Interim Retirement Nestegg Report – I broke $500,000

Well it took a little longer than last time, but compound interest is still working its magic with my retirement nestegg. Today I officially broke through the $500,000 mark for the first time. This milestone came 14 months after the $400k milestone which was actually slower than it took to go from $300k to $400k, but this market is not exactly the magical market that existed in 2013.

The more I update those tables below the more I question why I used a stupid metric like the DOW as an indicator, I think the only reason I chose it was because of the nice symmetry for when I first broke through $100k and the DOW also being at exactly 10,000 – anyway you get the idea that my nestegg is growing faster than the ridiculously dumb and outdated DOW index :-)

I also broke through another milestone this month – my wife and I had our 5th kid! While this certainly won’t help me financially I think it carries some weight to the fact that you can’t use kids as an excuse as to why you are not achieving your financial goals/dreams. 5 kids and 1 income have worked out just fine for me to reach $500k in retirement assets at age 35 – and I am hardly hardcore when it comes to being frugal – though I’m also not a moron generally when it comes to spending money either. So it’s been a nice balance I’ve been able to work out.

Taxable Account – $17,678.94
Traditional Rollover IRA – $37,561.08
My Roth IRA – $133,790.44
Wife Roth IRA – $77,432.67
Traditional 401k – $236,145.41

Total Retirement Nestegg – $502,617.54

$100,000 NestEgg Milestones

Date DOW Jones Value MFJ Nestegg
Oct 2008 10,000 $ 69,300
Oct 2009 10,000 (+0%) $100,000 (+44%)
Feb 2012 13,000 (+30%) $200,000 (+100%)
Jul 2013 15,423 (+19%) $300,000 (+50%)
Feb 2014 16,395.88 (+6.3%) $400,000 (+33%)
April 2015 18,084.48 (+10.30%) $500,000 (+25%)

Retirement Nestegg Report – March 2015

Another big contribution month for my 401k due to company bonuses getting paid out this month. Overall a pretty boring month – no $40k swings or anything like that – though I expect/hope there will be some of those coming up in the future one way or the other. Volatility is the investors friend.

Taxable Account – $16,030.31 (-3.15%)
Traditional Rollover IRA – $36,508.31 (-1.48%)
My Roth IRA – $125,964.81 (-1.95%)
Wife Roth IRA – $72,647.36 (-4.11%)
Traditional 401k – $230,681.99 (+0.79%)

Roth/Traditional % = 41.25% (tax free)

Total Retirement Nest Egg $481,832.78 (-1.00%)
Retirement Salary (4%) – $19,273.31

Monthly Contributions $3,266.21 (401k)
SPY Performance -1.74%
My Monthly Investment Performance -1.67% (+0.07% vs SP500)
My Monthly Individual Stocks Performance -2.60% (-0.86 % vs SP500)

Retirement Nestegg – February 2015

Well another all-time high by a long shot this month. My nestegg increased by almost $39k this month! This was in part by crazy strong returns for the stock market and the fact that I also contributed $14k to my accounts this month.

The big contributions were due to two reasons. First I received a very large federal tax refund which I decided to invest entirely in Tesla Motors stock in my taxable account. I know I need to adjust my allowances – I filled out my W-4 nearly 9 years ago when I started my job and I’ve had a handful of kids since then.

I also received a portion of my 401k matching 5.5% that my company contributes once a year into my 401k (on top of the 4% they put in with each paycheck).

I am getting with in striking distance of the half a million dollar milestone and I expect that I could eclipse this figure next month due to the fact that there is a chance I would get a bonus payout from work next month.

It was also nice to see my potential retirement income jump by about $1500 a year in just one month!

