Retirement Nestegg Report – April 2014

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)

  • rdr1144

    Hi,

    I have been following your blog for quite some time, as it has been a great guide for my financial journey as you are a few years older than I am. I am also looking at purchasing land and was wanting to know your strategy for buying/financing the land, then going to a construction loan. Do you plan on using the land as collateral to build, or are you able to do that? Or do you plan to have the property deed in hand, then put up an additional 20% for construction. I haven’t spoke with any banks yet, but I was hoping to get some good advice before I went into a bank. If you could post something on your website about the process or your plans to build and how to make your cash flow work the best for you, that would be great.

    P.S. I was able to hit the $100,000k by 30 years old 1 month before I was 30 and your blog definitely helped me have the inspiration to accomplish that.

    Thanks,

    rdr1144

  • MFJ

    Hi rdr1144 –

    Thanks so much for the comment and congrats on hitting your $100k by 30 goal! I too got started because of another blogger and its amazing what you are able to accomplish once you get some inspiration – glad I could play a small part in that.

    Now regarding the land purchase – I ended up paying cash for the land rather than finance it since I had the cash on hand. I will be able to use it as collateral/down payment when we build our house. Now that being said we ended up paying over $8000 per acre and the bank said they would value it at $5 to $6k per acre so that is what it would be worth to them as collateral which will still be more than enough to cover our 20% down. That being said I have still kept another cash cushion just to be safe.

    It’s really been a struggle for me keeping that much cash around when I could put it to use in many other spots working for me (such as paying off our existing mortgage), but I wanted the flexibility of never having to have to rely on a bank approval if something came up and we needed to move fast.

    We are still in the design phase, but once we have finalized plans we can bring them to the bank and talk about construction loans – which the builder will use basically as a line of credit he can draft from as he needs cash for various sources during the build. In the end it will be converted to a conventional mortgage.

    My recommendation would be to just swing by a local bank you have a relationship with and ask them how their normal process works – my guess is it will be similar, but each bank has a little different process/requirements so it’s best if you know the ropes before you start making the big decisions. It’s a daunting enough process without any surprises along the way.

    I will see if I can put any useful information up here about the building process. Right now I just have vacant land which actually is being rented by a farmer for a very nice sum of money for the summer and we are going round and round trying to finalize our house plans, pick a builder, and a building method.

    Thanks again for the comments – I forget sometimes that people still follow my blog. Also apologize for the slow reply – my commenting system doesn’t notify me when I have new comments for some reason so I don’t see new comments as quick as I’d like.

    Later,
    MFJ

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