Author Topic: New net worth  (Read 7141 times)

Exflyboy

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New net worth
« on: May 28, 2014, 12:05:49 PM »
Turns out I was guessing too low on an account that I did not have online access too.

Net worth as of this morning is...

$1,394,000, not including the house which is paid off.

I don't know how much is in the Wife's checking account, but it does include the rent due on June 1st, plus a couple of checks I have in the drawer...:)

Why not wait for $1.5M to brag about this?.. I have a sense the market is going to rollover before then.. But we'll see.

Frank

Franklin

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Re: New net worth
« Reply #1 on: May 28, 2014, 12:19:26 PM »
Congrats!  Any reason you don't include your house in your net worth?  How about your possessions?

Exflyboy

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Re: New net worth
« Reply #2 on: May 28, 2014, 12:27:32 PM »
I guess I only count liquid NW because I don't see the house as being able to generate money quickly.. and you always need somewhere to live that its kind of irrelevent.

I would guess the house is worth  $400 to $450.

As to possessions.. I sold my airplane last year ($85k) and rolled that into Vanguard.. Beyond that there is a 2 year old car, tractor, tools etc.. But that all seems kind of trivial and again cannot easily be turned into cash.

Frank

frugalman

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Re: New net worth
« Reply #3 on: May 28, 2014, 12:29:29 PM »
Quit trying to time the market, Frank!
You have about 3x my net worth, but it's not a competition (you win).

One thing you don't hear about a lot, is how to set your portfolio in retirement. Not MMM type retirement, where he is still producing a lot of income (Blog, carpentry projects etc) but real retirement, where you don't wish to work any more. Yes there is the 4 percent rule - but how should you set the stocks/bonds ratio?

The answer is 50 percent stocks, 50 percent bonds:
For the annual data between 1926 and 1995, they found that a portfolio consisting of 50% large-capitalization stocks and 50% high-grade long-term corporate bonds would have provided a 95% chance for success in supporting inflation-adjusted annual withdrawals starting with an initial withdrawal of 4% of the portfolio value at the time of retirement.
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html

If you think about it, a 50/50 portfolio would likely be down 25 percent after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

Franklin

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Re: New net worth
« Reply #4 on: May 28, 2014, 12:40:26 PM »
I guess I only count liquid NW because I don't see the house as being able to generate money quickly.. and you always need somewhere to live that its kind of irrelevent.

I would guess the house is worth  $400 to $450.

As to possessions.. I sold my airplane last year ($85k) and rolled that into Vanguard.. Beyond that there is a 2 year old car, tractor, tools etc.. But that all seems kind of trivial and again cannot easily be turned into cash.

Frank

Yeah, I see people go both ways.  For net worth I count everything, including possessions over $1K which I depreciate 20% each year including the first.  In my eyes you are about to hit the $2M mark, unless you are correct about the market.

Exflyboy

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Re: New net worth
« Reply #5 on: May 28, 2014, 12:53:42 PM »
Quit trying to time the market, Frank!
You have about 3x my net worth, but it's not a competition (you win).

One thing you don't hear about a lot, is how to set your portfolio in retirement. Not MMM type retirement, where he is still producing a lot of income (Blog, carpentry projects etc) but real retirement, where you don't wish to work any more. Yes there is the 4 percent rule - but how should you set the stocks/bonds ratio?

The answer is 50 percent stocks, 50 percent bonds:
For the annual data between 1926 and 1995, they found that a portfolio consisting of 50% large-capitalization stocks and 50% high-grade long-term corporate bonds would have provided a 95% chance for success in supporting inflation-adjusted annual withdrawals starting with an initial withdrawal of 4% of the portfolio value at the time of retirement.
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html

If you think about it, a 50/50 portfolio would likely be down 25 percent after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

Nope not a competition at all.. I hope all of us on this forum will do as well or better than me.

No market timing here.. I did just roll to a 80/20 stock/bond allocation in fact

As bonds do not make qualified dividends, I left the 20% in the 401k.. Of course I can't get access to this but the wifes salary and rent covers our living expenses until she quits in 3 years time plus I have about 3 years in cash (will probably roll the cash for years 2 and 3 into CD's)

So that 6 years with zero withdrawal, plus at year 7.5 I should get my pension (estimated at $26k per year.. Unless it does a "Detroit".. Wife gets a $16k pension in 9 years)

So if all goes well I should not HAVE to access any of my stash.