Taxable Account – $16,551.55 (+70.30%)
Traditional Rollover IRA – $37,058.16 (+5.62%)
My Roth IRA – $128,463.17 (+4.99%)
Wife Roth IRA – $75,762.74 (+6.70%)
Traditional 401k – $228,876.40 (+9.23%)

Roth/Traditional % = 41.96% (tax free)

Total Retirement Nest Egg $486,712.02 (+8.71%)
Retirement Salary (4%) – $19,468.48

Monthly Contributions $7,799.06 (401k) $6,300 (Taxable)
SPY Performance +5.49%
My Monthly Investment Performance +5.56 % (+0.07% vs SP500)
My Monthly Individual Stocks Performance +5.61% (+0.12 % vs SP500)

Retirement Nestegg Report – January 2015

Well another all-time high and I finally put some good distance between the SP500 and myself when it comes to peformance. Last year I trailed the SP500 by 2.5-3.5% and this month I made up a lot of that ground already. It’s earnings season and a number of my big stock holdings (Netflix, Amazon, Apple, Starbucks) had some great reports and good increases in stock prices this month. Let’s hope this trend continues into February.

Taxable Account – $9,719.27 (+1.19%)
Traditional Rollover IRA – $35,086.77 (-0.34%)
My Roth IRA – $122,362.76 (+3.89%)
Wife Roth IRA – $71,005.71 (+1.46%)
Traditional 401k – $209,546.10 (-1.52%)

Roth/Traditional % = 43.39% (tax free)

Total Retirement Nest Egg $447,720.61 (+0.51%)
Retirement Salary (4%) – $17,908.82

Monthly Contributions $2,655.90 (401k)
SPY Performance -3.10%
My Monthly Investment Performance +0.00 % (3.10% vs SP500)
My Monthly Individual Stocks Performance +2.63% (+5.46 % vs SP500)

Expenses Cut in 2014

Scissors

I’ll admit it I have become comfortable when it comes to personal finance. I did a lot of research and hard work when I was in my 20s. I soaked up all of the personal finance information I could. I was as frugal as they came and I setup my future self very well by saving $100k before I turned 30 and continued to save money into my 30s.

My retirement nestegg has grown at astounding (to me) rates and to be totally honest I have not done anything new or special when it came to personal finance in the last 6 or 7 years. I spend money on luxuries and don’t really flinch like I would have because pfft I make a lot of money, I saved a boatload in my 20s, and dude look at my nestegg – it’s huge!

I no longer go through every expense with a fine tooth comb. If something saves me time I’m happy to spend the extra money and honestly I don’t sweat the small stuff. In fact I just bought some land and probably overpaid for it by $40k just because we’ve been looking for land for so long.

That being said I’ve not become completely stupid and was able to dig into some of my ongoing expenses in 2014 and in the end actually ended up saving myself a lot of money per month & year. Below are some of the expenses I cut in 2014.

Packing my lunch
This one is kind of ironic. I had always packed my lunch, but then about 3-4 years ago a former co-worker & friend of mine started working at my company and he tended to eat out a lot and in turn convinced me to start going out to lunch. Long story short I got hooked to Chipotle and Panera and started eating out every day. I mean I could “afford” it easily and dang that food was good. The ironic part about this is this same co-worker later discovered Mr. Money Mustache, started packing his own lunch, and then started making fun of me for going out to lunch. Eventually it caught on and I now pack a lunch every single day. I estimate that this saves me about $80 per month or nearly $1000 per year!! Holy crap what a waste!

New Cell Phone Provider
My wife had her phone with a local cell phone provider which was cheaper than anything we could get through Verizon, Spring, ATT, etc. But we were still paying $80+ per month by the time you add in all of the taxes and fees. Her contract recently came up and we made the switch to Republic Wireless. The service is excellent and we currently pay $25 per month for unlimited talk,text,data. My wife can also switch to the $10 /month plan anytime via the phone if she decided she wont need data service outside of wi-fi. This move saved us over $60 per month or $720 / year.

Revisiting My Life Insurance
I have a large family that relies on me and about the time I started this blog I took out $1M in term life insurance. It was split between two policies a 30 year and 20 year policy. I now have a nestegg about the size of one of those policies so I figured I could probably eliminate one of them. I ended up actually replacing both policies with a new 30 years policy that was cheaper than the previous two policies. So an extra $10 years of coverage and saving me money – talk about a win/win. All in all this move saved me $30 per month or $360 per year.

