Retiring Early

Saturday, December 02, 2006

November Net Worth Update (up 2.27% to $904,687)

growth chartAgain, another good month with a lot of little things going on. Overall, my stock gains were up 3.71%, but I used some of these funds for other purposes so the gain showing at NetworthIQ is shown a bit lower (see below). Also, my retirement gain was 2.94%, both of which were great despite the huge one-day drop at the end of November. Following are the details:
  1. Investment gains were great. I sold my position in HOG after a near 50% run in the stock, and according to my goal of having $501k in stocks/retirement and a remaining mortgage of $170k by the end of 2006, I used some of the cash proceeds to pay down the mortgage ($12k). Also, I paid down an extra $1790 with free income cash for the month (in lieu of investing it). Note, my stocks/retirement total is still hovering around $510k after this move, so I'm quite confident I will hit my goals for the year.
  2. In December, I expect to pay down the mortgage more with free cash and hope to make the $170k balance by end of year. For me, hitting this goal is all part of the early retirement plan. At the rate I am paying it down, I should be mortgage free by 2011 (5 years), about the same time I hang up my big corporate hat.
  3. I also moved another $2000 into in anticipation of additional positive returns. I have 6 loans returning an average of 14%, all of which are low risk and "Current". I may step up the risk a bit on this next round of funding, but I'm not going overboard. I'll take a reasonably assured 14% return any day.
  4. I should point out that on the stock front, there are about $1500 worth of contributions (via employee stock program), so the gain is a little mis-represented.



  • At 12/03/2006 5:11 PM, Blogger Larry Nusbaum said…

    I can not think of reasons to pay down a mortgage, beyond the scheduled amortization.
    Just wanted to pass that along as it's something I've analyzed and thought about extensively.
    FYI: I am 52

  • At 12/03/2006 6:47 PM, Blogger fin_indie said…

    Larry, For me, I know I'll sleep better at night when I hang up my working hat, knowing that I own my home outright. It may or may not be the most logical or rational thing from an investment perspective, but it will help me sleep better at night.

    I know a lot of people have differing opinions on the topic. Have you written about it? I'd like to understand your thinking.

  • At 12/04/2006 7:59 AM, Blogger Larry Nusbaum said…

    I do not believe in "paying off" one's mortgage nor over leveraging.
    1. Not paying off: because, a payoff is a lump-sum and right now you are paying around 5% for that money. Over times, levergaed real estate will return about 3-5 times that.
    2. Since I am long-term, the loan balances go down in time and the equity goes up in time, naturally. I never go in with less than 20% down. Now, after many years, some of my properties have loans that represent about 10-20% of te current market value. And, I never had to draw down cash in an attempt to pay something down.
    It's the way you get from $904,687 to $4,000,000 some day (and still sleep at night)

  • At 12/04/2006 8:18 AM, Blogger fin_indie said…

    Larry, you seem to be making your point relative to *investment* properties, whereas I am talking about my primary residence. I have owned investment properties in the past and have kept the mortgages to no more than 50% leverage. You definitely have a point from that perspective, but primary residence in my mind, is another matter entirely. It's a simple matter of risk management, especially when you're looking at retiring around age 40.

  • At 12/04/2006 9:57 AM, Blogger Larry Nusbaum said…

    Lte's take a different view of this "question"....and, don't worry, I know it's very personal. Meaning I can't feel what you are feeling and visa versa.

    Let's say you do retire at 40. Then, if your home is paid off you can't get the money back because you have no W-2 income to qualify you for a bank loan.
    Also, are you telling me that you can't do better on your money than whatever you are paying on your home loan?
    There are longer term consequences should you just pay off your home. ESPECIALLY if you retire.
    Not trying to sway you. Just look at it from another's view....


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