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 2014 is to get my portfolio up to $768,536. Because we saw exceptional returns in 2013, I have accomplished this goal. Time to look back on the month of January.
All good things must come to an end. After 8 month of gains, I had a small loss in January. My portfolio started the month at $869,635 and ended the month at $858,561. The investment portion (non-cash) started at $819,723 and ended at $818,214.
Most my of decline this month was due to $10,000 I took out of savings to pay for the Uglyhouse renovation. It drives me nuts that I’m not saving anything right now. Uglyhouse is eating all of my income and now, some of my savings.- Compared to the S&P 500 index, I actually did well. The index dropped 3.5% while I lost .1%. This is attributed to holdings** in facebook and Google who both had earnings reports that made Wall Street happy. If it had not been for a huge decrease in Apple and Amazon, I would have been positive for the month.
Here are the numbers as of 1/31/2014:
2014
- Days elapsed: 31
- Days remaining: 334
- 2014 gains: -11,074
- Left to go (2014): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 395
- Days remaining 1105
- Gains since 1/1/2013 gains: $272,518 (including my contributions)
- Left to go: $141,439
The Portfolio is a Changin’
I’ve lamented many times that I need to to make changes to our investments and we started doing just that in January. I have two major updates to announce:
- 401k rollovers: Mrs. 1500 had two, high fee 401(k)s from past employers. We opened up a Vanguard account and rolled both over. We split the money between VFIAX and VITAX.
Personal Capital - Bye-bye Apple: The first quarter of 2013 was characterized by Apple destroying my returns. This is my own fault as no one in their right mind should have close to 25% of their portfolio tied up in a single stock. I think Apple’s position today is worse than it was a year ago. Apple’s moat is now gone. Android/Google are taking bigger bites out of Apple every quarter. I’m not sure if a closed ecosystem such as Apple’s can survive long term. ‘Not sure’ is the key phrase here. I started selling Apple shares and will continue to whittle down my holdings as the year progresses. Similar to the Mrs. 1500’s 401(k)s, the money is also going into a Vanguard account.
One final thought
January was a bad month for the markets, but corrections are to be expected, especially after the great run up we had in 2013. If you haven’t already, please check out this chart. While the markets aren’t exceptionally high, they are still above the mean. While I don’t have a clue what the future will bring, that chart tells us that further drops shouldn’t come as a surprise.
No matter what happens though, I encourage you to stay the course. Freaking out and yanking your money out could be one of the worst mistakes you ever make. Stay in it for the long term and don’t worry about little bumps in the road. As always, I’ll let James Collins have the last word.
*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.
**Don’t copy me! I am not a financial adviser and I have come to believe that buying individual stocks is a bad, bad idea for most. I still owe you a post on that one. It’s coming.
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Are you planning on completely exiting the AAPL position or just trimming it? Overall that was still a good month considering how the markets behaved and that you took out $10k from savings. Not bad at all. Just curious since you’ve already hit the 2014 Goal any reason you haven’t increased the goal or are you just sticking with the original plan/goal to retire in 1500 days?
JC @ Passive-Income-Pursuit recently posted…Lots of options
Same question as JC, Mr. 1500… was this a total sale or a trim of your Apple position?
Definitely not a bad month given the withdrawals. And it shouldn’t be too much longer on that house, right? 🙂
writing2reality recently posted…Lending Club – December and Year-End 2013 Update
“And it shouldn’t be too much longer on that house, right?”
I hope not! It is miserable at the moment. I’m trying run wire in the new addtion (unheated at the moment). It’s so cold that the jacket is cracking off. Uggghh.
I sold about 30 shares of Apple and still have somewhere north of 300 shares. I’m not sure if I’m going to keep any or not. Through VGT (http://finance.yahoo.com/q?s=VGT), I already own a bunch.
I just can’t stand the uncertainty. I bought most of my shares in 2007 when the iPhone was launched because I was pretty sure it would be a hit. It was, but times have changed. They have no real advantage now. Others seem to be innovating at a faster pace. Google is the 800 pound gorilla on Apple’s (and Microsoft’s) back.
I’m sticking to the original goal. 2013 was a really great year, so I’d expect that we’ll have some not so great years in the near future. It will all even out.
Time to buy up those Vanguard funds while they are on sale!
Also, you clearly have been doing very well, but I can’t fathom having a 25% stake in one stock. That is terrifying to me. I really like JL Collin’s perspective where he says that he does, absolutely know what will happen to the stock of every company. In the long run, it will go to zero (how long is another question). In the meantime, you can gain from it and I imagine that you would start selling if you saw that Apple was headed in the wrong direction (which is exactly what you are doing), but for me – I want an index fund to make that choice for me, based on stats.
Dave @ The New York Budget recently posted…We Should Have a National Saving and Investing Day
Yep, index funds are the way to go. Sometimes, I can figure out good times to get in on a company (Google, IPO), (facebook, $29/share) and Apple ($90/share). It is much harder knowing when to get out.
I feel for you, Mr. 1500! This is the first month I reported a drop in net worth as well, both from dismal market performance as well as from some nasty bills coming up: a rebuilt transmission and a new car down payment. You did very well to drop so little in your investment portfolio, though. The market was down much more than you were.
But I totally understand the psychology of hating to touch savings or investment principal for big bills like you just experienced. The cars plus our bathroom remodel are giving me a tight cash flow situation for the next couple months.
Chris @ Big Day Coming recently posted…Net Worth: January 2014 Progress
I HATE not saving! I’ll get my money out of the house in the long term, but it is painful now.
