Ask the Readers returns in a couple of weeks. This week, I regale you with numbers and bad jokes in my February performance update. Next week, I’ll tell you about the coworking space Mrs. 1500 and I bought and why we did it.
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 in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.
Everything should be made as simple as possible, but not simpler.-Albert Einstein
Less is more.-Mies van der Rohe
Simplicity is the keynote of all true elegance.-Coco Chanel
Have you ever heard of the concept of KISS? No, I’m not talking about the glam rock band with those dudes who wear stupid makeup:
I’m talking about the acronym:
Keep It Simple Stupid
As a software developer, my team and I talked about KISS frequently. Simple code is good code.
The more I think about investing, the more I think that KISS is also the right answer. And in investing, KISS equals simplicity. In other words:
KISS equals VTSAX
VTSAX >> Fancy
The market has had a big, big run and by some measures, you could argue that stocks are overvalued and have been for a while. So, I decided to get fancy. In November of 2016, I put $50,000 into a real estate syndication deal.
In a syndication deal, a group of investors pool their money to buy something far bigger than they would have been able to afford otherwise. In this case, the syndicator would purchase an apartment building, rehab it, raise rents, and exit 5-10 years later. Investors get quarterly payouts and then a big one at the end when the property is sold.
This investment has performed poorly and is getting worse:
- The syndicator’s November performance report stated that it had fired the management company due to poor performance.
- The February report stated that the (now fired) management company had been falsifying data. The deal was performing so poorly that our quarterly payout would be a big fat zero.
My payouts so far on my investment of $50,000 total $2921.04. This is a little under 6% in two years or 3% per year. During the same time period, the S&P 500 has
There is still a chance that the syndicator could right the ship. But at this time, I’m not holding my breath, b
Recently, I was talking to a friend who happens to be a syndicator based out of the same city as my deal. I showed him the location of the building and he said:
That’s not a good area. We never would have bought there.
The reason I’m not naming names is despite my poor returns, I have a lot of respect for the syndicator. The folks running it made a poor decision. They didn’t know the area and got burned. However, I think they’re also doing the best they can and continue to run the operation in an open and honest way. While I appreciate the honesty, that alone won’t buy the children clothes and feed the dinosaurs. So, they won’t be getting any more of my money. I’m going to stick with simplicity from here on out.
If you don’t like it, you can KISS My VTSAX.
February Spending: $3,661
February was our lowest month for spending since we started tracking it again. After paying our mortgage of $1427, we chewed through $2,234. After the mortgage, our four largest expenses were:
- Groceries ($852.87): Wow, this was a lot of spending on groceries. We don’t eat fancy food, but we did host an epic birthday party for our daughter:
- Restaurants ($403.54): This is high. Over 1/3 of the total was the result of taking some good friends out to a fancy meal in Denver.
- Health care ($261): Payment on braces…
- Utilities ($178.11): In the winter, we use more natural gas.
Most Fun Expense
On a day off of school, I took the girls down to Denver where we visited the Denver Museum of Nature & Science. I love museums and I love science, so I visit these types of museums whenever I can. While the girls don’t quite share my level of enthusiasm yet, we got to see some cool dinosaurs:
February Performance Update
We started the month with a net worth of $2,164,953 and ended at $2,173,864 for a gain of $8,911:
2019 (as of 2/28/2019)
- Days elapsed: 59
- February gains: $8,911
- 2019 gains: $109,424 (including 401(k) and HSA contributions**** of $3593.32)
Since the start (1/1/2013)
- Days elapsed: 2249
- Gains since 1/1/2013: $1,072,821
- Investment portfolio and cash value: $1,658,864
- Net worth (investment portfolio plus home equity, a silly toy car (Acura NSX!), bikes, and dinosaurs): $2,173,864
We have a diverse portfolio (full listing here) that includes real estate:
- Mobile home park (elevated home living to the easily offended/politically ultra-correct)
- Coworking space: We own a building/small business in Longmont
- Private loans (2 now totaling $135,000)
- Syndication deals (6 including the bad one I mentioned in the intro)
And stock market holdings:
- Individual stocks (old thinking)
- Index funds (most money goes here now)
Both sides of our portfolio saw increases, although real estate did the heavy lifting this month:
- Stock market: $752,171
- February appreciation: $836
- Real estate: $866,693
- February income from mortgage notes, syndications, and private loan: $8,345
- 2019 income: $14,137
- Cash reserve: $40,000
KISS My VTSAX
The other aspect of fancy investing is that it consumes mental bandwidth. While I like evaluating deals, there are 100 things that I’d rather be doing.
Now, if I was in control of the investment and
We continue to look at real estate. Perhaps we’ll purchase another fix and flip or partner up on something bigger. Or, maybe we’ll just ride the index fund horse from here on out. We don’t need more money…
*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. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.
**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 was to have enough money put away to cover the mortgage at the time of retirement.
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****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.
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