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:
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- Efficiency: Outdated appliances, old steel windows and zero attic insulation.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.
Our home:
- 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.
**The numbers on the right side of the page only reflect my investments and cash. Net worth includes, but is not limited too:
- Home equity
- Cars
- Microsaurs
- Bicycles
- 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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Very inspiring to read. I had to look up what “flaccidity” means 😉
EurFI recently posted…February 2015 – networth and expenses
Ahh, “flaccid.” Not that hard of a word…
Hah! I see what you did there . For an antonym check “turgid”
Turgid! What an ugly sounding word, but I love it anyway. I must find a way to use it soon, very soon…
Flaccid, buhahahahaha!!!! Sorry, been around too much high school humor. I can not see that word and not laugh.
Congrats on the good month, only 90k left to go!
Old School recently posted…Net Worth Update: February
High school humor? That is being far too nice! I’d say 7th grade at the most. You should see how I act in person. Ever see Dumb and Dumber?
“Two pairs of gloves this whole time!!!???”
“Its the Rockies…duh.”
Yes!!! One of the best comedies ever, right up there with Beverly hills ninja.
Old School recently posted…Net Worth Update: February
LOL! Love that movie. Much to my wife’s chagrin…
Big money in ED! Though I did see an article yesterday on what could be the next big thing in lifestyle medicine – a medical device to increase satiety, called something like “feel full implant”. 10% of the cost of bariatric surgery, much safer, and better results. Imagine the market potential if this thing ever gets approved in the US. We’ve got tons (get it?!?) of fat people! =)
Way to bank a solid win on your net worth in the face of your cash crunch. Ours wasn’t quite that big due to cash outlays over $20K, but we haven’t booked increases from our solar investment yet, either. =)
Mrs. PoP recently posted…PoP Income Statement – February 2015
Ha, I read about this too! If it really works, the doctor who invented it is going to be a billionaire. Only thing that would make more money would be an anti-baldness drug.
I love that you guys are doing solar. Some day soon, we’ll follow in your shadows…
For me, the most interesting part of this year’s letter was the discussion of stock buy-backs and their ability to increase shareholder value, the best timing of them and the foolishness of issuing stock for purchases in most instances. As always, I love how hard he is on the financial industry in general.
I’d like to buy more BRKB but have some studying up on Buffet’s perceptions of intrinsic value v. book value and how to time the purchase… I haven’t yet read his notes at the end of the report in that regard.
“As always, I love how hard he is on the financial industry in general.”
Yes, he is one of the few sane voices in a sea of nonsense. I loved when he said that gurus “will fill your ear, but not your bank account” or whatever that was.
That’s awesome that the value of your house is going up. That’s always a good thing to see.
I’ll never complain!
Awesome result for Feb – will be interesting to see what you do with your Apple stock, and when.
Sounds like a fascinating plan for the home projects on your street, look forward to hearing more about it! What a great contribution to your part of the world it would be to change your street for the better 🙂
Jason@Islands of Investing recently posted…Long Service Leave – take the money or the time?
I know, right? My neighbors better appreciate it! They don’t. Oh well. My bank account will appreciate it though.
I read the Bershire report with great interest. My DH thinks it’s my porn. He even texted me a pie chart to get me excited. I’m such a numbers geek!
Oh, I love numbers too. They are running through my head at all times. I even dream about them.
One day you are almost out of cash, the next day you are back in the double comma club.
Seems like a pretty fun roller coaster to be on. I just downloaded the Shareholder letter this morning. For others that may not download and/or read it. Here is the last sentence on page 30:
“At Berkshire, we can – without incurring taxes or much in the way of other costs – move huge sums from businesses that have limited opportunities for incremental investment to other sectors with greater promise. Moreover, we are free of historical biases created by lifelong association with a given industry and are not subject to pressures from colleagues having a vested interest in maintaining the status quo. That’s important: If horses had controlled investment decisions, there would have been no auto industry.”
By the way you are gaining on Root of Good who just hit $1.5M this month.
Good work and may the market gods continue to favor you and your gargantuan position weighting in Apple 🙂
Gen Y Finance Guy recently posted…Everyone Has a Number â Mineâs $10M. Whatâs Yours?
Thanks Gen !. Life is good, I have nothing to complain about. Except if Apple takes a dive. Then, I’ll be whining like a little kid who just broke his favorite toy.
