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My Investment Holdings January 2017

My Investment Holdings January 2017

In annual tradition I will list all of my current investments. These really do not change significantly from year to year as I don’t do a lot of buying and selling and well now as my portfolio has grown so big the amount of money I am putting in towards new investments tends to be sort of insignificant.

That being said there was some movement around this year. The mutual funds are part of my 401k and are a very similar percentage of my overall retirement nestegg. I max out my 401k each year and kind of just set it and forget about it. My 401k makes up about 45% of my nestegg.

My individual stock holdings comprise of about 30-40 stocks with the new addition this year being that I am now including some private stock I had previously not included that is actually my largest individual stock holding. My top 5 public stock holdings this year are Netflix, Tesla Motors, Amazon, Buffalo Wild Wings, and Under Armour which are the same five from last year with a few of them flipping spots.

I feel super good about that top 5. My Tesla stake has increased due to the large investment I had in Solar City which the acquired as well as most of my investment money this year going to Tesla. I feel very strongly that their future will be very bright and have a big enough and diversified portfolio that I can probably take a larger risk there without it really affecting my overall portfolio too negatively.

SYMBOLPercentage
VPMAX11.49%
VIEIX11.48%
VINIX11.38%
VILVX10.73%
Private Bank Stock8.95%
NFLX6.47%
TSLA6.44%
AMZN4.59%
BWLD4.38%
UA4.15%
SBUX2.57%
CMG2.53%
AAPL2.19%
MIDD2.02%
BOFI1.28%
BRK-B1.22%
AMBA1.17%
BIP1.12%
BJRI0.94%
PNRA0.89%
ANET0.61%
TXRH0.60%
IPGP0.56%
ISRG0.38%
ZOES0.34%
COST0.28%
PRLB0.27%
SHOP0.26%
DDD0.25%
PCLN0.22%
SAM0.15%
SSYS0.09%
Retirement Nestegg Report December 2016

Retirement Nestegg Report December 2016

Overall a pretty disappointing year for my Retirement Nestegg. My investments greatly underperformed the market and the market was up a nice amount this year. Overall this is an anomaly based on my previous 10+ years of investing and will not cause me to make any rash changes to my investment philosophy. It is still frustrating though especially when my account is large enough now where even average investment performance probably would have pushed me over the $700k mark.

One area where I knocked it out of the park this year was in my investment contributions. I contributed a record $67,350 to my retirement accounts this year. Part of this was a $25,000 contribution I made to a taxable account with left over money we had after building our house. Overall I want to continue to bump up our taxable account as we start ramping up for early retirement.

Taxable Account- $43,553.69 (+2.25%)
Private Stock $60,000 (+0.00%)
Traditional Rollover IRA – $29,225.55 (-5.47%)
My Roth IRA – $150,481.80 (+0.83%)
Wife Roth IRA – $85,092.60 (+4.94%)
Traditional 401k – $302,111.57 (+2.06%)

Roth/Traditional % = 35.43% (tax free)

Total Retirement Nest Egg $670,465.21(+1.60%)
Retirement Salary (4%) – $26,818

Monthly Contributions $653.13 (401k)
SP500 Performance +1.82%
My Monthly Investment Performance +1.51% (-0.31% vs SP500)
My Monthly Individual Stocks Performance +1.48% (-0.34% vs SP500)

My retirement contributions for 2016 $67,350.70
401k $18,000.00
401k matching $12,350.70
My Roth IRA $5,500
Wife Roth IRA $5,500
Taxable Account $26,000

SP500 Performance for 2016 +9.54%
Investment Performance for 2016 +3.32% (-6.22% vs SP500)
Individual Stock Performance for 2016 -4.57% (-14.11% vs SP500)
Total Investment Return 2016 +$17,455.46

Retirement Nestegg Report November 2016

Retirement Nestegg Report November 2016

Well another all-time high for my nestegg, but another month of disappointing performance by my individual stock holdings. Overall this year my stocks have trailed the market quite significantly in part to under performance by some of my key holdings like Tesla, Chipotle, Under Armour, Netflix and others. Overall I am not too concerned but it does get frustrating watching the market beat me month after month in 2016. The good news is I have about half of my portfolio in market index funds so not all hope is lost and so far over longer periods of time I still have outperformed by quite a significant margin with my individual stocks, but this is not one of those years. Luckily though I feel as confident as ever that the aforementioned under performing stocks will greatly reward me in the future.

