My main goal was to build an investment and cash portfolio of $1,120,000* in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal last year and my 1500 Days are over, but in the interest of openness, I’ll continue to share my numbers.
Two net-worth altering events happened in May. The first involved our home and the second involved a car purchase.
Way back in 2013, we moved from a big luxury home in an awful neighborhood to a neglected home in a great neighborhood. We willingly went from this beautiful kitchen:
To this ant-infested, ugly-ass kitchen:
We then fixed up the neglected home:
While we were busy rehabbing, something good was happening in our town; prices were going up, up, up. According to Zillow, the average home price in June 2013 when we purchased was $214,000. It now sits at $345,000:
And our little pocket of the ‘hood has been doing exceptionally well. In October 2015, a home just a couple doors down sold for over $517,000. While this house was much bigger than ours, I was still surprised at the price. But it has gotten crazier. Another home that isn’t nearly as nice just sold for $580,000.
Prior to this latest sale, I had been valuing our home at $460,000. This number came directly from a bank appraisal at the end of last year. Based on Mr. $580,000, I decided to recalculate the worth of our home.
My Small One
- Size: 2087 finished square feet ($278 square/foot), but some of it is in the basement
- Beds/baths: 4/3, same as our place
- Finishes: Nice, but no better than ours
- Yard: Large
- Size: 1850 square feet, all of it above grade
- Beds/baths: 4/3
- Finishes: Nice
- Yard: Tiny. Remember ladies, it’s not the size of your man’s yard, it’s how he uses it. (Yeeeaaah right, that’s what men with small yards say. Sigh…)
Ummmm, that was uncomfortable. Let’s move on. And hey, stop laughing at my yard! Seriously, I’m crying here. Don’t make me use the weed whipper on you!
Anyway, if I apply the $278/square foot number to out home, I arrive at a value of $514,300. I like to be conservative, so I’m knocking it down to $500,000. Our mortgage sits at $110,000, so we have $390,000 in equity.
Our home initially set us back $175,000 and we put about $100,000 into it. While I knew our town was on the upswing, I had no idea the swing would be this big and fast. It’s popular now to dismiss home ownership in favor of renting, but I’m glad we bought.
The other new development is a used car purchase. I bought a silly toy that set me back $45,000 (perhaps I’m compensating for my small yard?). The money came out of our cash pile:
For the purposes of the Performance Update, I’ll continue to value the car at it’s purchase price until I see strong evidence of price movement in either direction.
Performance Update: May
2017 (as of 6/1/2017)
- Days elapsed: 151
- 2017 gains: $148,409 (including 401(k) contributions of $31,220**** and car purchase of -$45,000)
Since the start (1/1/2013)
- Days elapsed: 1611
- Portfolio gains since 1/1/2013: $819,574
- Needed to quit work ($1,120,000 in investments): Mission accomplished!
- Net worth: $1,860,617 which includes:
- Investment portfolio and cash: $1,405,617
- Home equity: $390,000
- Silly toy car: $45,000
- Other cars, bikes, dinosaurs: $20,000
Stock Picking Experiment
I don’t pick stocks much anymore, but some companies still intrigue me. My litmus test is this:
How big is the moat? In other words, do I have a reasonable degree of confidence that I can hold the stock for the next 10 years?
And by that, I really mean:
Do I have confidence that the company’s stock will outperform the S&P 500 over the next decade?
And by that, I really mean:
Do I have confidence that the company’s products and services will grow at a faster rate than the average of companies in the S&P 500?
This is very difficult to do. Very few companies meet my criteria, but I picked a small bucket of them that do in April of 2016. I don’t condone this; it’s only a silly little experiment. And my real goal is to prove myself wrong so I just stick to indexing.
My portfolio has been up and down, but as of now, I’m beating the pants off of the S&P 500:
My portfolio is tech heavy and this sector has been a run. My little (stop laughing!) portfolio holds 3 of the 4 FANG stocks (Facebook, Amazon and Google) which have done very well. However, Alibaba and Tesla Motors are the two best performing holdings in this portfolio.
One Thing that Isn’t Small
I didn’t grow up with money or confidence. My family occasionally struggled when my dad was out of work. At the same time, I had a lot of self-doubt and always worried what others thought of me.
I never thought I’d amount to much in life. I didn’t apply myself in high school and was a slightly above-average student. Meh.
In college, I started studying and realized that I wasn’t stupid. I got all As and graduated magna cum laude in biology and chemistry. But back to my childhood…
If you would have told me when I was growing up that I’d be worth a million dollars some day, I would have laughed at you. Now, my net worth is $140,000 away from $2,000,000 and I have a difficult time wrapping my mind around it.
Don’t take this to mean that I’m not grateful because I am. I’m very grateful. I just don’t feel like someone who is worth $1,860,000 (what is that supposed to feel like anyway?). I still feel like the same guy I was when I finished school and had a net worth of -$60,000 (mostly college loan debt). I suppose I always will and maybe there isn’t anything wrong with that.
*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. So, if I were to quit my job now, I could spend about $48,000 in my first year of retirement. I’d stick very close to that number too because market valuations are ambitious. Let’s say that Mr. Market caught a cold tomorrow and my portfolio dropped down to $800,000. No big deal. This would mean I’d be safer stretching my spending a little north of 4%.
**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off. My compromise is to have enough money put away to cover the mortgage at the 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 (me) makes some cold, hard, beautiful, cash. Personal Capital is a totally free and awesome way to keep watch over your investments. It’s worth it for the fee analyzer alone. I would never recommend anything that I don’t personally use and completely believe in, so give it a try. If you’ve already signed up through the link, please know that you are a fine person of above-average intelligence.
****My 401(k) contributions include my own, Mrs. 15oo’s, and the contributions from my corporation. Self-employment with a solo 401(k) is a very powerful savings tool. I should have done this years ago.
Join the 10s who have signed up already!
Subscribing will improve your life in incredible ways*.
*Only if your life is pretty bad to begin with.