Two items before we begin:
- Thank you for all of the kind words concerning my dad’s situation. He has since had another surgery and will be moved to a hospital that focuses on rehabilitation very soon. He’s still on a ventilator and the road to recovery will be a long and arduous one. He may never be the same. But the fact that he’s alive with normal brain function is a miracle.
- It doesn’t seem quite right to talk about money with everything else going on in the world, but I feel that I owe these updates to my readers. More on the state of the world at the end of this post.
On with the show.
My main goal* was to build an investment and cash portfolio of $1,120,000* ($1,000,000 to retire on and $120,000 to pay off the house) 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.
Tech On A Tear (and other factors)
April was the best month for us ever in terms of monetary gains. Our net worth started the month at $2,344,773 and ended at $2,641,119 for a gain of:
How did this happen?
Tech On A Tear
I’m a big believer in index funds, but this is a recent phenomenon. When I started the blog, I didn’t even know what an index fund was. Prior to embracing index investing, I bought a lot of tech stocks and I hold most of them to this day.
April was a stellar month for most of our major tech holdings. Tesla appreciated 49% (!!!) and alone contributed $50,000 to our monthly gains. Craziness. Owning an actual Tesla would be a lot more fun, but holding the stock isn’t bad either. Facebook (my largest holding) and Amazon also had a huge month.
I have mixed feelings about these stocks. While my picks have vastly outperformed the markets, no empire lasts forever. It doesn’t matter if a stock appreciates 1,000% if it then goes to $0 and you rode it all of the way down. Something on a smaller scale happened to me during the dot com bubble. I bought a fund for $10 which then went to $120 before going bust. I held on the whole time. Index investing is self-cleansing and eliminates this worry.
The markets also had a stunning April. The major indices had gains of about 10%.
Mindy and I performed some financial gymnastics in April. We took out a mortgage ($300,000, 3.50% for 30 years) on our primary home that we mostly owned free and clear. I used the word “mostly” in that prior sentence because we used a HELOC from our previous home to buy the current one and still owed $100,000. With the mortgage refinance, we paid off the HELOC and invested the remaining $200,000. As it stands today, we got very lucky with our timing:
The refi appraiser valued our home at $75,000 more than we bought it for ($365,000 -> $440,000), so 25% of our net worth gains was due to appreciation. It was nice to see the sweat equity we’ve put into the home already paying off. We’ve cleaned the place up, painted, remodeled a bathroom, put in new lighting everywhere, and replaced the windows. The improvements we have yet to complete such as finishing a basement (with another bathroom), updating the kitchen, and remodeling the master bath will have an even bigger effect.
Finally, I’ll note that my net worth calculation only includes home equity. The effect of the refi is that our investment portfolio took a huge leap, but our primary home now makes up a much smaller percentage of our net worth. And this is how I like it. I’m fairly confident that my investments will return greater than 3.5%.
April Performance Update
Our investment portfolio (stocks, rental home, coworking space, trailer park, and other real estate deals) started the month at $1,979,773 and ended at $2,491,119 for a gain of $511,346. To reiterate, much of this increase was due to our cash-out refinance which decreased our home equity but increased our investments. With our primary home accounted for, our net worth now sits at $2,641,119:
2020 (as of 4/31/2020)
- Days elapsed: 121
- Investment portfolio gains: $491,298 (Again, gains our outsized because we took equity out of our home and invested it. The next number, net worth which includes home equity, is more accurate.).
- Net worth gains: $241,079
Since the Start (1/1/2013)
- Days elapsed: 2677
- Investment portfolio gains: $1,448,997
- Net worth gains: $1,905,073 (Net worth includes primary home. We’ve done well with Longmont real estate.)
Portfolio and Net Worth
- Investment portfolio and cash value: $2,491,119
- Net worth (primary home equity of $150,000 included): $2,641,119
The news is not so great on the real estate front. The Elevated Living Estates (trailer park) is struggling. Most of our syndication deals have temporarily suspended distributions. One private loan has been struggling. Two thoughts:
- Our real estate holdings are all residential and for that I’m thankful. The mall may close because of Amazon and commercial office space may not do well because of new telecommuting policies, but people always need a place to live.
- But, if I would have just stayed within my strongest circle of competence (stocks), I’d be doing much better financially. Hindsight is always 20/20.
I’m not sure that the markets reflect the long-term effects of COVID-19 shutdown. Mr. Market is forward-thinking and perhaps is already living in a post-COVID world, but it seems aggressive that markets are within 10% of all-time highs now:
While April was a great month and it makes me happy to see the gains, putting much weight into 1 month of performance is silly. Investing is an exercise best performed over decades, not weeks.
One More Thing
You’re an interesting species. You’re capable of such beautiful dreams, and such horrible nightmares.-Carl Sagan
I’m not a poet and much of the time, no more eloquent than a rock, so commenting on current events isn’t easy for me, but here goes.
In the past seven days, we’ve seen horrific images and also beautiful ones. On Saturday afternoon, I watched the SpaceX launch with my girls and it was incredible. Perhaps one of them will become a NASA engineer and will point to that launch as the inspiration.
But sometimes humans are awful. It makes me question how thick the veneer is between order and chaos or savagery and peace. I’m not sure.
One thing that I’m pretty certain of is this: It’s usually not difficult to figure out the right thing to do. Do it.
*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 (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.
***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. 1500’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.