Retiring Early

Saturday, September 01, 2007

August Net Worth Update (up 1.87% to $988,082)

growth chartIt's been a few months since I've done a real monthly update here on the blog, so I thought I'd take the time to provide an update.

First off, I've been busy as all heck on all of my other projects and writing the blog has taken a bit of a second priority, but do expect me to chime in every now and then over the next few months.

On the surface, this month looks like a great month, but let's dig into the details a bit further. First off, this was an absolutely brutal, brutal month in the market with huge swings, hedge fund redemption selling, periods of low volume and economic stories.

All told, I lost nearly 9% of my portfolio value (or $51,000 if you're playing along) from mid-july to the low in mid-August. Paper money? Yes. Was I nervous? Heck yeah.

Thankfully, it wasn't worse because I was holding a fair bit of cash and even though I was starting to buy into the market as it was dropping, I never committed my full amount of sidelined cash. Also, from mid-August to now, the market has rebounded nicely, although it's still off the highs. With ongoing help from the Fed and now Bush on the sub-prime issue, I can see the market ending the year higher over the next four months and ultimately the correction and following consolidation was a good thing for a move higher.

Although it looks like the portfolio has come back almost entirely from the lows, it really has only regained about $26,000 of that $51,000 lost. The other gains that make August look like an "up" month, were due to a) three prior stock awards in the amount of about $15,600 after taxes, b) 401k and c) ESPP contributions.

Three other points about the current month:
  1. Although I have bought a few equities during the correction, I continue to hold nearly $65,000 in cash. I'll continue to look for opportunities to put this cash to work and I think the time is pretty ripe right now.
  2. I continue to pay down the mortgage and am on track with my mortgage goals for the year. As a reminder, the plan is to pay double mortgage payments for the next few years with the result being a fully paid off home. Double payments are being made possible by reducing expenses, not through savings withdrawals. The ending mortgage balance goal for this year is: $144,000 (stretch goal of $135,000), and I'm still on track.
  3. On the front, I have $3000 principle invested into 22 loans, and this month, I had one loan go into default. The Proper collection agency was able to recover about 15% of the loss making my net loss only $80 after all was said and done. All other loans are current. Although I am still making over 16% on these loans, I stopped funding new loans in June. If sub-prime folks (same folks getting loans on Prosper) can't pay their mortgages and keep their homes, does anyone really believe they'll have enough money to pay back these loans? There's definitely much more risk for Prosper loans now and I'm not jumping out in front of that truck. There's nothing I can do about the current loans, but at least they are being paid back methodically and don't appear to be in trouble (yet).
Anyway, that's the update -- Things are still good and it looks like I'm only $12000 away from my first Mil mark. Hopefully I should be able to meet that milestone by the end of the year.