IRAs. The only account we are currently contributing to is the 401(k), as we are ineligible to invest in the rest. These were up a surprising 2.9%. Of the $17,643.59 in gains, only about $1,300 was from contributions.

529 accounts – We are contributing $500/month for each kid, and given the low balance of these accounts I expect that our contributions will dwarf any investment returns for quite some time. We added $1,000 and got another $2.74 in gains from the market, so it looks like my expectations are about right.

Brokerage accounts – This is our early retirement fund and where most of our net worth is. This account was essentially flat (up .6% for the month). We made no contributions/investments this month, and the slight outperformance compared to the S&P was due entirely to dividends received.

Private equity – 2 separate equity investments in startups. Since there’s no way to value these investments I will continue to keep them valued at my initial investment amount. Hopefully I’ll one day be pleasantly surprised to see that the companies are worth something. For now we assume these are worth $0 in our planning.

Rental properties – On the last day of each quarter I adjust the value of the properties based on Zillow’s estimate. Over the last 3 months the values here were up 1.3%, for a total $12,208.50. I’d need to spend some time doing the exact math, but my guess is that if you were to look at the actual cash-on-cash returns (or leveraged returns, as some people prefer to call them) you’d see the actual return is more like 5% for the quarter. This is pretty great when you consider that this is in addition to the cash flow generated by the properties.

Primary residence – Just like the rental properties, I adjust the value of our house at the end of each quarter. According to Zillow our house was up 1.7% in Q1. This number doesn’t really matter, as we hope to live in this house forever, but I track it for the sake of completeness.

Total assets – Total assets were up $82,017.61 for the month. That’s a 1.7% gain, which is great for a single month.

Liabilities

Credit cards – We don’t carry a balance from month to month on our credit cards, so this just reflects our balance as of the end of the month.

Rental mortgages – We paid off $1,022.28 on the mortgages. Nothing spectacular, but it’s good to see the mortgage balances slowly drop every month.

Primary mortgage – We paid $3,432.13 on the mortgages for our primary residence. The goal is to have the second loan (~$187k) paid off by the end of 2017. Based on some recent developments I think this is a slam dunk.

Although I don’t really consider our house to be an asset, I definitely consider our home loans to be liabilities. I think it would be difficult to retire early with substantial mortgage payments hanging over our heads.

Total liabilities – Total liabilities were down $4,586.63 for the month.  Most of that reduction was due to paying down the mortgage on our house.

Total net worth

Net worth was up $86,604.24 for the month which is a ridiculous 2.50% in one month, for a total of $3,551,268.51. I’d obviously be delighted to see these kinds of returns every month but this was really due to a few factors:

  • Our investments being up a few percent
  • Large tax refunds
  • Quarterly adjustments to the value of our rental properties and personal residence

None of that can really be attributed to anything we did especially well this month. Due to our real estate holdings I expect us to underperform the market on the way up but significantly outperform in a down market. My guess is that we’ll find out sooner rather than later if this is the case.

How did everybody else do this month? Is anybody planning on making any changes to their allocations or investment strategies?

2 thoughts on “Net Worth – March, 2017

  1. It’s amazing your net worth grew so much in just one month, keep it up! I like you’re pay down strategy, I’m doing the same.

    I really splurged this month. Found a condo a mile from the beach. With no bills except rental property mortgages and primary I decided to rehab it. Figure on keeping for a year as a second home and if I like it I will keep it, if not sell. Worst case I lose a few grand after rehab but have a cool summer spot. I put down a big 25% downpayment and it will cost me about $1250 monthly to keep. I’ve got a positive cashflow with other rentals far exceeding this so figured I’d give it a shot! I’ve done a few buy and holds, this is a bit different, BUT it just seems so cheap to be able to walk to a beautiful beach. Hoping with this I will have fun, and Grow my net worth!!

    1. I know a lot of people believe that the key to being rich is to leverage your house (and other assets) for as long as possible. And it’s certainly true that if you can borrow money at 4% and invest it at 8% then you should do so. The problem is that investing today is pretty unlikely to result in 8% returns. In fact, somewhere around 3-5% for the next 10 years is more likely. In that case paying down debt makes much more sense, as it’s a guaranteed return.

      I’d love to hear more about your condo purchase. Where do you live?

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