I’m still behind from my vacation, so no rant today. I’ll get back to my complainy ways next week. Today, do your best to enjoy my performance update for May.
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 have a very late look at May.
Yep, this month, I reached a new high. No, not that kind of high! Just because I live in Colorado doesn’t mean that I indulge in the recently legalized green stuff. Get your mind out of the bong people!
I’m talking about another kind of green stuff; money! In May, my investment portfolio reached a new all time high ($1,036,272). Life is good, even if only my portfolio and Spendosaurus are high.
I don’t even know my own friggin’ portfolio
At the Berkshire conference, Mr. PoP and I were talking investments:
- Mr. PoP: You’re mostly in stocks, aren’t you?
- Me: Well, I own stocks, but now, most of my investments are in safer assets like ETFs and mutual funds.
After the conversation, I started thinking and wasn’t so sure that what I had said was correct. I went back to the hotel room and checked my accounts. It turns out I wasn’t quite right. I have some things to say about the current state of my portfolio:
- First and foremost, I haven’t written about it in a while. Last time was here, here and here. A bit has changed since then, so I’ll be publishing an update shortly.
- As of this writing (6/10/2015), I have $166,015 in Apple and $164,280 in Facebook. I am not comfortable with having almost 1/3 of my portfolio in two risky stocks. Technology moves fast and either of these could easily be irrelevant in 10 years (remember Nokia, Nortel and Blackberry?). I sold a bit of Apple a couple months ago and will continue to whittle down these holdings.
- I lied to Mr. PoP. Well, lie is too strong of a word, but about 50% of my portfolio still consists of individual stocks. While I think it’s OK to have a portion of money in stocks if you like to play, it is mostly a losing strategy that the overwhelming majority of people would be wise to avoid. Although this advice comes from someone who has had great success with stocks – I’m currently sitting on four 10 Baggers (Google, Apple, Chipotle and Tesla) – I have been extremely lucky that my speculative gambles have panned out. Many more people have lost a lot of money in the stock market because of poor choices, so take my advice to heart. I look forward to converting most of my portfolio over to Vanguard funds in the near and distant future.
Anyway, let’s talk about May.
I started the month at $1,011,854 and ended at $1,036,272 for an increase of $24,418. I put $5,475 into my solo 401k, so my investments appreciated $18,943. I’ll take increases like that any month!
Here are the numbers as of 5/31/2015:
- Days elapsed: 151
- Days remaining: 214
- 2015 gains: $48,921
- 2015 401k contributions: $16,425
- Left to go (2015): Goal accomplished!
Since the start (1/1/2013)
- Days elapsed: 881
- Days remaining: 619
- Gains since 1/1/2013: $450,229
- Needed for $1,000,000 (investments and cash only): I’m there!
- Needed to retire ($1,120,000 in investments): $83,728
- Net worth**: $1,282,282
Why I probably won’t make my goal and why I don’t care
As long as I have a job, I’ll be contributing $5,000+ per month to my solo 401k****. Even if the markets didn’t appreciate at all, this alone would allow me to attain my goal of $1,120,000 (one million plus enough to cover our mortgage debt). However, I’m not confident that the markets will be higher in February of 2017 than they are right now. The current bull market is 6 years old while the average one lasts for 4 years. This one started after a severe recession, so I don’t think this is worrisome. However, nothing lasts forever. Eventually, the markets will take a breather and we’ll all see some losses.
I don’t really care either and a drop probably won’t change my plans:
- I need to avoid the One More Year trap: I can easily see myself falling into the vicious One More Year cycle. The best strategy is to force myself to follow through and avoid OMY at all costs.
- Life will be better on the other side: There are some decisions in life that seem difficult while in the moment, but down the road, it is clear that you made right choice. Leaving full-time employment won’t be easy, but I think that I’ll be much happier afterward.
- I’m confident in our financial planning, but frugality is most important: I think that Mrs. 1500 and I manage our investments well, but that is only half the battle. We can’t control the greater factors that cause the markets to swing up or down. We can all control our lifestyle choices though and I think that is much more important. If one can live on $40,000 per year instead of $80,000, it takes much less to move the needle. If the markets went south for an extended period of time, just driving for Uber, renting out a room via Airbnb or taking a short term contract job would go a long way to smoothing over a rough patch.
- Mrs. 1500’s new gig: After taking time off to raise our children, Mrs. 1500 is working again. She is part-time until the fall when both kids will be in school. Her new income will allow us to increase our savings.
- Real estate: We will probably purchase at least one rental property before I hang up the old keyboard. We are considering one right now actually. The stock market may crash, but people need a place to live and I want some steady cash flow.
I’m really looking forward to not working 40 hours per week. I already have my days planned.
- Code! Programming for fun will keep my brain strong and allow me to work on code I’ve been dreaming about for a while.
- Exercise! Working out takes a back seat to everything else now. Post-work*****, I’ll be able to exercise as much as I want. Perhaps, I’ll be able to bring my body back to the Schwarzenegger-in-his-prime physique I once had******.
- Kids! I look forward to being able to take the kids to and from school every day. More books, more playing and more building too.
- House! Maybe I’ll be able to actually finish the work on our home! Hell, it’s only been going on for 2 years now!
- Books! Not much time to read now. I have a lot of catching up to do.
Phew, that was a mouthful. I’m hungry now. Where are the Cheetos (I’m particularly fond of those hot ones that are dyed an unnatural, violent red color)? Wait, I know what you’re thinking! Stop it! I already told you, none of that stuff for me! But really, where are the Cheetos?
Tune in next Tuesday when I update you on my 401(k) rollover experiment. And hopefully the Cheetos.
*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 to:
- Home equity
- Car magazines: My dentist once told me that he didn’t pay for any of the office magazines. Apparently, once people know that you’re a dentist or doctor, the magazines just start flowing in like water. I am experiencing a version of the same phenomenon. Car magazines have started showing up, even though I never subscribed to them. I love cars, so I appreciate this supernatural happening. Oh, and do you see that blue car in the bottom of the picture? It’s the new Ford GT and has some of the most beautiful lines I’ve ever laid eyes upon (aside from Mrs. 1500 of course [I’ll wait while you roll your eyes]). Way to go Ford!
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****The 401k limit for 2015 is $18,000. Between me, Mrs. 1500 and our own corporation’s contribution (25% of our wages), we can sock away much more than most.
*****I hate the word retirement. It has connotations of seniors playing golf or sitting in a retirement (see, there is this awful word again) home, biding their time. I avoid using it at all costs.
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