Buying an Antenna
This one will go down as me being lazy category. About 3 years ago I cancelled our cable saving me a crapload of money each month. The problem was it was nearly winter and I was too lazy to climb up on our roof to install an antenna so I just told the cable company to leave the local channels on my bill for like $20/month. I figured we were moving soon anyway as we were trying to buy land and wanted to build right away. Well we know how that went. To top it off the cable company as cable companies due continually raised prices and I was paying over $30 per month for channels I could get for FREE over the air. I finally purchased a small compact antenna which works perfectly from the bush in our front yard (it’s winter again :) ) and this move saved me $30 per month or $360 per year.

Mortgage PrePayment
Again once we purchased our land I felt complete control over my finances again. The uncertainty of how much money we would need to purchase land was gone and now I had a nice surplus of cash laying around. Like I mentioned many years ago I could have paid off our entire mortgage in its entirety many years ago and still had a large cash cushion, but I wanted the flexibility to be able to move on a piece of land without having to worry about banks. After this was taken care of I finally decided to take about $20k of cash I had laying around and paid it towards our mortgage. This move saved us about $66 per month in interest or about $800 per year. Also I don’t know if I can take credit for this but 5 years ago we refinanced to a 5 year ARM because again we certainly would be gone in less than 5 years, well we are still here and it just refinanced to a significantly lower rate. Between the pre-payment and the rate adjustment – the amount of interest we pay per month is $160 less per month or over $1900 per year.

Harvesting My Own Meat
This isn’t necessarily new as I have been a hunter all of my life, but I shot a nice buck this year which I will get a little under 100lbs of meat from. I butcher the deer myself and my family enjoys venison. The hunting tag cost me $20 and I do have some of the meat being processed by a local meat market who will be turning some of my venison trim into wonderful things like venison bacon and sausage. All in all this meat will cost me less then $1/lb even with my fancy venison bacon. I also took up bow hunting this year – $5 license since I was a first time hunter. In the past I really only wood harvest a large deer because I didn’t know how to butcher the deer and I wasn’t sure if my family would eat it. Some years I even gave the meat away to other family members I knew would eat it. Going forward I expect to be less selective in my hunting and harvest 2 or 3 deer a year to fill our freezer with very low cost organic meat. Hard to put a cost savings on this one, but its probably at least $3/lb so could end up being $300-$1000 per year depending upon my skill level.

All in all these small changes that required no sacrifice or major effort on my part saved me potentially $5000 per year!

In the mantra of not being a lazy bastard and resting on my laurels I have identified the following areas to potentially lower my monthly reoccurring costs even more in 2015.

Internet
We currently pay $62 per month which is the cheapest plan offered by our cable company. About my only other option would be to move to DSL. We will be building in the spring so possibly moving to our new house may lower this some, but this is one expense that really irks me due to the lack of options.

Groceries
We have will have 5 kids next spring and I think we could be a lot smarter about our purchasing. I think we do an ok job, but I am sure there are ways for us to cut this cost even more.

House
Kind of an ironic once since we will be building a mansion on our own private 15 acre estate out in the country, but there are so many simple ways to save $10k+ when building a house by making simple decisions common sense decisions that most people don’t make or possibly doing some of the work ourselves. Since this will greatly affect our monthly cash flow going forward and our ability to retire early I will need to be very diligent when it comes to our house.

My All-Time Investment Performance January 2015

Continuing on my tradition from last year I have calculated my cumulative investment returns from 2006 until now against the SP500. The good news is that I am still pretty handily beating the SP500, especially when it comes to my individual stock investments, but the bad news is that I trailed the market by a few percentage points this year. Given my massive outperformance last year I can’t be too upset about trailing by a few points.

