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.

Retirement Nestegg Report – January 2014

Well I we started out 2014 with a down month for the market and to be honest that kind of excites me. Again I am young and am contributing so a bad market benefits me tremendously. Also as you can see I put over $9000 of new money into my accounts this month so have money to deploy should things start falling.

Once again I have bested the SP500 by a significant margin and while the time period is still short I am very excited at the prospect that I will be able to get market beating returns with my individual stocks and this will increase the already amazing power of compound interest. We will see – everyone feels like a genius during a bull market like we have had for the last 4-5 years, but overall things are going pretty well for me so far and its possible I have the right long term mindset to be able to beat the odds that so many investors face when trying to get above average returns.

Taxable Account – $5,218.22 (+83.73%)
Traditional Rollover IRA – $33,125.25 (+14.29%)
My Roth IRA – $104,502.73 (-1.34%)
Wife Roth IRA – $56,404.15 (+0.84%)
Traditional 401k – $170,426.51 (-1.58%)

Roth/Traditional % = 44.12% (tax free)

Total Retirement Nest Egg $369,676.86 (+0.77%)

Monthly Contributions $1,105.11 (401k) $2,500.00 (Taxable) $5,500.00 (Traditional IRA)
SPY Performance -3.56%
My Monthly Investment Performance -1.71% (+1.85% vs SP500)
My Monthly Individual Stocks Performance -1.26% (+2.30% vs SP500)

Whoops I saved another $100,000 and didn’t even try

Probably one of the more popular things I’ve done on this blog was set the goal of having saved $100,000 in retirement accounts by the time I hit 30. I ended up falling just short of that goal, but overall it was a great exercise.

Since then I have really been in cruise control (probably not a great thing) and I thought I had been doing a horrible job saving for retirement as I was saving fairly aggressively for a new house – in fact that was the reason I fell short of my original goal to save $100k by age 30.

Last January I had mentioned that I had enough money in our house savings that I could pay off our mortgage entirely. A year later and my house savings has grown by over an additional $50,000. It honestly makes me sick knowing that I have that much money sitting there doing nothing for me, but given what we think we want in regards to a large chunk of land out in the country I thought it was necessary.

So here I sit I have over $175k in cash waiting to get lit on fire for a house/land purchase and I feel like the biggest bozo in the world knowing that this money could be used and should have been used to get me very much on my way to becoming financially independent and I was doing the bare minimum when it came to my retirement savings.

I decided to do the math since I completed my original $100,000 by age 30 goal less than 4.5 years ago and it turns out since then I have saved $101,691.90 or about $22,500 per year. While it’s not that impressive by itself is pretty good when combined with the amount of money we also were simultaneously saving for the new house and land.

Since I started this blog at the end of 2004 – I have saved roughly $377,000. That works out to about just under $42,000 per year.

I do not micro-manage my finances as I don’t feel the effort is worth it. I know my wife and I share a similar mindset so it doesn’t take any kind of special effort or sacrificing on our part to control our spending where as a result of our relatively modest income and supporting our 4 children we are still able to save a decent chunk of change.

So what’s next – well the reason I actually went through this exercise was to kick myself in the butt about being such a slacker when it came to saving for retirement. I also have been doing some considerable thinking with regards to what I am trying to accomplish financially here.

I set some great short term goals for myself, but the last few years I have been flying aimlessly in the wind when it came to what I was trying to accomplish next. I have some ideas as to what I want to accomplish and think I have started to piece together some visions I had for myself going all the way back to college, but wasn’t sure how I would accomplish them. I think I now know how I can do this and this excites me.

So look forward to some posts in the near future and a renewed sense of excitement as I set some new goals for myself here.

My all-time investment performance January 2014

I figured this is something I should be doing now that I have enough history to take a look at my investment performance over the long term versus the market. Since I have made the decision to invest solely in stocks in my IRAs I need to take a look to see if that decision is paying off or worth the trouble. I do track this with each monthly report as well as each yearly recap – but I have never taken the time to look at my investment performance since the beginning of time.

Now granted this year is very much in my favor so don’t anoint me as the next Peter Lynch just yet, but I have to say I was very pleasantly surprised to see how well I am doing when you stack it all together.

Since I started tracking my values on this blog in 2005 my investment performance for all of my investment vehicles (401k, Roth & Traditional IRAs) has resulted in a total investment return of 74.01% over the last 8 years for an annualized return of 7.17%. Meanwhile the SP500 over that same period of time has returned 29.81% or 3.32% annualized return. So my performance has been over double that of the SP 500.

Now since the vast amount of my 401k is an Vanguard Index Lifestyle fund that is closely tracking the SP 500 you will wonder how I outperformed the market so well. Well about half of my retirement nestegg is in my and my wife’s Roth IRAs which are invested 100% in individual stocks trying to beat the market. Over the same 8 year period of time my individual stocks have returned 160.55% total investment return or just under 12.72% annualized returns or over quadruple the returns of the SP 500.

Cummulative Returns By Year
Total Investment Performance 2013
YearMFJ StocksMFJ NesteggSP500
200614.20%14.37%15.79%
200722.48%20.66%22.15%
2008-22.84%-37.23%-24.56%
20094.77%-16.68%-4.60%
201043.47%3.82%7.65%
201140.19%-1.92%-11.73%
201254.56%15.85%0.16%
2013160.55%74.01%29.81%