Retirement Nestegg Report – June 2014

Well a pretty good month for me. My investments crushed the SP 500 index and my retirement nestegg grew by almost $25k in just one month which I think is a record for me and is more than my retirement nestegg was worth when I started this blog in December of 2005 and did my first nestegg report. Compound interest is a beautiful thing.

Taxable Account – $5,490.86 (+7.68%)
Traditional Rollover IRA – $34,681.76 (+13.71%)
My Roth IRA – $112,056.67 (+8.44%)
Wife Roth IRA – $62,243.25 (+9.60%)
Traditional 401k – $198,046.80 (+3.17%)

Roth/Traditional % = 42.25% (tax free)

Total Retirement Nest Egg $412,519.34 (+6.41%)

Monthly Contributions $1000 (Wife Roth IRA) $758.84 (401k)
SPY Performance +1.91%
My Monthly Investment Performance +5.95% (+4.04% vs SP500)
My Monthly Individual Stocks Performance +9.07% (+7.16% vs SP500)

Retirement Nestegg Report – May 2014

Well nothing too exciting this month – I gained some of the lost ground to the SP500 the last few months and I made $4000 in contributions to our Roth IRA accounts. The good news is I didn’t have any five or six figure purchases this month so I feel a little bit more frugal than I did last month :-)

Taxable Account – $5,099.04 (+2.99%)
Traditional Rollover IRA – $30,500.70 (-1.23%)
My Roth IRA – $103,334.94 (+7.92%)
Wife Roth IRA – $56,790.05 (+5.32%)
Traditional 401k – $191,961.67 (+2.52%)

Roth/Traditional % = 41.30% (tax free)

Total Retirement Nest Egg $387,686.40 (+4.01%)

Monthly Contributions $3000 (My Roth IRA) $1000 (Wife Roth IRA) $753.77 (401k)
SPY Performance +2.10%
My Monthly Investment Performance +2.74% (+0.64% vs SP500)
My Monthly Individual Stocks Performance +3.37% (+1.27% vs SP500)

Retirement Nestegg Report – April 2014

Ouch a very rough month for my retirement nestegg and for the 2nd month in a row my portfolio badly underperformed the SP500. To top it off I also finally made a land purchase so $131,000 came out of my savings account and went to buying some dirt. Also last month we purchased a new minivan for $15,000 so cash savings is flying out the door and my investment accounts are dropping as fast as they went up. Bottom line is I feel a lot poorer this month than I did last month.

In the grand scheme of things the investment fluctuations mean nothing. I have a pretty volatile stock portfolio and so when the market is up I usually greatly outperform it and when it is down well yeah I greatly under perform it. I guess the good news is the stock market is up a lot more than its down so in the long run this should benefit me.

Regarding the extra $150,000 in discretionary spending the last two months. Well yeah that part is probably not the most financially smart use of that money – clearly if I had put that money to work in my nestegg the last 5 or so years that I had been saving it I’d probably have a retirement nestegg in the 3/4 of a million dollar range. I also expect that the crazy spending will not end for a bit here as we actually build a house on the land and make use of the 15 acres of land that we purchased. However life is all about balance and while I may be “living it up” now I made dang sure that when I was in my 20s I put myself in a very good spot when it came to my financial situation and have even said that the foresight to take care of those things when I was young and get compound interest on my side early on will allow me to act like an idiot when I am older should I so choose and not screw up my retirement.

Now granted I could retire much earlier had I just set that as my sole goal, but again I am not dooming myself for the rest of my life I don’t think. While we likely will take on some debt with the new house – all of our purchases for the land, new van, etc were all done in cash and we still have a cash cushion of about $40k as well as about another $50-60k in equity in our existing house and we have no other debt other than our student loans so I am confident that even this wildly exorbitant spending regarding our new house will still allow us to pay off our mortgage, student loans, save for kids education and have a retirement nestegg well in 7 figures by the time we hit 50 (next 15 years).

Anyway here is my monthly report

Taxable Account – $4,950.85 (-7.23%)
Traditional Rollover IRA – $30,879.84 (-6.10%)
My Roth IRA – $95,751.56 (-7.79%)
Wife Roth IRA – $53,893.27 (-6.38%)
Traditional 401k – $187,250.21 (-0.16%)

Roth/Traditional % = 44.59% (tax free)

Total Retirement Nest Egg $372,725.73 (-3.73%)

Monthly Contributions $753.77 (401k)
SPY Performance +0.62%
My Monthly Investment Performance -3.93% (-4.55% vs SP500)
My Monthly Individual Stocks Performance -7.08% (-7.70% vs SP500)

Retirement Nestegg Report – March 2014

Well I guess things can’t keep going up forever and I can’t destroy the SP500 every single month. After breaking $400k for the first time earlier this month my portfolio took a little dip backwards and my investments greatly under-performed the market this month. The only saving grace was that my employer’s very generous 401k matching and bonus program both hit this month so about an extra $8k went into my 401k this month that makes the month not look quite as bad as as it actually was.

To be honest I feel much more comfortable with things heading south especially after the almost unprecedented run-up and prosperity we have seen in the stock market the last 5 years, I’m still somewhat young and have a long investing career ahead of me so the more pessimistic the stock market is the better off it will be for me in the long run.

