My main goal is to build a portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal a couple months ago, but believe that it’s a worthwhile exercise to continue with my financial updates until the end of 1500 Days, so I continue.
It’s time to take a look back at September. But first, I must discuss a recent confrontation that I had with the immortal enemy of all parents, the claw machine.
Claw Machine Scheme
Everyone knows that the claw machine is a silly waste of money.
This evil device exerts a magnetic force on children. Within a millisecond of spotting one:
Mom! Dad! Can I have some money to play the claw machine!! Please! Please!! PLEASE!!!
My answer is always:
Well, almost always.
A month ago, our youngest child (D) spotted one of these dreaded devices and as usual, begged for money. My ‘No’ was followed up with a lecture about how no one ever wins anything. My words fell on deaf ears.
Then, I started thinking about it. Maybe letting her lose, just this once, wasn’t such a bad idea. I could use the experience as a teaching tool. After she lost, I would have a little talk with her:
- Certain things are just there to steal our money: The claw machine is a child’s version of the lottery. It is false hope.
- Compound interest: I’d tell her how much money she’d have if she invested the $.50 instead. Not much, but to a 6 year old, a couple dollars is big-time wealth.
- The futility of life!: No one ever wins at the claw machine, and no one gets out of life alive. I know, too deep for a young child, so maybe I would have held off on that one…
Anyway, I gave D the $.50 and observed. With great excitement, she put the quarters in and grabbed the controls.
I could tell it was futile at once; she didn’t understand the joystick, moving it around wildly. Then came the big moment.
The claw started its hopeless, doomed descent. D’s eyes grew to the size of frisbees (like the one in the machine she had no chance of winning) as she watched with eager anticipation. I observed with sadness, knowing the disappointment that would soon wash over her.
And then she won.
Claw machine misadventures aside, September was another month of boringness. My portfolio went from $1,211,898 to $1,230,542 for a gain of $18,644. I had money accumulating in my business account (which isn’t reflected in my numbers), so I transferred $10,000 into my personal account (which is reflected in my numbers). If I take that out of the equation, my portfolio appreciated $8,644 (yawn). The big dip in the chart reflects me moving money around:
2016 (as of 9/30/2016)
- Days elapsed: 274
- Days remaining: 92
- 2016 gains: $172,581 (including 401(k) and some after tax contributions of about $30,000)
- 2016 401(k) contributions: $51,000****
Since the start (1/1/2013)
- Days elapsed: 1367
- Days remaining: 133
- Gains since 1/1/2013: $644,499
- Needed to quit work ($1,120,000 in investments): Mission accomplished!
- Net worth*****: $1,480,542
My next performance update should be more interesting. Earnings season is upon us and 40% of my portfolio is still made up of individual stocks including Facebook, Google, Apple and Amazon. Tech stocks tend to swing severely, but that’s all part of the fun. I like drama.
The Storm Before the Calm
The past six of months have been the busiest ever. Life has been going by at two miles a minute. Not fun and exhausting:
- House: We still have some nail holes to patch, but this sucker is 99.99% in the can. We are having it appraised next week for a line of credit that will help fund other projects. I discussed the line of credit back in August: Should I pay off my Mortgage? Anyway, we paid $176,000 for the home and have about $90,000 in improvements. I’m dying to learn what Mr. Appraiser thinks of it.
- Portfolio on the move: We moved $267,000 to a self directed solo-401(k). With this fun new toy, we are in the process of investing in two real estate deals with more planned. Setting up the SD 401(k) was incredibly frustrating, but I’m glad we did it. More on this soon.
- Work trip: I spent last week in Chicago on a work trip. I love my old city, but I’m also glad that I don’t live there now (high taxes and low temperature). Work trips are always a grind and I’m tired.
More changes are on the way, but I’ve rambled long enough. I’ll let Bubblegum the Bear have the last word:
*My goal isn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. So, if I were to quit my job now, I could spend about $44,000 in my first year of retirement. I’d stick very close to that number too because market valuations are ambitious. Let’s say that Mr. Market caught a cold tomorrow and my portfolio dropped down to $800,000. No big deal. This would mean I’d be safer stretching my spending a little north of 4%.
**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off. My compromise is to have enough money put away to cover the mortgage at the time of retirement. So, to retire today, I would need about $1,120,000.
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****My 401(k) contributions include my own, Mrs. 15oo’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.
*****The numbers on the right side of the page only reflect my investments and cash. Net worth includes, but is not limited to
- Home equity
- Really good beer: I’m usually a frugal guy, but my budget knows no limits****** when it comes to good beer. This weekend, after helping a friend build a shower, we sampled some fine beverages.
******The wonderful thing about the FI community is that lots of us appreciate fine beer and are willing to share. Thanks Kyle for the wonderful King Sue. Thanks to Joel for some stellar beers from his neck of the woods including everything from Creature Comforts. Also, big thanks to Physician On Fire for hooking me up over the summer. You guys are all awesome.
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