You and Don Henley would’ve made a great writing tandem. No Flaccidity in February just sounds like something Don Henley would say.
I live in Park Hill in Denver and my neighborhood house prices hasn’t gone a little insane, it’s gone redrum, here’s Johnny, Stanley Hotel insane. Houses in the $300k range 2 years ago are now in the $500k range. Our neighborhood full of color and character is now gentrified with unfriendly spendypants families that drive clown cars. They’re just too busy being fabulous.
Hope that doesn’t happen in your neck of the woods where the Mustachians reign.
Ha! “Welcome to the Hotel 1500, such a lovely place, such a lovely place.” OK, I have nothing creative to say, so I’m stopping there.
Dah, I’m sorry your ‘hood is being taken over by fancy people driving fancy cars with fancy children. Our prices are crazy, but the people moving in seem pretty tame. I think the town has the right mindset? Dunno, I just don’t get a bad feeling yet…
Out of curiosity, since you’ve hit your goal, do you still contribute the $24,000 each year? Have your spending habits changed such that you send more or less?
Mrs. Maroon recently posted…Don’t Treat Diet Like a Four-Letter Word – Same Goes for Budget
I now contribute more than $24,000 each year. This year will be $50,000! See Monday’s post. 🙂
However, all money went to home improvement last year, so I contributed nothing!
Spending is actually less now than it ever was. Last year, we went out to eat about once per week. Now, it’s about once per month. We haven’t been to the movies in ages. We use our town’s facilities like the indoor pool all of the time. We pay a yearly membership for that, but it’s well worth it considering the amount of time we spend use the facilities. We use points now to go on vacation. Life is frugal and life is good. Never been happier.
I was too busy singing during your Thursday rant to notice anything about saving $50,000. You should really think about trying to express yourself more clearly…
Mrs. Maroon recently posted…FF #14 – My New Cleaning Solution
Just for a little contrast, because I focus exclusively on dividend-paying investments, the way I track my stash is based on the projected total dividends that would be generated by the portfolio over the next 12 months. That number is very much uncorrelated with the market value of the portfolio on any given day.
As long as that projected amount of total dividends stays healthily above my projected annual expenses, I’m good. And so far, so good. 🙂
Retired To Win Alex recently posted…How I Found Where to Draw The Line on Spending
Dividends? What are those? 🙂
I didn’t start out as a dividend guy, but now by biggest holding (Apple) is throwing out a dividend and it will be increased in April.
Your approach is a calmer than mine and I bet you sleep better at night! I often wonder if some of the stuff I own (add Facebook to the list) will be relevant in 10 or even 5 years?
I’m working on it…
We had a great month too! Our investments went up quite a bit (I think because we are heavy in oil stocks – as you know, that’s the problem with having a bunch of money in one industry!)
I’m always scared to count on my house value. Right now, I think we would make a small profit, but the last two houses I sold were at a lost. I think I don’t have the real estate touch!
Mrs. SSC recently posted…Ice Storm: Travel not advised!
“I think I don’t have the real estate touch!”
We always make money and here is how: We buy clunkers and fix them up. Forced equity! I highly recommend it. Just don’t hire out!!
I love the home improvement posts. I’m a novice myself, but we’ve built some garden beds, planted fruit trees, and repainted the whole downstairs. Hoping to up my game to wood working this year.
I wrote about my takeaways from the Berkshire letter. I think the link should pop up below.
Adam @ AdamChudy.com recently posted…What I learned from 50th Anniversary Berkshire Hathaway Letter
I’m a novice too actually. I just take my time and do loads of research before I undertake anything. I spent about 20 hours just reading about plumbing before I touched any PVC or PEX.
While that PC chart looks incredibly skewed, remember that there is some international exposure built into that positions. Of course, this reminder has nothing to do with you still needing to reduce your exposure to some of your larger positions.
Needless to say, once the trimming begins, balance will be restored. Plus, once you add $100k in P2P and another multiple six figures in equity in real estate… things will look different.
writing2reality recently posted…Trades – February 2015 Loyal3 Portfolio Purchases
“While that PC chart looks incredibly skewed, remember that there is some international exposure built into that positions.”
Yeah, I always forget about that, but how right you are.
“Needless to say, once the trimming begins, balance will be restored.”
I’ve decided to get rid of at least 10% of my Apple this year. It took me a long time to get comfortable with it, but the older I get, the more conservative I get. With that said, I still consider myself more aggressive than 95% of folks out there.
