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 as well as my goal for the end of 2014 and 2015.
Last month, I wrote about how boring my performance update was. October proved to be the opposite. Stock portfolios experienced wild gyrations. One company I owned even went belly-up-bankrupt! Although I finished the month at $965K, that little mini-correction sent me down to $900K on 10/15. Whoah.
In October, my portfolio resumed its march upward. I started the month at $948,294 and ended at $965,210 for a gain of about 1.7%. I under-performed the S&P 500 which saw a gain of 2.3%. My poor showing this month is attributable to facebook and another stock which I’ll tell you about in a moment.
Facebook had stellar earnings, but Mr. Market did not like the fact that the company will be investing heavily in its business in 2015. Remember that Mr. Market cares most about the next 3 months. For someone who looks a decade out, I couldn’t be happier that facebook is investing in itself. Long term thinking baby.
Anyway, here are the numbers:
- Days elapsed: 304
- Days remaining: 61
- 2014 gains: $95,575
- Left to go (2014): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 669
- Days remaining: 831
- Gains since 1/1/2013: $379,167
- Needed for $1,000,000: $34,790
- Net worth***: $1,165,210
$5,000 down the toilet
I’ve come to believe index funds are the way to go and I’m about to illustrate why with one of my dumb mistakes. Better to learn at my expense than yours.
Earlier this year, I learned that Apple had contracted with a company call GT Advanced Technologies (GTAT) to supply sapphire glass for the iPhone 6. “Great!” I thought. Apple is the most profitable cell phone manufacturer in the world. GTAT stock will surely benefit over the long term.
The new iPhone came out without sapphire glass. Hmmm, not good. A short time later, GTAT announced it was going bankrupt. My sure-hit was now a penny stock. I flushed almost $5,000 down the toilet in the couple of milliseconds it took Wall Street trading robots to send the stock crashing.
I stopped the stop loss order
In last month’s update, I mentioned that I had put a stop loss order on Apple and facebook because I own way too much of these companies (1/3 of my portfolio!). While I need to rebalance, I’m not excited about the tax implications of selling. In my ideal world, I’d wait to sell for another couple of years when I’m retired and I won’t have to take a capital gains hit. A stop loss order is my solution, only selling if a stocks go down.
However, I also also didn’t want to sell just because of a general market correction. When the markets started tanking in October, I cancelled my stop loss orders. I’ll put them back in place after the first of the new year.
I learned something about myself
I used to freak out during stock market crashes. When things were crashing in 2008/2009, I didn’t sell, but I stopped maxing out my 401k. Now, I clearly see that was a dumb move. However, since the market has done so well since, I hadn’t tested myself to see if I’d stick to my buy low, sell high guns. It’s one thing to say what you’re going to do given a situation; it’s quite another to actually do it.
On 10/1, I had $948,000 socked away. On 10/15, this had dropped almost $50,000 down to $900,000. Without thinking, I logged on to my retirement account and bumped my 401k contributions up to the maximum****. A couple minutes later, I thought back to what I had done. My mind is now in the right place.
*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.
**This is an affiliate link. If you sign up, the blog makes a little bit of money and I can afford to feed my dinosaurs. You wouldn’t want the dinosaurs to go hungry, would you? I didn’t think so. With that out of the way, I would never recommend anything I didn’t use myself and completely believe in. Personal Capital is totally free and an awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone.
***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
- extensive collection of tape measures: Tape measures and I don’t get along well. I lose them, buy more, and then find all the lost ones the next day. I’m sure I have at least 10. This problem would be easily remedied with my tool belt. Anyone know where that is? (Mrs. 1500 note: It’s in the Master Bedroom closet. Where else would you keep a tool belt?!?)
****I believe that the best idea is to max out your 401k as soon in the year as possible. However, our home renovation projects frequently drained our bank accounts. Now that most of those expenses are in the rear-view mirror, I look forward to maxing out my 401k for 2014 in December and for 2015 over the first quarter of the year*****.
*****I’m a contractor and my contract is up for renewal this month. While my client likes me, the company that owns my contract would love to show me the door and replace me with someone cheaper. If the company wins over the client, early retirement may start in about 4 weeks… (Mrs. 1500 note: I welcome that scenario******. I have a honey-do list a mile long. His work just gets in the way…)
******I’m a bit terrified of this scenario. I’m also apprehensive about what surprises await me on this mysterious “honey-do” list that Mrs. 1500 has never mentioned before…
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