Taxable Account- $42,594.38 (+3.44%)
Private Stock $60,000 (+0.00%)
Traditional Rollover IRA – $30,915.37 (+9.14%)
My Roth IRA – $149,245.46 (+2.90%)
Wife Roth IRA – $81,088.55 (-1.50%)
Traditional 401k – $296,022.09 (+4.78%)

Roth/Traditional % = 35.43% (tax free)

Total Retirement Nest Egg $659,865.85(+3.20%)
Retirement Salary (4%) – $26,394

Monthly Contributions $1,371.16 (401k)
SP500 Performance +3.42%
My Monthly Investment Performance +2.99% (-0.43% vs SP500)
My Monthly Individual Stocks Performance +2.35% (-1.07% vs SP500)

Retirement Nestegg Report October 2016

Retirement Nestegg Report October 2016

Taxable Account- $41,179.18 (-5.75%)
Private Stock $60,000 (+0.00%)
Traditional Rollover IRA – $28,325.27 (-8.74%)
My Roth IRA – $145,046.18 (-1.68%)
Wife Roth IRA – $82,327.47 (+0.89%)
Traditional 401k – $282,527.68 (-2.24%)

Roth/Traditional % = 35.43% (tax free)

Total Retirement Nest Egg $639,405.78(-2.06%)
Retirement Salary (4%) – $25,576

Monthly Contributions $1,371.16 (401k)
SP500 Performance -1.94%
My Monthly Investment Performance -2.27% (-0.33% vs SP500)
My Monthly Individual Stocks Performance -2.30% (-0.36% vs SP500)

Retirement Nestegg Report September 2016

Retirement Nestegg Report September 2016

Taxable Account- $43,689.79 (-3.71%)
Private Stock $60,000 (+0.00%)
Traditional Rollover IRA – $31,038.00 (-3.99%)
My Roth IRA – $147,529.06 (-1.26%)
Wife Roth IRA – $81,598.29 (-1.29%)
Traditional 401k – $288,999.95 (+1.31%)

Roth/Traditional % = 35.43% (tax free)

Total Retirement Nest Egg $652,855.09(-0.33%)
Retirement Salary (4%) – $26,114

Monthly Contributions $1,371.16 (401k)
SP500 Performance -0.12%
My Monthly Investment Performance -0.54% (-0.42% vs SP500)
My Monthly Individual Stocks Performance -1.91% (-1.79% vs SP500)

Financial Goal Checkup: My very own basketball court

Financial Goal Checkup: My very own basketball court

About 9 years ago I posted a kind of an unique financial goal on this blog – I wanted my very own full court basketball court.

In roughly 5 years time I want to have enough money put away so that I can build a house out in the country with a full court outdoor sportcourt basketball/volleyball/tennis/etc court. — MFJ 2007

Well I am here to report on the progress of this not often mentioned financial goal I had for myself. Well the good news is that I saved quite a bit of money for that house out in the country starting in 2007. In fact I ended up saving $180k+ in cash for our move to the country, new house, and of course basketball court.

The bad news is it took us a lot longer to find the perfect land out in the country and we didn’t actually build until 2016. This also happened to be one of the greatest times to invest in the market in my lifetime so that $180k probably cost me double that, but the good news is that I can now report that we have secured 15 acres out in the country, built our dream house, and if you open the oversized garage you will find my very own basketball court.

IMG_6340

Now in my original post I had always envisioned an outdoor sport court type basketball court, but given the fact that I live in WI I figured the bigger bang for buck would be to move it indoors so that I can use it year round and cost constraints ended up making it a half court, but I am still very happy with how it turned out. Our garage is nearly 1500 ft and it is a great spot for the kids to play regardless of the weather.

The best part is I was able to pull this off while still accumulating a sizable nestegg despite having only one income and raising 5 young kids. I’m sure many people will view this as an extravagant expenditure that set my early retirement back years. And it is! It’s totally unnecessary and so is our mansion in the country, but it is also something that I have wanted for a long time (blog post in 2007) and something our family will enjoy for years to come. Life is about balance and we have put ourselves in great financial shape where we can afford anything we want, just not everything we want 🙂

We have five young kids and while I could have amassed a much larger nestegg or achieved Financial Independence much earlier if we had continued to live the status quo – it likely would have come at the expense of our memories we get to create with our children in the short period of time they are in our house. No sense in becoming financially independent eating rice and beans and try to get the kids to come over and play basketball with when they are 25 and I am 50 🙂

The biggest thing is we set ourselves on a very solid foundation in our early years where as I’ve said before that by setting and reaching goals in our 20s we put ourselves in such a good situation that it will be hard for us to wreck ourselves financially by wanton spending in our older years (30s & 40s). We still are spending money on things that bring us value and happiness and minimizing spending on things that do not. I still drive a typical MFJ pimp ride (wife’s used car we bought 13 years ago) and we are still saving a good portion of our income and on the path to financial independence in our early 40s. We just happen to have a basketball court in our garage 🙂

IMG_6370

The path forward to two commas ($1M by age 40)

The path forward to two commas ($1M by age 40)

I’m sure I’m not unique and I’m sure every financially savvy person has contemplated the day when their net worth / account balance will surpass the magical $1,000,000 mark. When I started this blog in 2005 I put together a goal of having saved $100,000 in money for retirement by age 30, because as we all know saving the money while you are young allows compound interest to kick some butt on your behalf.