Your individual stock holdings also helped you avoid the drop that would have happened if everything was in an index fund. On the plus side, those index funds are “on sale” now! Not that I would advocate individual stocks either, but I got hit pretty hard with my index funds.
Mom @ Three is Plenty recently posted…10 Minutes to save $15 per month
This is just a hiccup. I’m thinking we need about a 10% drop to really set things right…
Not a bad showing in a month with a down market – and renovations to ugly house are no doubt increasing its value even if you’re not including that as a part of your investable portfolio.
Let’s just continue to enjoy the sale on those index shares and fingers crossed that the sale lasts for a little while. =)
Mrs PoP @ Planting Our Pennies recently posted…PoP Income Statement – January 2014
Yes, I want a bigger sale though! Like my Lowe’s coupon, I want 10% off!
Why not sell close to the money covered calls on apple? Maybe get a bit more income at a price you are comfortable selling at?
Evan @ My Journey to Millions recently posted…February 2014 Net Worth Update
Covered calls are a great idea! Why didn’t I think of that?
Would you be willing to share more about your choices to purchase VFIAX and VITAX for your wife’s account? My Roth IRA is currently split between VTIAX (60%) and VTSAX (40%). I have all of my taxable money in VFINX. I’m trying to educate myself a bit more about all these Vanguard index funds.
Cashville Skyline recently posted…Holding myself accountable: a January review
I don’t think that there is much difference between VFIAX and VTSAX. From my research, the main thing you get with VTSAX is exposure to small cap companies: http://www.mrmoneymustache.com/forum/investor-alley/vtsax-vs-vfiax/ Next time I have some extra money, perhaps I’ll throw it at VTSAX/
Regarding VITAX, I can’t see to get over my love to tech companies. I believe that sector will outpace the general economy.
Way to beat the market average! I love your plan to slowly sell out of Apple, if for better diversification alone. And since you’re not yanking it all out at once, if they do well, you’ll get a piece of the action on the way out the door.
Done by Forty recently posted…February Budget Porn
Thanks!
Facebook is becoming my second good problem. I have 200 shares, so over $120,000 or about 15% of my portfolio. My average price is about $29, but this is way too much exposure to such a speculative investment.
Good, now I feel less pathetic about having done nothing with my old 401k yet. Plan to remedy that in the near future, though. Both our 401ks had been doing amazingly well, but we’ve been brought back down to reality recently.
Who knows, maybe your old 401k is OK? Mrs. 1500’s were not. One had expenses of close to 2%!
I don’t really view the recent downturn as a true sale. It really has to fall more….
SavvyFinancialLatina recently posted…The Benefits and Downsides of Working for a Large Corporation
Yep, let me know when we fall 10% and I’ll start throwing my cash into the market…
I have a lot of growth stocks which is getting dinged in this downturn. It’s ok because I believe in their business model. I agree with you on the mortgage side.
charles@gettingarichlife recently posted…The Three Financial Moves You Need To Protect Your Family
Yep, as long as you’re in it for the long game, things will come around.
Geez, you did a lot better than the market! You are so gonna make it by 1500 days!
Ha, thanks! I never count my chickens before they hatch though.
What goes up has to come down. The best thing is you still have time in your timeline to let the stock market work its magic.
Can’t wait to see you hit your goal!
Amanda @ Passionately Simple Life recently posted…Oh Those Expenses….January 2014
If you have ever read From Good to Great, you might find some similarities in the description of these rockstar CEOs bringing the company up to super heights and then seeing the decline of the company right after they retire / leave.
This is what I had in mind when I saw Apple with Steve Jobs at the helm. I had a feeling the stock would take a beating once this idol had retired or passed (RIP).
saverspender recently posted…January 2014 Budget Roundup = $218,737.65 or an increase of +$1462.48 or +0.67%
Sad. There are very few really great CEOs that I can think of: Elon Musk, Steve Jobs, Alan Mulally and maybe Mark Zuckerberg. It takes a very good person with a unique mind to be able to steer a large hsip.
Wow, you only list .1% in January. You sir, are either lucky or smart. Probably both.
It is silly to hear people complain about the market performance after such an outstanding year. How quickly we forget. We should all know that 30% years are anomalies just like 2008 was an anomaly. I may only see one or two more of those as long as I live.
It also sounds like you are becoming more of an index investor as time goes on. That’s good to know since that’s the only kind I’ve done so far.
Cash Rebel recently posted…When it’s finally time to find a new job
“It is silly to hear people complain about the market performance after such an outstanding year. How quickly we forget. We should all know that 30% years are anomalies just like 2008 was an anomaly. I may only see one or two more of those as long as I live.”
Great thoughts. I’m convinced that the human mind is wired to only think in the very short term.
Yep, I’ve been lucky with my stock picks, but it’s time to move on. I’ll slowly be moving to index investing. I will keep some in stocks, but less than 20% long term.
“Mr. 1500” —
Wow, incredible.
Are you still on track to retire by 43?
Thanks for posting all these beautiful numbers. I really appreciate you being so open with everything. It is very helpful for others to see what is possible and how it’s done.
My wife and I just started posting our numbers too! Yikes, it was scary at first, but it is great to see others posting numbers. Thanks for the encouragement.
— Don’t copy us either, 😉 —
-Derek
Derek Olsen recently posted…Net Worth First Quarter 2013
I’m on track to retire at 41, ha! Well, I don’t count my dollars before they compound. We’re due for a correction after the incredible run we’ve had recently.
Just took a look at your site. I once owed good old Sallie Mae a lot of money too. Those were the days…