My main goal is to build a portfolio of $1,000,000 in 1500 days with no debt*, starting from 1/1/2013. Every month, I provide an update on my status. My goal for 2015 was to get my portfolio up to $874,353. Because we saw exceptional returns in 2013 and 2014, I have already accomplished this. Let’s take a look at February.
February was a pretty great month with almost no dysfunction of any type. We came dangerously close to running out of cash, but the portfolio went up and stayed up, reaching an all time high. It has since drooped just a little bit, but I’m not complaining.
I started the month at $975,181 and finished at $1,029,887 for a gain of more than $50,000. Here are the numbers as of 2/28/2015:
- Days elapsed: 59
- Days remaining: 306
- 2015 gains: $42,536
- Left to go (2015): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 789
- Days remaining: 711
- Gains since 1/1/2013: $443,844
- Needed for $1,000,000 (investments and cash only): I’m there!
- Needed to retire ($1,120,000): $90,113
- Net worth**: $1,279,887
Allocation and Apple Flirtation
I’ve been thinking a lot lately about my portfolio allocation. Almost everything is in US stocks and most of that is large cap. When I roll my 401k over soon, I’m going to diversify a bit. More on that next month.
As usual, Apple was responsible for my big, strong month. The stock is on fire at the moment. Rumors of an Apple car have been everywhere and the Apple Watch comes out soon. I’m not so enthusiastic though. If Apple is really building a car (the idea is preposterous), it is years off. Also, the Apple Watch will not have nearly the impact that the iPhone did. Most people carry a cell phone and the iPhone was a revolutionary product. However, you don’t really need a watch. I can’t think of one killer feature.
House formerly known as Uglyhouse gets a raise
The home almost directly across the street went up for sale in January, priced at $325,000. We went over and had a look at it. Here are the stats:
- Beds/baths: 3 bedrooms, 2 bathrooms
- Size: 1,400 square feet of finished space above grade, 600 square foot, unheated basement
- Garage: small, 1 car
- Efficiency: Outdated appliances, old steel windows and zero attic insulation.
- Yard: Large with great views.
- Appearance: Kitchen inexpensively remodeled – probably using low quality finishes. The rest of the home was a bit of a disaster. The bathrooms were ugly. Some of the other improvements were poorly done. Bamboo floors were poorly installed and put right next to red oak. Not good.
- Beds/baths: 4 bedrooms, 3 bathrooms
- Size: 1,900 square feet of finished space above grade
- Garage: oversized, 2 car
- Efficiency: High efficiency furnace, AC unit and new, Energy Star rated windows.
- Yard: Small, but nicely landscaped.
- Appearance: Really nice. The guy who did the updates is a pro with exquisite taste, above average intelligence, sharp wit and really knows how to handle his tool. I think he was on the cover of GQ a couple months ago. (Mrs. 1500 note: I’d sleep with him…)
We were a bit surprised at the $325,000 asking price. Real estate is on fire in our area, but this seemed ambitious. However, a couple weeks later it was under contract and just closed for $299,500.
Based on those numbers, I’m increasing the estimate of our home by $50,000 to $350,000. I think I’m being conservative too. Another home on our street also in poor condition sold late last year for $376,000.
My home is going to be the best looking one of the street
While our home is almost done, there are still some big things I’m going to do to the outside:
- We will tile outdoor walkways with slate. I’m going to put dragonfly mosaics in some of the tiles.
- We are going to pretty up the posts that surround the deck. The bottom half will probably be wrapped in slate and we’ll do decorative wood on top.
- I’m going to teach myself how to weld this year. With this new skill, I’d like to make some decorative artsy stuff for around the home.
Why would I do all of this?
- It’s fun. I love taking something ugly and making it into something spectacular. My dragonfly mosaic tiles and fancy-pants posts will be my design. In both projects, I’ll be pushing the boundary of my skill-set, but this is what really makes it rewarding.
- It’s not expensive. Slate tile costs about $1.25/square foot at the local big box. I need about $250 worth of tile and probably $200 in wood. Add another $50 for random supplies. $500 to make the house look great is well worth it. I’ll pick up some welding supplies used. My kind neighbor will let me use his equipment too.
- Most importantly, I want my street to be a place people want to move. Despite the crazy percentage of millionaires on my small, dead end street of 29 homes, it is a mixed bag. Some of the homes are beautiful. Others are neglected and ugly. I want people to see our home and know that people are putting money into the street. I’m hoping as other homes come on the market, people will snap them up and follow in my hammer swings. I want to change our little street for the best.
We would like to flip a couple homes on our street too. We have discussed buying the homes from two of our neighbors to flip them. I expect we’ll do at least one in the next five years. Stay tuned.
*I still owe something like $120,000 on my mortgage. Because I have a low rate, I firmly believe in not paying it off. My compromise is to have enough money put away to pay off the mortgage at time of retirement. So, to retire today, I would need about $1,120,000.
- Home equity
- My impressive collection of ED related office products. Besides an asthma inhaler, I live a glorious, prescription-free life. However, my sister has a job in a doctor’s office where pharmaceutical representatives shower the doctors with ED related merchandise. She then unloads it on me. Judging by the sheer volume of these products, is isn’t hard to see that there is big money in flaccidity.
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PS: Anyone read Warren Buffett’s Berkshire letter that came out last weekend? I thought it was pretty great how much credit Buffett gave Munger. Charlie is one of the great men alive today.
If you’re a Berkshire investor, I thought the last paragraph on page 30 was the most important in the whole thing. I’d love to know your thoughts.
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