During the 9 years I have been tracking my investments closely enough to calculate returns the SP500 has produced annualized returns of 6.47%. During the same period of time all of the investments in my Retirement Nestegg have produced 7.36% annualized returns which is nice to be beating the market. But where I am really proud of is that my individual stock picks which now make up more than half of my portfolio have returned annualized returns of 12.17% which is nearly double what the SP500 has returned. If I am able to keep this up financial independence is not too far around the corner

Cummulative Returns By Year
Total Investment Performance 2014
YearSP500MFJ NesteggMFJ Stocks
200615.79%14.37%14.20%
200722.15%20.66%22.48%
2008-24.78%-37.23%-22.84%
2009-4.88%-16.68%4.77%
20106.99%3.82%43.47%
20117.32%-1.92%40.19%
201221.78%15.85%54.56%
201357.83%74.01%160.55%
201475.80%89.51%181.16%

Yearly Returns By Year

YearSP500MFJ NesteggMFJ Stocks
200615.79%14.37%14.20%
20075.49%5.50%7.25%
2008-38.42%-47.98%-37.00%
200926.46%32.75%35.78%
201012.48%24.60%36.94%
20110.31%-5.53%-2.29%
201213.47%18.12%10.25%
201329.60%50.20%68.58%
201411.39%8.91%7.91%

Best and Worst Stocks in 2014

Here are my top stock performers for 2014.

BJ’s Restaurant (BJRI) 61.92%
Ambarella (AMBA) 59.05%
Under Armour (UA) 57.93%
Tesla Motors (TSLA) 47.17%
Intuitive Surgical (ISRG) 39.20%
Apple Inc (AAPL) 37.96%
Bidu Inc (BIDU) 31.19%
Chipotle Mexican Grill (CMG) 28.96%

Looking at the list I will point out that BJRI had made my list the last two years as a loser and it’s nice to see my patience and long term timeframe pay off with it being my biggest winner this year. Ambrella is a newer stock for me having first purchased last October and is riding the wave of video.

Under Armour is a favorite of mine and long term they will likely surpass Nike. Telsa and Elon Musk are going to change the world as we know it much faster than expected. Intuitive Surgical and robots will continue to revolutionize the way we do surgery. Apple is a behemoth and is totally ingrained in the way we interact with technology. China is coming online with crazy numbers of users and Bidu is a major player there. Finally Chipotle is completely changing the way we eat fast food and in my opinion are just getting started. They will someday surpass McDonalds in size.

And now for the losers.

3D Systems (DDD) -63.79%
Stratasys (SSYS) -35.57%
Ubiquiti Networks (UBNT) -34.00%
Amazon (AMZN) -22.03%
InvenSense (INVN) – 9.86%
Netflix (NFLX) -7.04%
Solar City (SCTY) – 6.05%

After 2 straight years of being in my top 3, 3D Systems had a rough year. Still 3D printing is in its infancy and 3D Systems and Stratasys will take advantage of this fast growing industry over the long term.

Ubiquity Networks is a small networking company who is making commercial grade equipment and selling it at consumer level prices. It’s users rave about its products and their CEO is pretty smart. Again a long-term winnner.

Amazon – Jeff Bezos will take over the world – end of story. The stock market only concerns themselves with short-term results which he cares nothing about. Keep going Jeff!

The last three aren’t down much but I will mention that despite its massive runup – Netflix has a long ways to go. So while my initial purchase is up nearly 18 times – I expect that long term that initial investment could end up being a 50 bagger.

Solar City like Tesla is going to take advantage of a huge trend of cheap electricity and improved batteries. The world is changing as we speak and these two companies are leading the charge. Just like BlockBuster never saw Netflix coming until they were bankrupt I have a feeling many car companies and utility companies will be the Blockbusters in the next 5-10 years.

While this arbitrary annual exercise really can’t tell you much about my stocks, I like the exercise as I honestly am surprised sometimes by the companies that make the two lists and it gives me a chance to revisit my investment thesis for these companies and hopefully as I look back on past years evaluations I will have learned something about my biases. Obviously right now I am a Elon Musk fan boi, but I honestly feel very strongly about what he is doing and plan to put the bulk of my investment money this year into his companies.