Retirement Nestegg Report June 2020

Retirement Nestegg Report June 2020

Well another nice month with the market being up 1.84% and my nestegg growing by 11.77%. Wait What?? This is getting ridiculous with my individual stocks returning 17.81% just this month and 68.31% in just the first 6 months of the year compared to SP 500 which is actually down 4.04% YTD for a market outperformance of 72% YTD!!

Just this month our nestegg grew by over $176,000 in a single month. Clearly this cannot and will not go on forever, but it also does not need to.

Individual stocks and outperformance of the market are not needed to retire early and were never part of the equation and still aren’t going forward. It was a risky experiment that I’ve dabbled in with a relatively small portion of my retirement nestegg savings and just turned out that I was incredibly lucky and that small portion of my nestegg savings has now grown to a ridiculous large number.

This is something that I will eventually pair back to more index funds, but right now the individual stocks driving the outperformance I believe have a long bright future so it will be tough for me to make this call. The good news is even if I am wrong I can afford to be wrong and still go on with life without any worries.

This is something that I don’t know what to call other than a margin of safety but there should be a cooler word for it. The 4% rule assumes you have a portfolio of 50% stock and bond index funds. I’ve always argued why not have 100% stock fund as it has higher returns over the long term and honestly the volatility is only relevant to you if you quit right at or close to your 4% number and have an immediate market correction. If you are well within a margin of safety above your 4% number say 30-50% higher then volatility is irrelevant and I would think the odds of your portfolio surviving and thriving long term are very close to 100%.

Same with these individual stocks – clearly no sane person would recommend putting a large portion of your retirement nestegg in a small basket of individual stocks that will be even more volatile and risky, but I’ve allowed myself to dabble with a small percentage of my portfolio and even if they all went to $0 I wouldn’t have ruined my retirement chances. The issue now is they are so large having grown so much that there is some risk to my portfolio and when we decide to live on our investments we will greatly pair back the individual stocks into index funds and use our time and energy into enjoy life vs having to do anything with our portfolio.

For the record I consider myself primarily lucky with a small percentage of skill in picking individual stocks and would recommend that anyone saving for retirement just put their money into VTSAX and not worry about anything else.

Fidelity Taxable – $5,261.33(+14.11%)
Taxable Account- $128,922.81(+18.64%)
Private Stock $72,000 (+0.00%)
Traditional Rollover IRA – $68,563.58 (+13.41%)
My Roth IRA – $531,548.40(+18.34%)
Wife Roth IRA – $315,723.19(+17.58%)
Wife 401k – $4,602.43(+1.96%)
Traditional 401k – $544,780.32(+3.29%)

Roth/(Traditional+Taxable) % = 50.69% (tax free)

Total Retirement Nest Egg $1,671,402.06(+11.77%)
Retirement Salary (4%) $66,856

Monthly Contributions $1086.50(401k)
SP500 Performance +1.84%
My Monthly Investment Performance +11.70% (+7.14% vs SP500)
My Monthly Individual Stocks Performance +17.81% (+15.97% vs SP500)