Monday, November 16, 2015

Net Worth Update - October 2015


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.  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 but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly.  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.

What a difference a month makes!  The stock market surged higher with the S&P 500 gaining 8.3% in October alone.  The majority of our net worth is tied to the performance of the stock markets so good months like October sees our net worth skyrocket but bad months like August or September sees our net worth decline along with the markets.  In the short term that's just noise to try and discourage you and it's in the bad months that I focus on my dividends.  Whether the markets are up or the markets are down those dividends continue to roll in throughout the month with just over $260 in passive income for the month.  Even better is the SIX dividend increases announced during the month.  That's extra money for doing nothing and I'm way okay with that.  Couple the market surge and a return to positive cash flow from my day job and it turned into a solid month.  During October my net worth charged higher by $26,601.32.

Current Assets: $599,442.21
Current Liquid Assets: $196,441.66
Current Debts: -$186,008.09
Net Worth: $413,434.12

October was a nice relief after the constant bleeding from August and September.  Those two months brought just over a $40k decline to my net worth but the October bump lessens the blow and I'm only -$13.5k from the end of July now.  The $26.6k increase for October was my highest monthly climb ever which is a nice little milestone.  The bump from October was a 6.9% increase from September's total and I'm now just 1.1% behind where I ended 2014.

I'm just glad to be back to a cash flow positive situation from my day job which will allow me to start saving and investing once again on a regular basis.  There's still some big expenses coming our way to account for, such as property taxes and homeowners insurance, but I expect to be able to finally get back to making 1-2 purchases each month.  I have to admit I've been jealous of all of you and your purchases over the last couple months.  My last purchase was all the way back in late July so I've been a little antsy.

I don't see the point in paying extra on the mortgage at this time given our relatively low interest rate and think we'll come out much further ahead investing the extra cash flow.  So the liabilities side of the net worth equation will be slow moving.  However, once the FI portfolio is able to get to a self-sustaining level of dividends then I'll plan to aggressively pay down the mortgage.  As of the end of October we have 22.64% equity in our house.  Also, according to Zillow our house has increased just over $10k in value from our purchase price although I'm just using our purchase price in my net worth calculations.

I haven't set any goals yet, and probably won't, for my net worth because there's just too much in flux with our financial house to be able to come up with reasonable goals.  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.  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.

The following chart shows my assets and liabilities, as well as my net worth, since January 2012.  While I have accurate records for my net worth dating back to July 2010, I didn't keep track of my assets and liabilities on a monthly basis until the start of 2012.


Truly passive income, dividends and interest, amounted to $261.31 during October which covered 4.6% of my monthly expenses.  Although there was a large expense related to catching up on savings for expenses like property taxes that would normally be prorated out each month.  Normalizing the expenses to account for that bring my passive income expense covered to 9.7%.  I also received payments from blogging/writing which amounted to another $257.11 paid in October which brings my total non-day job income to $518.42 which covered 19.2% of the normalized expenses.


Based on my expenses from October, my liquid savings would last for 2.87 years which is a big drop from September's mark of 7.62.  Although once again that's because of the large expense for savings that would normally be prorated out each month.  If you just take the prorated portion of what I owe the number climbs to 6.07 due in large part to the higher expenses in October.

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

Make sure you sign up to receive new posts to your email so you don't miss anything.  And be sure to follow me on Twitter@JC_PIP to get up to the minute news of new purchases for my portfolio.

How did your net worth fare in October?  Riding the market wave higher?

Image courtesy of holohololand on FreeDigitalPhotos.net.

10 comments:

  1. Good going, JC!

    I can imagine how antsy you must feel not being able to deploy new capital. Hope that changes quickly for you and you can get back to building that dividend machine.

    Take care
    FerdiS, DivGro

    ReplyDelete
    Replies
    1. Ferdi,

      Sitting on the sidelines this long has been grueling. Pretty much every month I find several companies I want to buy and go looking through my accounts to see if there happens to be enough capital available but it never works out. Now that we're almost caught up on our savings though it'll be much better going forward. A little celebration will be in order whenever I do get to make that next purchase.

      Thanks for stopping by!

      Delete
  2. PIP,

    Really nice trend there on your net income! Nice work. We're in the same boat in that our NW moves around quite a bit as the market moves.

    ReplyDelete
    Replies
    1. MoneyAhoy,

      There's a solid trend long term and it's great to see. It really reinforces the progress that we're making even though our net worth is a secondary objective with the primary objective being passive income.

      Thanks for stopping by!

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  3. Replies
    1. Ben,

      It was a nice return to growth after the bloodbath from August and September. Although I do wish it hadn't jumped as much because our cash flow is improving to where we should get back to regular investing and of course the markets are back near their highs now.

      Thanks for stopping by!

      Delete
  4. Nice going JC. It's nice to see Networth trending higher. Don't worry about not deploying capital. You'll get plenty of chances as there will always be opportunities. Take care of the neccessities first and everything will fall into place. We're all in this together and glad to be travelling with you. Keep strong and push forward. Cheers bud.

    ReplyDelete
    Replies
    1. Hustler,

      It's good to see it finally moving in the right direction again. Capital deployment should restart later this month as we just about have everything figured out as far as required savings/upcoming expenses and there's still time to make up the extra required savings. There's so many great companies out there and I can't wait to start adding them to my portfolio again and building up that dividend stream.

      Thanks for stopping by!

      Delete
  5. JC, Could be a blessing in disguise not to have available capital to invest right now. Valuations look stretched across the board, though hard to know what the future holds.

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    Replies
    1. Integrator,

      A little bit yes and no on that one. I'm still finding some good values out there but it's definitely not widespread. It's been about 4 months since my last purchase and of course there was lots of volatility in that time. Hopefully volatility will return to the markets now that our cash flow is a lot better. I'm ready to get back to regular investing and building up the dividend stream. Most of the value plays that I'm finding though are in some of the lower yielding but higher growth companies so the growth is a bit more speculative and definitely not guaranteed.

      Thanks for stopping by!

      Delete