Hmmm… 95% might be an understatement given you current concentration. 😉
10% is a good goal… especially if you can pull the trigger (tough I know) and sell within the first half of the year. Perhaps sell a couple of covered calls at $130 that expire this month. If they don’t sell, rinse and repeat each month until sold. Of course, six months from now if you haven’t picked up anything but more shares (if DRIPing), market order and get out of dodge. Emotions will be the hardest thing for you to wrangle.
Put the requisite amount (15%) away for taxes and re-purpose from there.
writing2reality recently posted…Trades – February 2015 Loyal3 Portfolio Purchases
I’ve always liked your covered call idea and that is probably what I’ll do.
The thing that drives me nuts about Apple at least in the near term is the watch. If it is actually a hit, $150 will be easy. If it flops, hello $100! Dunno. Will the fanboyz come out in droves or will it go the way of the Newton. I’m sitting on a time-bomb. Get it, “time-bomb?!” 🙂
“The thing that drives me nuts…” (cue Robin Williams quote about only being given enough blood to run one of two male “thought-centers” at one time)
So the question is, are you thinking with emotion or rationality? 🙂
Along the lines of Robin Williams, it’s like asking a guy to make some mature decisions while in the middle of an intimate moment… tough to do. You’ve got to just rip off the band-aid, sell a March 20 covered call at $130 per share for a premium of ~$2.15-20 per share ($215-20 before commission). In two and a half weeks, see what happens. If you sell, you’ve picked up the $215-20 plus the $13,000, and have actually made progress. If not, repeat in for April (as of today a $4.00 premium, will go down from time erosion assumes flat stock price).
writing2reality recently posted…Trades – February 2015 Loyal3 Portfolio Purchases
Agreed. Sell the covered calls against 10% of your position (or more) and the market just might make your decision for you if Apple closes above the strike price by expiration.
Apple closed today at $128.54
Lets entertain the idea that the $1 Trillion market cap becomes a reality. Apple would need to trade up to $171/share. The options market is pricing in about an 22% probability of this happening between now and January 2016. That is the probability of touching this price, not closing above it. The probability that it will close at $171 or higher is only 11%.
W2R suggest you sell the March $130 calls for around $2.20/share or $220 for every 100 shares. With 16 days to go to expiration there is a 60% chance that these will expire worthless, meaning you keep the premium and you keep your stock. Happy days! But you just kick the can down the road.
You get a chance to rinse and repeat.
You voiced concern about Apple popping to $150 in the short term if the Watch is a hit. Well if you turn to the options market to place a probability on that happening, there is only a 31% chance of touching $150 between now and July 2015. And a 15% chance of closing above $150.
At the very least selling some at the money or very close to at the money call options will increase your chances of actually following through with selling 10% of your Apple position. And in the process you get to squeeze a few more dollars out. And worst case you get paid to hold the position a little longer.
No one ever went poor taking a profit!!!
Gen Y Finance Guy recently posted…Everyone Has a Number â Mineâs $10M. Whatâs Yours?
Gen Y. Holy crap, what do you use to get all of these numbers?
I have to dig into my trading accounts. I’ve never messed with options of any kind, While I know what they are, I’ve been hesitant to play. However, a covered call seems to make a lot of sense in this situation.
Thanks much for all of the information. Are you at $10,000,000 yet? 🙂
I use the Think or Swim platform from TD Ameritrade. I was with Think or Swim before they were acquired…but it is the best software available to the retail investor in my opinion.
Even when I traded professionally for the oil company a few years back I relied heavily on this very robust and FREE software.
To me the path is all math!!!
I have my plan of attack formulated, but still short by about $9.8M. May have to start asking my readers for some donations to my charity…its for a good cause…my prosperity 🙂
I love options because they allow you to be very mechanical with investing and not be emotional. Its all about probabilities and selling premium just like an insurance company.
If you ever want to talk shop, or if you have any questions about options don’t hesitate to reach out.
Cheers!
Gen Y Finance Guy recently posted…Everyone Has a Number â Mineâs $10M. Whatâs Yours?
I MUST meet you for pizza someday. 🙂
We will be in California soon, but north of you: San Francisco, Yosemite and Pismo Beach. If you’ll be anywhere near there in June, let’s talk…
I have family up near San Francisco. Send me an email with the dates and we can see if we can make it happen.
Cheers!
