1500 Days to Freedom

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Performance Update 15/50: March Crapness

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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 March.

The goal

In March, my retirement pile was brutally assaulted on 2 fronts:

  • My cash pile was depleted due to home construction expenses. I had a bunch of bills to pay and pay I did to the tune of $25,000 (wow, I hate writing these checks!). I’ll still have other expenses (flooring, trim, railings, sigh…), but I shouldn’t have to dig into my savings again. I hope to start building my cash back up again as the year progresses.
  • My investments also took a hit as my tech heavy portfolio got walloped. This is a bit of a relief actually. The markets, especially technology stocks, were (still are) overheated.

201403 chart

Here are the numbers as of 4/1/2014:

2014

  • Days elapsed: 91
  • Days remaining: 274
  • 2014 gains: -$30,871
  • Left to go (2014): Goal accomplished!

Since the start (1/1/2013)

  • Days elapsed: 456
  • Days remaining 1044
  • Gains since 1/1/2013 gains: $252,356 (including my contributions)

What does it all mean?

Almost nothing. A year ago, I was freaking out over bad performance. Now, I can say with a straight face that I couldn’t care less. Just like the seasons and many other things in life, the stock market is cyclical. Periods of growth will be followed by downturns and recessions. It is the way of things.

An awful lot of money has been lost by folks who think they can time these cycles. If someone tells you they can, they are probably trying to sell you a financial product. Listen with skeptical ears.

If anything, I don’t think that the markets have corrected enough. After the spectacular performance of 2013, the markets could use a healthy breather.

201403

Buffett** lovin’

I’m pretty much out of the stock picking game in favor of Vanguard index funds. However, I make an exception for Berkshire Hathaway. This past month, I dumped some of my Apple stock in favor of Berkshire.

My reasons for liking Berkshire could constitute 10 posts, so I won’t go into them here. That is a story for another day.

 

*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.

**Anyone going to the Berkshire meeting next month? I am and cannot wait! I went for the first time last year and thought it was pretty great. Where else can you ask a couple billionaires questions on investing? They don’t call it the ‘Woodstock of Investing’ for nothing!

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  2. Hey Mr. 1500,
    I may have missed it in the archives, so forgive me if that’s the case, but are you aiming for 4% SWR? Just curious… The continuous debate over the 4% rule has me intrigued about what early retirees are aiming for. Frankly, I think the people pushing for lower SWR in general reeks a little of recency bias.
    Big Guy Money recently posted…Announcing The Big Guy Money Reader GiveawayMy Profile

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    • I completely agree that there is some recency bias going around today. Also, I think people are scared. They don’t realize that if the 4% rule doesn’t work out, they can always… get a job again! They’ll be no worse off than if they had never strived for FI (or if they were always too paralyzed to actually quit)
      Dave @ The New York Budget recently posted…Slomo Documentary: Find Your HappinessMy Profile

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      • “They don’t realize that if the 4% rule doesn’t work out, they can always… get a job again!”

        Yes, exactly! Even just a little bit of income in retirement could make for a substantial buffer as well. That is what I’m thinking about actually. Maybe I’ll try to do some part-time or short term coding assignments.

        Reply

    • Yes I am. I too have to admit that I doubt the 4% rule. What if a terrorist attack happens the day after I retire? Much of my portfolio would be gone in an instant. However, like Dave said, you can always go back to work.

      Reply

  3. Great post 1500, but I’m sorry you had some short term struggles. Remodeling is always expensive, especially because you’ve gutted your house. The pictures a couple weeks back looked great though. It’s great you’re going to the Berkshire meeting. I would like to go and experience it in the coming years…..hopefully while Warren Buffett is still alive.

    I was curious about one thing though……if you reach your “number” and pay off your mortgage before your time period ends…..will you retire? I know there are other constraints given the little ones, but I am curious about your plans.
    -Bryan
    Income Surfer recently posted…The Eighth Deadly Sin: Chasing YieldMy Profile

    Reply

    • Ahh, don’t be sorry. It’s just an opportunity to buy at a little bit of a discount. As long as you’re on the buy side of the equation, dips should be welcome.

      Regarding your second question, I have no idea what I’ll do if I make my goal ahead of time. One thing that plays into the equation is the overall market valuation. Right now, it is high (http://www.multpl.com/). I’d feel much more comfortable retiring in a recession.

      Reply

      • It’s funny you should say that about retiring in a recession. My wife, son, and I are taking a year long trip in 2015. I was telling her last night I hope we get into a nice recession before the trip. I’d rather be lucky than good……
        -Bryan
        Income Surfer recently posted…Our Portfolio: You AskedMy Profile

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        • Holy cow, a year long trip! Have you written about it? If so, please direct me to the post. That sounds awesome!

          Reply

    • Exactly. Bring the S&P 500 down 10% or 20% and I’ll be shoveling money into my Vanguard’s furnaces.

      Reply

  5. I would love to hear a report on the Berkshire meeting after you go!

    Have you read the recent Business Insider article “Why Buffett Doesn’t Invest in Technology”? It’s really interesting. They also link to an article that Buffett wrote in 1999, five months before the dot-com crash, that is even more interesting.

    I’d post links, but don’t want this to get caught in a spam filter — if you google the article title you will find it! It’s very apropos, given that you cashed out some Apple stock to buy Berkshire Hathaway ; )
    Quinn @ Wealth Out West recently posted…Analyzing Wealthfront’s Business Model: What Does Profitability Look Like?My Profile

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    • I really like the dividends too, but I wonder where Apple will be in 10 or 20 years. Google is the smartest company in the world and Apple is dead center in it’s crosshairs.

      Reply

  7. If I had money to invest I would wonder about Berkshire Hathaway given Mr. Buffett’s age? Apple has dipped after the death of Steve Jobs.

    I have some Vanguard and I will have more when/if I figure out how to get more money.
    jane savers @ solving the money puzzle recently posted…How To Get RichMy Profile

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  8. Why do you not revise your yearly goals on January 1st of each year? Great year in 2013 but seems silly to just focus on the end goal and not revise your annual goal.

    Reply

    • I thought about it, but 1 year is a very short period of time. Things have a way of balancing out. The market could tank this year or next and I’d be set way back. 10% a year is reasonable, perhaps even too aggressive.

      Reply

  9. The markets sure did put a hurtin’ on your net worth but it’s nowhere near time to worry. I’d love to have a larger pullback in the markets and I hope it comes. Lately though it’s been buy the dips because the markets coming back up. I have no idea if that’s going to continue so I’ll just buy when it feels right. Exchanging AAPL for BRK is a good move and I’d love to go to the BRK meeting but that’s not in the cards for this year.
    JC @ Passive-Income-Pursuit recently posted…The Roots of a Wallet EngineerMy Profile

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    • Do try to make it to the Berkshire meeting. It is really great. I was surprised how much I enjoyed it the first time last year. As long as Warren is there, I vow to never miss it.

      Reply

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