Friday, November 14, 2014

Net Worth Update - October 2014

While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  The S&P 500 had a whirlwind month declining at much as 5.5% to start the month and then charging back 8.3% to finish the month with a 2.3% gain for the month.  Since more and more of my net worth is tied to the markets, there's a larger correlation between my net worth and the markets and for August my net worth rose with the markets.  As a dividend growth investor I'm not overly concerned with the short-term gyrations as long as the dividend stream remains in tact, but the markets' effect is noticeable.  I had just under $6,200 in after-tax savings from my paycheck, just over $1,000 in ESPP contributions, and just over $1,400 in 401k contributions counting the employer match.  The rest of the changes were due to dividends received and changes in the stock market.  All in all October saw a $10,144.45 increase in my net worth.

Current Assets: $588,284.41
Current Liquid Assets: $199,452.97
Current Debts: -$188,847.53
Net Worth: $399,436.88

The roller coaster ride for my net worth during the second half of 2014 continued with alternating months of gains and declines.  Luckily though, October was an up month.  What's really amazing to me is how close I am to a $400k net worth.  If I would have found an extra $560 last month I'd have been there.  There wasn't much to report for last month as most of the gains were attributable to savings and of course the stock markets return to all-time highs.  I did invest just over $1k in my new Loyal3 portfolio but there wasn't much else to report on the investing side.  I continue to make very little progress on liabilities since they are essentially just our house.  I don't see the point in paying extra on the mortgage given our relatively low interest rate and think we'll come out much further ahead investing the extra cash flow.  However, once the FI portfolio is able to get to a self-sustaining level of dividends then I'll aggressively pay down the mortgage.

October's net worth showed a 2.61% increase from the end of September and year-to-date I've had a 24.78% increase.  That's a $79,322.66 increase year-to-date.  My goal for the year is to have a $125k increase but I don't see that happening unless the markets make a huge move higher.  I'll need to average $22k+ increases per month over the last two months of the year, and while that's doable since I've hit those levels before, I don't expect that to happen.  The net worth goal has always been a secondary goal since a lot of it is out of my control since I invest primarily in the stock market, so I'm not too disappointed about the shortfall.  I'll just continue to focus on what I can control which is maintaining a high savings rate and investing in high quality companies at fair prices.

I've changed the chart for my net worth to better reflect our situation now that there's significant debt on the books with our mortgage.  The chart will now show both assets and liabilities as well as the net worth.  I also changed the colors because I didn't notice this until April but assets were red and liabilities were green.  So that's now been fixed.


My after-tax savings rate for October came in at 70.63% which is well over my goal of 50% 65% and was the second highest level I've hit all year.  Unfortunately this is another goal I'll fall short of for the year since I need to average 82.9% the last two months in order to bring my average savings rate for the year up to 65%.  This is a big drop-off from 2013's 81.31% rate, but that's because I changed the way I calculate my savings rate.  It's now just savings from my after-tax income that is specifically marked for investment.  I think this gives a "purer" savings rate since it's only true savings/investment capital from my after tax income.


Based on my expenses from October, my liquid savings would last for 6.41 years, a 0.33 year increase from September.  The combination of declining expenses and a solid increase in net worth led to an extra 1/3 of the year I could be off from work.  Not bad!

I've updated my Progress page to reflect October's changes.

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How did your net worth do in October?  

1 comment:

  1. Wow great gains man. Really impressed by your savings rate. i wouldnt be surprised if u hit 500k my mid 2015 if u keep this up

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