Taxable Account – $5,336.62 (-1.43%)
Traditional Rollover IRA – $32,879.53 (-5.21%)
My Roth IRA – $103,836.82 (-6.70%)
Wife Roth IRA – $57,565.12 (-4.97%)
Traditional 401k – $187,559.51 (+4.85%)

Roth/Traditional % = 44.59% (tax free)

Total Retirement Nest Egg $387,177.60 (-0.94%)

Monthly Contributions $8,483.36 (401k)
SPY Performance +0.69%
My Monthly Investment Performance -3.11% (-3.80% vs SP500)
My Monthly Individual Stocks Performance -5.83% (-6.52% vs SP500)

Interum Retirement Nestegg Report – I broke $400,000

Well I never in my wildest dreams would have thought I’d be writing this post so soon, but today my retirement nestegg topped $400,000 today. It was less than 9 months ago that I broke $300,000 and $200,000 16.5 months before that, and $100,000 28 months before that and five years before that I started investing.

Once again the power of compound interest is becoming crystal clear as you follow my retirement nestegg.

Taxable Account – $5,435.18
Traditional Rollover IRA – $35,121.03
My Roth IRA – $112,779.11
Wife Roth IRA – $61,867.48
Traditional 401k – $186,251.10

Total Retirement Nestegg – $401,453.90

$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%)

Retirement Nestegg Report – February 2014

Well another great month for the stock market and another great month for my retirement nestegg. Once again my investments outperformed the SP 500 and my retirement nestegg is inching up on $400,000 – which is absolutely mind boggling since I just hit $300k in July! This also marks the 100th monthly report in a row that I have done for this blog.

To put the power of compound interest into perspective – my first monthly report was filed in December of 2005 and my nestegg was at $24,616.93 and that had represented over 3 years of savings to that point. This month my retirement nestegg grew by $21,177.32.

Taxable Account – $5,414.22 (+3.76%)
Traditional Rollover IRA – $34,686.58 (+4.71%)
My Roth IRA – $111,290.81 (+6.50%)
Wife Roth IRA – $60,576.09 (+7.40%)
Traditional 401k – $178,886.48 (+4.94%)

Roth/Traditional % = 44.59% (tax free)

Total Retirement Nest Egg $390,854.18 (+5.73%)

Monthly Contributions $742.72 (401k)
SPY Performance +4.31%
My Monthly Investment Performance +5.53% (+1.22% vs SP500)
My Monthly Individual Stocks Performance +6.38% (+2.07% vs SP500)

What am I saving money for?

This seems like kind of a horse after the cart type of moment, but I’ve more recently started to wonder what I am saving all of this money for. My retirement nestegg has grown exponentially and overall I think I have done a pretty decent job of saving a significant portion of my income for retirement.

I’ve set goals and have met them and I have toyed with setting new goals for myself. For example I set that $1M for 40 goal 2-3 years ago and never wrote a post as to what, why, or how I was going to do that. Part of the reason was that I didn’t know really the why and well the how part really relied on my investment returns which as we no tend to not be a linear/stable thing you can project over a short period of time like five years.

So take a step back – ever since I was in high school I knew that I wanted to live below my means and let compound interest work its magic. I am sure in high school I was leaning more towards the man if he let this money compound for 50+ years would have many millions of dollars at his disposal at 70 years old.

Then as I left college and began my working career and contemplated a family I knew that the idea of retiring early would definitely appeal to me. In fact my wife was going to school for teaching and shortly after graduation I was seriously considering going and getting a masters degree in teaching so that I could have summers off with my wife and our future family.

Then I realized teachers don’t make much dough so maybe it would be better for me to stay in a high paying field like computer science, get my MBA instead, save like crazy when I was young, and then when I was older and money didn’t matter that much maybe pursue that teaching thing as an early retirement.

In my MBA classes we had a class where you basically figure out what you want from life and what you want your career to be – in the end somehow I settled on college professor. Again I would have summers off, flexible schedule, and well the money was better than teaching high school, but then there is that whole PHD thing.

So while I never had a solid plan one recurring theme was having summers off with the family and saving money early on in my life to give me the freedom to pursue other options where the schedule was great and maybe the pay was not so great.

Well here I sit I am 34.5 years old and have accumulated 4 children that I have grown fond of. I have a retirement nestegg of nearly $370k, another $170k+ in cash savings, and a few other assets. I still have my mortgage $110k+ and some student loans of about $40k. So right now I have a liquid net worth of $400k+, though most of that is tied up in retirement plans that aren’t easily touched before age 59.5.

My career is going very good and I am able to save support my family of six while saving a significant amount of cash each year. I could have actually made probably a lot more money in my career, but have I shunned overtures by my bosses to take on higher roles or to relocate to Europe for the sole reason that I like my current work/life balance and if anything I would like to scale it back even further rather than go the other direction with more responsibility and more money. I have more money than I can use right now and the call of more money, a fancier title with more responsibility, advancing my career, or relocating to fancy places around the world does not appeal to me at all.

My wife has been able to stay home with our children and has graciously put off using that teaching degree until our kids are all in school. Ideally it would be awesome if when she decides to go teach full-time again that I was also able to convince my work to allow me to have a similar schedule if I took a proportional paycut. I am not sure if this will fly or not. I am well respected and valued and I do work for a European company where in Europe many of my colleagues have 6 or more weeks of vacation, but I do work in the USA and my boss even in my last performance review said he was disappointed that I was looking to keep a good work/life balance and not interested in taking on higher roles with my skill-set – so me turning around and asking to reduce my workload by 25-30% more might not go over well.

I could also take another step backwards in my career and go back to consulting and just work it out with a local consulting company that I don’t work during the summers – I think this may be more doable.

Regardless I need to be in an even better financial situation where I am not so dependent upon my primary job to provide for my family. This may require me to start saving more money in taxable accounts that are more easily accessible while I am younger than age 59.5

Conclusion
So if I had to cut this very long post down to a simple conclusion it is that I am saving money so that I have the freedom to spend more time with my family while they are young – especially during the summers. I want the flexibility and freedom from not having to pursue a job that does not fit this schedule.