Frank

frugalman

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Re: New net worth
« Reply #6 on: May 28, 2014, 01:05:34 PM »
$3,000/mo hard cash will be a very comfortable retirement for me. Some golf and travel money in there too (about $1,000/mo worth). I'm retiring in 18 months, with $2,668/mo social security, and $650/mo annuity (old pension). So I should not have to touch my stash, ever, either. But it is comfortable that it is there. I do think I will set it at 50/50 stocks/bonds. Some will be in cash accounts, some in taxable IRA money. I have projected that I will be able to withdraw about $16,400/year from my IRA and still pay zero income taxes. Since I don't need the money, I will withdraw it, then immediately deposit it into my Betterment cash investment account (avoid any significant future possibility of taxes).

Exflyboy

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Re: New net worth
« Reply #7 on: May 28, 2014, 01:36:40 PM »
$3,000/mo hard cash will be a very comfortable retirement for me. Some golf and travel money in there too (about $1,000/mo worth). I'm retiring in 18 months, with $2,668/mo social security, and $650/mo annuity (old pension). So I should not have to touch my stash, ever, either. But it is comfortable that it is there. I do think I will set it at 50/50 stocks/bonds. Some will be in cash accounts, some in taxable IRA money. I have projected that I will be able to withdraw about $16,400/year from my IRA and still pay zero income taxes. Since I don't need the money, I will withdraw it, then immediately deposit it into my Betterment cash investment account (avoid any significant future possibility of taxes).

Yes I think that is a totally viable strategy, with 1.5 years to go and even though in theory you should not have to touch your stash, having it in a way where you have access to a significant portion (about 40% even if another great Recession happens) is a smart move.

When I finally get to the point where I have to tap the stash a little I will probably move more towards the 50/50 model as well.. Of course if my stash grows at 8% for the next 7 or 8 years, well I guess all of our trips abroad will be taken in business class..:)

Frank

luigi49

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Re: New net worth
« Reply #8 on: May 28, 2014, 07:56:55 PM »
congrats!!   

Guizmo

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Re: New net worth
« Reply #9 on: May 28, 2014, 08:13:15 PM »
WOW! That is awesome Frank. Any advice for a young gun like myself? I'm 24 and my net worth is probably around $60k, mostly tied to a paid off condo that I rent. I don't think I'll make it to a million mark but hope for around $800k not including a paid off house. What was the biggest factor in growing your stash?

Exflyboy

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Re: New net worth
« Reply #10 on: May 28, 2014, 08:40:37 PM »
WOW! That is awesome Frank. Any advice for a young gun like myself? I'm 24 and my net worth is probably around $60k, mostly tied to a paid off condo that I rent. I don't think I'll make it to a million mark but hope for around $800k not including a paid off house. What was the biggest factor in growing your stash?

You have lots of time.. I started saving in my late 30's and got to this position by age 52.

So 15 to 20 years you can achieve a heck of a lot.

Check out my story here               http://forum.mrmoneymustache.com/share-your-badassity/i-retired-today!-%29/

The trick is to keep buying ETFs even as the mart goes down and everybody is preaching gloom and doom.. buy as much as you can!

Frank
« Last Edit: May 28, 2014, 08:42:22 PM by frankh »

JT

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Re: New net worth
« Reply #11 on: May 29, 2014, 02:10:50 AM »
Congratulations Frankh - that's brilliant!

Not having to touch your stash is a great way to go!

frugally

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Re: New net worth
« Reply #12 on: May 29, 2014, 07:58:52 AM »
Keep the good news rolling, Frank, it's always great to hear from someone who has already hit FI.

bo_knows

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Re: New net worth
« Reply #13 on: May 29, 2014, 08:06:06 AM »
Quit trying to time the market, Frank!

...after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

ಠ_ಠ

mark_saver

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Re: New net worth
« Reply #14 on: May 29, 2014, 09:13:20 AM »
Quit trying to time the market, Frank!

...

The answer is 50 percent stocks, 50 percent bonds:
For the annual data between 1926 and 1995, they found that a portfolio consisting of 50% large-capitalization stocks and 50% high-grade long-term corporate bonds would have provided a 95% chance for success in supporting inflation-adjusted annual withdrawals starting with an initial withdrawal of 4% of the portfolio value at the time of retirement.
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html

If you think about it, a 50/50 portfolio would likely be down 25 percent after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

I would be very worried if I retired and promptly put 50% into high-grade long-term bonds today. That's because high-grade long-term bonds are at historically high prices and correspondingly low yields right now. If interest rates/inflation ever go up over the next 30 years (and they can hardly go down much more being at nearly all-time lows), you get stuck in a nasty spiral of lower value of your bonds (so it's hard to sell them and replace with higher yielding stuff) and lower yields relative to inflation (which in effect lowers your income).

