Monday, June 20, 2016

Net Worth Update - May 2016

May 2016 Net Worth Update
May 2016 Net Worth Update
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.

The S&P 500 marched higher yet again despite constant calls from pundits for a crash in equity prices.  The S&P 500 climbed about 1.5% for the month.  Since the majority of my net worth is tied to the performance of the markets every move higher for the markets means my net worth climbs higher too.  The rest of the increase came from a combination of $300 in dividends as well as receiving the last bit of severance pay from when I was laid off.

For the month our net worth increased $11,789.46.
Current Assets: $662,733.29
Current Liquid Assets: $248,358.17
Current Debts: -$184,288.51
Net Worth: $478,444.78

Year to date we've had a surprisingly good outcome for our net worth considering all of the changes that have gone on the first half of this year.  Our net worth has marched higher by over $65k from the end of 2015 which is absolutely fantastic.  Sadly that kind of result won't be sustainable the rest of this year since I no longer have my high paying job, but I'm happy with where we're at considering the circumstances.  For the month we had a solid 2.5% increase.

At this time I don't see the point in paying extra on the mortgage at this time given our relatively low interest rate as well as the tax break on mortgage payments 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 May we have 23.4% equity in our house based on our purchase price.  According to Zillow our house has increased almost $13k in value from our purchase price which is a nice bonus, although I'm keeping the purchase price as the value in the net worth equations.  Based on Zillow's estimate the equity in our house is 27.7% thanks to the appreciation.

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.

Net worth update through May 2016
Net worth update through May 2016
Truly passive income, dividends and interest, totaled to $329.72 during June which is about a $14 increase from February's total of $315.68.  Adding in the gross income earned from blogging/writing added another $453.99 to the monthly non-day job income total.  That's a total of $783.71 of income that's not related to a regular 9-5 job.  We've still got a long ways to go to reach our goal of financial independence, but we're heading in the right direction.

I've updated my Progress page to reflect May'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 May? 

Image courtesy of holohololand on FreeDigitalPhotos.net.

12 comments:

  1. Hi JC -- thanks for sharing your net worth updates. These articles constantly remind me to take care of diversification (for us, currently, only stocks and real estate). What are your thoughts on owning gold, bonds, and other types of investments for diversity?

    ReplyDelete
    Replies
    1. Ferdi,

      We own bonds through some mutual funds but it's on a much smaller level than our equities exposure. We also don't have any direct exposure to gold although I'm sure there's some exposure via some of the mutual funds we own. I personally don't like gold as an investment and really only see it being useful if we enter into a hyper inflationary period, but not one that completely cripples the economy and there's an entirely new one government/economy in place.

      My thought process is that there's very little real economic value to gold other than as a store of value. So a high inflation environment should be good for gold. But you can't have a situation get too bad for say the USD and economy to be completely undercut so as to bring gold back to the economic standard. If that happens then you would have been better off buying guns/ammo/food and getting your gold after the fallout.

      One of these days I'll sit down and get a better breakdown of our net worth to give everyone a better look.

      Thanks for stopping by!

      Delete
  2. Replies
    1. Evan,

      I love it although it's likely to reverse soon with little to no income for the next 2-3 months except for dividends and an unemployment check. Still no complaints on my end.

      Thanks for stopping by!

      Delete
  3. It is pretty sweet that your NW is growing on its own, without even putting new money to work. It would be even sweeter when in the future, your dividend income covers your expenses.

    Good luck in your FI journey PIP!

    ReplyDelete
    Replies
    1. DGI,

      I love seeing it continue to march higher although with the "dreaded Brexit" that will probably start to change. I can't wait until the day when our dividends can cover our expenses. We've got a long ways to go but we're better than we were.

      All the best!

      Delete
  4. 2.5% is pretty solid MoM increase. Nice to see the steady increase. Congrats.

    ReplyDelete
    Replies
    1. Tawcan,

      It was a much bigger move than I was anticipating going into the month which is always good. Surprise to the upside and no one's disappointed.

      Thanks for stopping by!

      Delete
  5. Looks like the trend is still intact. Nice job with your gains. Of course, these monthly pictures can change by a wide margin, whether it's home values, stock prices and the like. A lot of our assets are tied to more volatile metrics and while it's important to see where we stand in terms of asset values, cash flow and income figures are probably more important. Thanks for sharing!

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    Replies
    1. DivHut,

      Completely agree. I focus a lot more on the cash flow, but I still think tracking your net worth it important. There's not any one financial statement that can encompass everything so you have to take a combination approach. It'll be a wild ride for sure whenever the markets/economy really does falter and we see some of those 20%+ declines. I'm not looking forward to that, although I kind of am too.

      All the best!

      Delete
  6. Hey congrats on the total net worth increase for 2016. I would have assumed dividends would be much higher on a monthly basis with 250K in assets. But beggars cant be choosers right. Good luck increasing it going forward.

    ReplyDelete
    Replies
    1. EL,

      I really need to break out our asset levels better in the future. Maybe quarterly or semi annualy updates to point to. Our dividends are really only off a ~$190k base which is still a bit low but that's what happens when you get a 7-8 year bull run. We have about $220k in house on the asset side but a $170k liability. The rest of our assets are around $140-50k in retirement accounts and the rest is in cash. That's a quick and dirty run breakdown of our assets/liabilities.

      Thanks for stopping by!

      Delete