Net Worth – September 2016

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.

Here’s how our net worth looked for September:

August September Change % change
Assets
Checking $22,132.55 $14,216.98 -$7,915.58 -35.8%
Retirement accounts $544,526.88 $545,251.86 $724.98 0.1%
529 accounts $9,764.90 $10,758.00 $993.10 10.2%
Brokerage accounts $1,337,396.18 $1,336,174.50 -$1,221.68 -0.09%
Private equity $200,000.00 $200,000.00 $0.00 0.0%
Rental properties $855,069.00 $865,325.00 $10,256.00 1.2%
Primary residence $1,540,000.00 $1,560,000.00 $20,000.00 1.3%
Assets total $4,508,889.51 $4,531,726.34 $22,836.83 0.5%
Liabilities
Credit cards $1,815.03 $2,562.93 $747.90 41.2%
Rental mortgages $527,817.81 $526,742.11 -$1,075.70 -0.2%
Primary mortgage $770,074.04 $767,710.08 -$2,363.96 -0.3%
Liabilites total $1,299,706.88 $1,297,015.12 -$2,691.76 -0.2%
Net worth $3,209,182.64 $3,234,711.22 $25,528.59 0.8%

S&P 500 performance for September = -.12%

 

Assets

Cash

Cash was down a bit this month just due to the natural ebb and flow of when the mortgage payments are due for the rental properties, when the rent checks are cashed, etc.

Retirement Accounts

This includes a 401(k), a few IRAs, and a few Roth IRAs. The only account we are still contributing to is the 401(k), as we are ineligible to invest in the rest. Being up .1% is solid considering the market was a bit down.

529 accounts

I’ve asked myself if I should really include these accounts in our net worth, as the money is earmarked for the kids and will be spent solely on them. Ultimately I’ve decided to continue including them, as if we didn’t have these 529 accounts then we’d need to pay for college out of our other investments. 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.

Brokerage accounts

This is where the bulk of our money is. This money is our early retirement fund. After maxing out my 401(k) all additional funds are put here.

As I’ve mentioned in some recent posts, I sold a few investments and will not be making any additional investments until valuations improve. For now I am hoarding cash until I see some compelling bargains in the market.

The brokerage account was -.09% for the month compared to the S&P being -.12% for the month. Strangely enough, the S&P was also down .12% last month. Due to the size of our portfolio vs the amount we can invest each month, the market will have a much stronger effect on our net worth than any new money we invest.

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.

Rental properties

On the last day of each quarter I adjust the value of the properties based on Zillow’s estimate. As a result, the rental properties logged a decent $10,256 of appreciation, which is 1.2%. That annualizes to a decent 4.8%, which I’d be very happy to have over the long-term.

Primary residence

Just like the rental properties, I adjust the value of our house at the end of each quarter. Like the 529 accounts, I struggle with whether I should include our house’s value here, as it doesn’t provide us any income and our hope (dream?) is to live in this house for the rest of our lives. As a result, it doesn’t really matter what the value is because we hope to never sell it. However, since we’d have to rent a place if we didn’t own the house, I’ve decided to include the house in our net worth calculation.

Total assets

Up $22,836.83, for a solid .5% increase. That annualizes to 6% a year. If I could increase my net worth by 6%/year using my mix of investments I’d be pretty happy. However, I expect that we’ll be seeing a downturn in the market in the next year or two, which means I expect to see this number drop by 20-30% at some point.

 

Liabilities

Credit cards

Slight increase in credit card usage for the month. This is partly because I often charge work expenses to my personal credit cards and then get reimbursed. I usually do this when someplace doesn’t accept my work AmEx.

Rental mortgages

Paid off just over $1,000 on the mortgages. In the past I’ve considered paying these down faster than the standard 30-year loan schedule, but I’ve always felt I could do better investing that money elsewhere. After all, most of these loans are at 4-4.5% interest.

However, given the current market valuation I’m wondering if it makes more sense to hoard cash (to buy back into the market at better valuations) or to pay down these loans (netting myself a guaranteed 4-4.5% AFTER taxes). This is something I’ll need to continue thinking about.

Primary mortgage

I have been paying the second mortgage off on an accelerated pace, with the goal of having it paid off in less than 15 years. Although I don’t really consider our house to be an asset, I definitely consider our home loans to be liabilities, and I’d like to pay them off as soon as possible. I think it would be hard to really hit early retirement with substantial mortgages hanging over our heads.

Total liabilities

Total liabilities dropped a mere $2,691.76 for the month. It’s tough to get excited about that. For the last few years I’ve been working on increasing my assets rather than paying down my liabilities. Given my reluctance to invest further in the market today I’m thinking it might be about time to reverse that thinking.

 

Total net worth

Net worth was up $25,528.59, which is a solid .8%. Pretty much all of that is due to the increase in the value of our real estate holdings. If you subtract those increases we were actually negative for the month. Given our large exposure to the stock market I expect that our net worth performance will closely track the performance of the stock market.

 

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 – September 2016

  1. Is your net worth mostly due to your own earnings and savings or did your spouse also contribute significantly. Either way, your well on your way to financial independence.

    1. Our net worth is entirely due to my earnings. My wife has a law degree, but only worked for a few years in a law firm before switching to a non-profit (which paid almost nothing). My guess is that she probably just paid for her student loans before we agreed that she should stop working to become a full-time stay-at-home mom.

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