Retiring Early

Saturday, January 20, 2007

December Net Worth Update (up 1.26% to $915,500)

growth chartOk, so I didn't really get this one out in a timely fashion. It's amazing how the first few weeks of the new year can pull you in so many directions. It has been a heck of a busy new year so far!

Anyway, I'm back and here's the update:

Not a bad month at all to end the year. Overall, my stock gains were up 2.16%, but I used some of these proceeds for other purposes so the gain showing at NetworthIQ is shown a bit lower (see below). Also, my retirement gains were up a meager .69%, given that I moved into some cash early in the month. Following are the details:
  1. Investment gains were great, but mostly due to end of year dividends. I racked up around $6000 in dividends and long term capital gains (from mutual funds) in the last two weeks of Dec. Also, I sold about $9000 worth of company stock (@ the 15% capital gains tax rate) and purchased another $5100 in company stock through our quarterly discounted employee stock purchase plan. On the one hand, it's great to have this stock, but on the other hand, it's quite a challenge managing how and when to get out of it.
  2. As expected, I paid down the mortgage to meet my goal of $170k by the end of 2006. Given that I far exceeded my brokerage account goal for the year, I moved $5k from the brokerage account to realize this goal. To summarize, I've paid down $30k of the principle on my $200k mortgage this year (or 15% of it). Without extra payments, I would only have paid off $5400 (or 2.7%). That a huge accomplishment towards having this baby paid off by retirement in 2011.
  3. On the front, I have $3000 principle invested into 15 loans, returning an average of 15.89%. All of these loans are current and I'm pretty comfortable with the whole thing so far. It's still more of an experiment for me, so don't expect me to all of the sudden dump $50k in there.
That's it, a pretty basic month.

On final comment I'll throw out there: overall, I'm a little nervous with the market right now. I'm in the camp that says we really need a decent correction at the current levels to be able to go higher. Consolidation in my mind always makes the markets stronger. To this end, I'll continue to hold the cash ($62k in my retirement account) that I have, as well as look to take some profits off the table (around $30k in my brokerage account) to position myself to buy the dip as it materializes. In my mind, it's not if, but when.



  • At 1/20/2007 4:38 PM, Blogger mOOm said…

    I agree on an upcoming "dip". But the summer rally went on much longer than I thought possible. My strategy for my own and my Mom's accounts is to hold off on buying more stocks until we have a substantial correction. My forecasting models are only for very short-term trading over a week-long horizon. The longer horizons are far more fuzzy. The thing is that stocks are not overvalued at current earnings levels. We would need to see stronger evidence of a recession than we're currently seeing to justify a decline on fundamental grounds. Technical indicators are rather ambiguous at this point.

  • At 1/20/2007 10:48 PM, Blogger pfstock said…

    I was beginning to think that you had disappeared... I have actually sold off much of my stock holdings in the last few months of the year. I am now finding it very difficult to find new investments that I think have a much greater chance of appreciating than of going down. But, up or down, the stock market doesn't make me "nervous". It used to... but I now feel that either direction presents a new, different set of opportunities.

    In your post, it is unclear why you consider long-term capital gains (from mutual funds) to be a net positive. Typically, the distribution is a wash since mutual fund shares are expected to decrease in price by an amount equal to the distribution. And you owe taxes on the distributions (in a taxable account), thus mitigating the benefits of compound growth. That said, I usually prefer funds with smaller capital gains distributions (unless they are held in an IRA).

  • At 1/22/2007 8:15 AM, Blogger fin_indie said…

    I see too much optimism, thus the comment about being "nervous". I'm not saying there aren't opportunities, but for me, those are probably going to materialize in the next three weeks or so.

    On the topic of long-term cap gains: they are not a net positive. Some of these holdings are held in tax-advantaged accounts and some not. Trust me, I'd rather not be realizing this income now, but in some cases, I don't really have that much control, either.

    For instance, I have an incredible emerging markets fund in my taxable account. The fund returned nearly 40% last year, and for some reason, it threw off a large dividend. My choices were: 1) own it in a taxable account and deal with the income or 2) miss out on the 40% return since I couldn't own it in my IRA (it's a sizable position) and the fund just simply isn't offered in my 401k.

    My IRA is stuffed with my REIT holdings to skirt the income issue, but there just isn't enough room in there for all of these income generating investments.

    Note to self: need more funds in tax-advantaged accounts!

  • At 1/26/2007 9:20 PM, Blogger mOOm said…

    Mutual funds must pay out all realized gains, dividends received etc. net of expenses and so a big gain is likely to mean a big dividend (except when there are big inflows of funds).


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