I suppose that is kind of "timing the market" though.

TomTX

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Re: New net worth
« Reply #15 on: May 30, 2014, 07:10:11 AM »
Quit trying to time the market, Frank!

...

The answer is 50 percent stocks, 50 percent bonds:
For the annual data between 1926 and 1995, they found that a portfolio consisting of 50% large-capitalization stocks and 50% high-grade long-term corporate bonds would have provided a 95% chance for success in supporting inflation-adjusted annual withdrawals starting with an initial withdrawal of 4% of the portfolio value at the time of retirement.
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html

If you think about it, a 50/50 portfolio would likely be down 25 percent after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

I would be very worried if I retired and promptly put 50% into high-grade long-term bonds today. That's because high-grade long-term bonds are at historically high prices and correspondingly low yields right now. If interest rates/inflation ever go up over the next 30 years (and they can hardly go down much more being at nearly all-time lows), you get stuck in a nasty spiral of lower value of your bonds (so it's hard to sell them and replace with higher yielding stuff) and lower yields relative to inflation (which in effect lowers your income).

I suppose that is kind of "timing the market" though.

There is "timing the market" - but I think that's a tad different from recognizing that bonds are at historically low returns, or recognizing after the market has had a 50% crash.

You are primarily responding to what the assets are priced at today, after recognizing they are out-of-whack, as opposed to guessing which way the market will jump in the future.

Perhaps it is too fine of a differentiation, but I just can't see putting that much of my money in bonds paying such a tiny amount. Hell, S&P dividends are basically 2%. If you are "buy and hold" - they should be qualified (lower/no tax) dividends as well.

mark_saver

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Re: New net worth
« Reply #16 on: May 30, 2014, 08:16:37 AM »
Quit trying to time the market, Frank!

...

The answer is 50 percent stocks, 50 percent bonds:
For the annual data between 1926 and 1995, they found that a portfolio consisting of 50% large-capitalization stocks and 50% high-grade long-term corporate bonds would have provided a 95% chance for success in supporting inflation-adjusted annual withdrawals starting with an initial withdrawal of 4% of the portfolio value at the time of retirement.
http://wpfau.blogspot.com/2010/10/trinity-study-retirement-withdrawal.html

If you think about it, a 50/50 portfolio would likely be down 25 percent after a 50 percent stock market implosion.
I would be sorely tempted at this point (make that I would) to change mix after a 50 percent fall to 80/20 stocks/bonds.

I would be very worried if I retired and promptly put 50% into high-grade long-term bonds today. That's because high-grade long-term bonds are at historically high prices and correspondingly low yields right now. If interest rates/inflation ever go up over the next 30 years (and they can hardly go down much more being at nearly all-time lows), you get stuck in a nasty spiral of lower value of your bonds (so it's hard to sell them and replace with higher yielding stuff) and lower yields relative to inflation (which in effect lowers your income).

I suppose that is kind of "timing the market" though.

There is "timing the market" - but I think that's a tad different from recognizing that bonds are at historically low returns, or recognizing after the market has had a 50% crash.

You are primarily responding to what the assets are priced at today, after recognizing they are out-of-whack, as opposed to guessing which way the market will jump in the future.

Perhaps it is too fine of a differentiation, but I just can't see putting that much of my money in bonds paying such a tiny amount. Hell, S&P dividends are basically 2%. If you are "buy and hold" - they should be qualified (lower/no tax) dividends as well.

That's a good way of looking at it. Bonds, as an asset, are "overpriced" now, so it doesn't pay to buy them until their "P/E ratio" enters a more attractive range.

In my case, I don't own ANY non-inflation adjusted bonds right now. I've been expecting inflation for 5 years now, and I've been wrong, but even while being wrong, my inflation-adjusted bonds have yielded enough to outpace inflation plus a few percent. I also own a few dividend paying stocks that have done reasonably well over the years. But in general I prefer growth stocks that don't pay any current income because those allow me to choose when to pay the taxes on the gains.

JT

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Re: New net worth
« Reply #17 on: June 12, 2014, 07:31:41 PM »
Man, this is good news!

Well done and congratulations!