Each month I’ll be keeping track of our net worth on this blog. The reason for making our net worth public is to not only hold myself accountable, but to provide a record so I can review my progress over time. I’ll be giving a brief analysis on our results for the month and what changes I’m thinking of making. Here’s how our net worth looked for February, 2017:
| January | February | $ Change | % Change | ||
| Assets | |||||
| Checking | $35,743.84 | $31,807.83 | -$3,936.01 | -11.0% | |
| Retirement accounts | $576,252.44 | $608,090.78 | $31,838.34 | 5.5% | |
| 529 accounts | $15,688.82 | $17,182.46 | $1,493.64 | 9.5% | |
| Brokerage accounts | $1,345,894.41 | $1,401,563.63 | $55,669.22 | 4.1% | |
| Private equity | $200,000.00 | $200,000.00 | $0.00 | 0.0% | |
| Rental properties | $904,962.50 | $904,962.50 | $0.00 | 0.0% | |
| Primary residence | $1,580,000.00 | $1,580,000.00 | $0.00 | 0.0% | |
| Total Assets | $4,658,542.01 | $4,743,607.20 | $85,065.19 | 1.8% | |
| Liabilities | |||||
| Credit cards | $10,068.99 | $1,014.69 | -$9,054.30 | -89.9% | |
| Rental mortgages | $523,507.48 | $522,635.63 | -$871.84 | -0.2% | |
| Primary mortgage | $757,530.00 | $755,292.61 | -$2,237.39 | -0.3% | |
| Total Liabilities | $1,291,106.47 | $1,278,942.93 | -$12,163.53 | -0.9% | |
| Net worth | $3,367,435.55 | $3,464,664.27 | $97,228.72 | 2.89% |
Assets
Checking – Not much change here. We keep a sizable chunk of money in cash for a few reasons. First, we have a number of rental properties and this allows to hand the situation where multiple properties are either vacant or have repair issues in one month. Second, I’m slowly building our cash reserve as a defensive move. As I’ve pointed out many times, I strongly feel the market is overvalued today and I’d rather hold cash than invest at these valuations.
Retirement Accounts – This includes a 401(k), a few IRAs, and a few Roth IRAs. The only account we are currently contributing to is the 401(k), as we are ineligible to invest in the rest. These were up a surprising 5.5% this month, due to the performance of the market plus contributions.
529 accounts – We are contributing $500/month for each kid, and given the low balance of these accounts I expect that our contributions will dwarf any investment returns for quite some time. We added $1,000 and got another $493.64 in gains from the market, so these accounts were up almost 10% for the month.
Brokerage accounts – This is our early retirement fund and where most of our net worth is. The brokerage account was up a ridiculous 4.1%, due to the huge gains in the market . Due to the size of our portfolio vs the amount we invest each month, the market will have a much stronger effect on our net worth than any new money we invest (or money we pull out of the account).
Private equity – 2 separate equity investments in startups. Since there’s no way to value these investments I will continue to keep them valued at my initial investment amount. Hopefully I’ll one day be pleasantly surprised to see that the companies are worth something. For now we assume these are worth $0 in our planning.
Rental properties – On the last day of each quarter I adjust the value of the properties based on Zillow’s estimate. No change this month.
Primary residence – Just like the rental properties, I adjust the value of our house at the end of each quarter. No change this month.
Total assets – Total assets were up $85,065.19 for the month. That’s a 1.8% gain, which is pretty amazing for a single month. Of course, before I start patting myself on the back I need to realize that the entire gain is due to the market’s performance.
Liabilities
Credit cards – My employer reimbursed me for some business travel expenses which meant the credit cards got paid off in February.
Rental mortgages – We paid off $6871.84 on the mortgages. Nothing spectacular, but it’s good to see the mortgage balances slowly drop every month.
Primary mortgage – We paid $2,237.39 on the mortgages for our primary residence. The goal is to have the second load (~$187k) paid off by the end of 2017. Although I don’t really consider our house to be an asset, I definitely consider our home loans to be liabilities. I think it would be difficult to retire early with substantial mortgage payments hanging over our heads.
Total liabilities – Total liabilities were down $12,163.53 for the month. Most of that reduction was due to the credit cards, as described above. For the last few years I’ve concentrated on increasing assets rather than paying down liabilities. Given the market’s current overvaluation I have changed my focus and will instead pay off the second mortgage then aggressively pay off some or all of the rental properties (they have a higher interest rate than our house).
Total net worth
Net worth was up $97,228.72 for the month which is a ridiculous 2.89%. I’d obviously be delighted to see these kinds of returns every month but again, this had very little to do with anything we did and everything to do with the performance of the market. Due to our large real estate holdings I expect us to underperform the market on the way up but significantly outperform in a down market. My guess is that we’ll find out sooner rather than later if this is the case. How did everybody else do this month? Is anybody planning on making any changes to their allocations or investment strategies?