Well in August 2009 the deadline for my $100,000 by Age 30 goal came and while I fell just short I had put myself in a great shape financially going forward. I immediately did the smart thing and laid out the next goal $1,000,000 by age 43 and even put a nice little tracker on my blog with the (post coming) and then proceeded to never sit down and write the post

InvestingGoals

Even before I started this blog at age 26 I had created excel spreadsheets forecasting my savings into the future and estimated returns and always seemed to come up with age 42 or 43 as to when I would cross the 1 million dollar mark. In my heart I always wanted to hit it by 40, but I never seemed to get the math to work with my then 21 year old brain which if you know a 21 year old probably wasn’t all that sharp.

Ironically when I created my little tracker for when I would hit $1M I relied on the calculations I had done even before I got my first job instead of doing the simple math and probably realizing with a little hard work $1M by 40 was probably attainable. So I probably set the bar too low and then I compounded that mistake by not putting together any meaningful plan as to how to achieve it and just figured by just using the status quo of me randomly living frugal and saving money by chance I would hit that mark.

Well today I’m going to actually look do the math and see where that status quo puts me and see what it will take for me to hit $1M by age 40.

Scenario 1 – Do nothing and let the market do the work for me.
I very recently had my retirement nest egg cross the the $600,000 mark and I have 3 years until my 40th birthday. In my last annual report I decided to include another $60,000 of private stock I own. If I were to never put another penny into the market I would need to have annualized returns of 14.86% over the next three years for my accounts to hit $1,000,000.

Odds of Success: 10%
Commentary: This would be a rather poor approach as it relies 100% on things out of my control and would rely on very unrealistic and uncharacteristic returns by the market as a whole or me to do something even more stupid and take on a idiotic amount of risk that would likely result in me putting together a new $100,000 by Age 45 post than it would welcoming me into the double comma club.

Scenario 2 – Average market returns – plus ho hum contributions.
If I expected annual returns of 10% I would need to contribute $38,000 to my retirement each of the next 3 years in order to hit the $1 million dollar mark.

Odds of Success: 40%
Commentary: The first problem with this plan is that it requires 10% annualized returns – which while that is historically an average return, the market is anything but a constant and almost never returns anything near 10% for a single year and is often much higher or lower than that.

Scenario 3 – Continue contributing as planned and hope for strong market returns
I currently have budgeted that I will contribute about 50k a year to our retirement accounts. I feel like this is very doable going forward as my 401k and employer matching account for about $29,000 per year. If I max out mine and my wife’s Roth IRAs that is another $11k and then I need to put $10k into a taxable account that will help the transition into early retirement by giving me an account with less strings attached to the money. If I were to do this I would need to achieve about 8.73% annualized returns from my investments.

Odds of Success: 60%
Commentary: I feel like this is probably the most well balanced plan. It is also ironically the path forward that I was already taking, but it gives me a little assurance that the math kind of works out.

The big question mark is what the market will do the next three years – which as anyone with any sense will tell you is that they have absolutely no idea. The market could be down all three years or it could be up significantly. Historical market average is around 10%, but almost never during a 1 year period will the average return be anywhere close to that and it doesn’t get a whole lot better in a short period of time like three years.

Ultimately this is the reason my $100,000 by 30 goal was all about contributions as it was entirely in my control, but that ship has sailed and going forward the whims of the market will be what is controlling my ship versus what I am doing.

The other item to factor in is my ability to put way $50k per year into my retirement accounts. The last two years I averaged $45k and while I’m already close to $60k this year that included a $25,000 boost from my cash savings that was a one time thing.

It certainly is possible for me to save that much money but we currently built some extravagant mansion out in the country with a $300,000 mortgage, have 5 kids, and a million home improvement projects lined up for the house so it may come down to a choice of spending like drunken sailors or hitting the $1M mark or finding ways to bring in additional income.

One wildcard with this scenario is that my wife does not currently have an income producing job as she is raising our five kids could theoretically land a teaching job in the next year or two or come up with other ways to make money which would definitely help on the income part and increase our odds.

Conclusion
It appears I am definitely on the right path and I have a couple of plausible scenarios to get me to my goal. I obviously will be targeting Scenario #3 which has the highest odds of success, but it is also apparent to me that this goal is very much out of my hands at this point. It reinforces that the real power to have drastic affect on your future wealth is achieved at a young age many years in the past. This sets the foundation and you are able to just plow through the choppy market waters and keep moving forward.

Once enough time has passed and your nest egg has grown to sufficient size you are a captain on a large ship with a tiny rudder and you are able to make less of an impact than you could 5 or 10 years ago. The only caveat to that statement is that your rudder right now is much larger than it will be 5 to 10 years down the road so while your saving habits certainly have less affect overall than they did in the past they certainly have much more than they will down the road. Which is fine because hopefully at that point I am just on the ship enjoying the view.

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