Gen Y Finance Guy recently posted…I Just Brought On a CEO To Help Run Things Around Here
Ha, of course I’m thinking with emotion! That is the core of the whole Apple problem, isn’t it?
I’m going to explore the covered calls this weekend. Stay tuned.
Love your progress. Just remember that pigs get fat and hogs get slaughtered. You are over 2 yrs ahead of your goal…my unsolicited advice would be to start shifting your money from the “get rich pile” to the “stay rich pile”.
What should the “stay rich pile” look like to you? In my mind, I’ll stay in stocks, but in the form of index funds, most in VTI.
The stay rich pile is the bucket of money that is properly diversified so a correction in any one particular sector/industry/company doesn’t force you to start your journey all over again.
My get rich pile is technology stocks, small caps and general hunches. My stay rich pile consists of index ETFs, blue chips, some utilities ETF and REIT ETFs.
Another way of looking at is…how would you feel if AAPL went up 20% and how would you feel if it went down 20% (I am sure the drop would hurt more than the increase would feel good).
IMHO: Once you have hit your goals, excessive risk just isn’t necessary.
Got it.
I was thinking about all of this last week. I think my rule will be no more that 10% of my portfolio in any one stock and no more than 20% of my portfolio in anything besides index funds. Now, I just have to start implementing it.
Hallo,
Can I just ask one question, please?
Your mortgage debt seems fixed at 120K. I know that you do not pre-pay your mortgage. But is your monthly payment this low?
Thank you.
P.S. And one more: Shouldn’t new posts be “hard-working”-pants?
“Your mortgage debt seems fixed at 120K. I know that you do not pre-pay your mortgage. But is your monthly payment this low?”
Our monthly mortgage payment is about $1100 (15 year fixed at 3.25%). So, the 120K number goes down every month, I’m just too lazy to look up the balance!
Yes, hard working!!! Thanks for the correction!
You guys are kicking some ass.
Thanks Chris!
If horses had controlled investment decisions, there would have been no auto industry.
Pretty interesting, I wonder how many companies are just putting money in their expertise, that is just failing over and over. Berkshire steps in and says that’s a bad idea and moves the money to an investment that reaps returns. Smart guys…….speaking of that who’s all going to Berkshire??? Am I allowed to tag along?
Even Steven recently posted…eBay Spending and So Many Legos
Of course you can tag along. All the cool kids will be there: Dividend Mantra, The PoPs, Kapitalust and Richmond Savers. I’m actually driving there from Chicago if you’re in the mood for a road-trip. What do you say Even?
I just got really pumped up, are you sure you can talk about personal finance for 14 hours straight?…I’m emailing you on this one.
Even Steven recently posted…eBay Spending and So Many Legos
If you’re going to do some flipping, might you have a unique opportunity to buy them…and then beautify your home?
Seems like you’re in a position to help your own flips…
Done by Forty recently posted…The Full Cost
The flips probably won’t happen for a while, I’d say 2 or 3 years. I hope they so too. I’m far too busy at the moment…
Awesome numbers there!
Looks like you’ve hit your goal, what’s next now ? 🙂
Nick
Nick @ The Money Mine recently posted…Berkshire Hathaway 2014 Financial report is out!
I have to get the debt gone! Once I have $1,000,000 and enough to pay off the mortgage, I’m done. I still have a while…
Great month (thanks Apple!). We have had a good year so far (portfolio up 8.5% from Jan 1st to March 1st (not including $26k of new contributions so far this year).
One question is why are you not changing your goal now that you have had a great run up over the past couple of years and have exceeded the target for 2017? I get the possibility of some market declines but at least on an annual basis update it (say for 2015 your new goal is to get your investment portfolio to $1.1M.
“One question is why are you not changing your goal now that you have had a great run up over the past couple of years and have exceeded the target for 2017?”
I am not a market timer, but I completely expect a 20% correction at some point. It would not surprise me at all if my portfolio falls below 900K in the next two years. Valuations have reached scary heights lately and I’m not comfortable with it. Here is a pretty good article about valuations and long term market performance:
https://www.kitces.com/blog/shiller-cape-market-valuation-terrible-for-market-timing-but-valuable-for-long-term-retirement-planning/
I think I already know the outcome, but have you given thought to your asset allocation once you hit your “number?” If you have your $1mil why take any risk at all?
I have read everyone of the 50 letters! They are so awesome but this is by far the best one!
Evan recently posted…March 2015 Dividend Watch List Update