Monthly update – Feb 2018

Keeping it rolling, only 29 months from Financial Independence!

A pretty good month to celebrate!

  • For the first time, our investment assets (not counting savings, checking, home, etc.) hit over $1M
  • Good month for gains – got a 1.36% monthly gain, in addition to what I put in
  • Was able to roll my Dad’s IRA required distribution and some additional savings (total of $9K) directly into investments, and I bumped up my deferred pay allotment as well. All total, I put in about $13K into my investments in January alone. Getting into FIRE really motivates you to save.
  • Did my first travel hack! Mrs. 39 Months and I attended a dulcimer conference in mid-January, and got to stay at a nice hotel for free. Sweet!
  • Traffic on the site exploded, up over 200% from my 2017 monthly average. Thanks for tuning in!

A great way to start the year. I want to keep the momentum going.

My “fun money” value portfolio was interesting. I have three stocks in them (Gilead, Beasley Broadcast and SBS). I’ve already gone over why I chose them.  Gilead is up 12% for the month, and SBS is up 10%, However, Beasley is down about 1.5%. Overall, they’ve been great picks, and I’m up 2.5% for January (even counting my bond fund losses). About that – when I was originally planning it, I thought I’d set it up as a dividend account as well – so I have Bond Funds in it. Since I want to evaluate value with this money, I’ve decided to sell the bond funds, and invest the money in a Vanguard Value fund. I’ll do that at the beginning of February, so I will have a “baseline” to compare my stock picks to.

My inherited IRA that I set up for Dividends didn’t do well in January. Since its 25% REITs and 50% bond funds, you would expect with the raging economy and work on raising the prime interest rate, they’d suffer – and they did. Overall, they are down -1.8% for January. Not unexpected.

My company 401K and deferred accounts are up about 6% for January, because they are more heavily invested in stocks (25% S&P, 25% Small Cap, 25% Int’l, 25% bonds). Small cap really knocked it out of the park.

Our IRAs and Roth IRAs came back in around 1.2% for the month – pretty good. These are the ones that are 30% bonds, and then evenly split over REITs, Small Cap, Int’l and S&P 500. Again, good returns, and not unexpected.

While I expect a market correction at some point, I think we will be able to weather it, provided the Zombie Apocalypse doesn’t come. My plan is to re-balance in July, unless the market really goes crazy.

Hope your new year is starting well!

 

Mr. 39 Months.

 

 

 

Investment update – End of 2017

Well, with 30 months left till FI, and the beginning of the new year, I wanted to go back and see how my investments did, to give you an idea of how my allocations seem to be working out.

For the year, my investments (not savings or real assets) went from $823K to $983K.

  • I added about $63K throughout the year
  • Got about $22K in dividends (2.7%)
  • Got about $75K in capital gains (9.1%)
  • Total returns on investments for the year, round 11.8%

The return is about average for the FIRE community. There are certainly some who really “smacked it out of the ballpark”, but I think that is because they are more invested in the assets that really took off this year.

Since I’m older and closer to FI, my allocation is a little more conservative:

  • 30% Bond intermediate Index Fund
  • 17.5% S&P 500 Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% International Index Fund
  • 17.5% REIT Index Fund

As one would expect, my bonds and REITs didn’t do as well this year (1.5% and 1.2% counting dividends) and they make up almost half of my assets. The stock portion (S&P, small cap and International) really kicked butt, getting around 20.1% on average. In the end I am very happy, as historically, this allocation would net me around 5.24% after inflation (which I expect to be around 2% for the US this year). Thus, my expectation was 7.24%, and I ended up around 11.8%.

As you might expect, my “set it and forget it” investment portfolio in my 401Ks and IRAs (both regular and Roth), where I just invest in index funds with the above allocation, did the best. I just regularly put in money, and surprisingly, the index funds do OK.

My father’s Inherited IRA, which I set up with an eye towards income, has returned 3.6% in dividends in 2017, which is a little more than I expected. Perhaps the rise in interest rates in the US (up 0.75% in 2017) had something to do with it. The capital gains for the stocks have been substantial, but that is only 25% of the portfolio. The REITs (25%) and bonds (50%) had a poor year for capital gains, so overall, it ended up just generating the 3.6%.

My “fun money” account, was somewhat of a disappointment as well. While one of my stock picks (Gilead Sciences) really shot up, the other two value picks (TAHO and CSS) did not perform well. I will revisit them in another email and I try and decide my ongoing value strategy. This portfolio also has 33% REITs and 33% bonds, which didn’t do well. Again, this is a small portion (5%) of my overall investment portfolio, so its more for me to try new things than to really make lots of money. I keep the majority of my investments in index funds and let them grow.

In a future posting, I’ll go into my value strategy, so folks can get some additional ideas and see if they work for them.

Hope your New Year has gotten off well!

 

Mr. 39 Months.

Goals/Objectives for 2018

I’ve already gone over my performance to goals for 2017 in a previous posting. In summary, I hit my finance and business goals, but was only halfway successful for the personal goals. From what I can see, that is fairly normal for FIRE bloggers – we are pretty good at hitting the numbers, but often fall off on the “squishy” goals.

For 2018, I kept my finance and business goals fairly similar (just bumping up some of the numbers) and added more personal goals. Why would I add to the goal category in an area I didn’t excel in? Call me a glutton for punishment, but I feel that I want to emphasize the personal as I get closer to my FI goal. I need to continue to work on realizing it’s not just about the money.

Finance:

  • Save $81K in tax-advantaged accounts (saved almost $37K in 2017). 401K, Roth IRA, etc. By utilizing a deferred account my company offers, I can dramatically increase this number (I will dump 100% of my company bonus in to help reach this number).  Since the deferred account money will have to be withdrawn (and taxed) when I leave, it actually is a pretty cool FIRE solution for saving.
  • Save $9K in regular accounts (compared to $26.5K in 2017). This will go into my brokerage account. I will use the money I was putting into this to upgrade the money in the tax-advantaged (see above)
  • Increase dividend income from all accounts to $24K/year (compared to 22K in 2017).
  • Passive income covers 33% of base living expenses in retirement (it was 30% in 2017). My long-term goal is to get my dividend/passive income up to where it covers over 100% of my expected retirement living expenses, so my investments can continue to grow.
  • Beat net worth growth rate of 7% (it was 12.3% in 2017). My historical net worth growth rate for the last 20 years has been 6.6%. This has been through two downturns (2000 and 2009), and it’s been over 12% for the last five – but there is a downturn coming at some point.

Business:

  • Begin attending regular meetings of my local real estate investors association. They hold a regular monthly meeting, a monthly meeting for new investors, and a monthly meeting for my specific county. All three could be interesting, and it’s free for a paid member. Last year I started attending, but it was spotty.
  • Double the number of blog visitors in 2018. Last year it was a little over 2,000. I want to get at least 4,000 this year, so I need to put myself out there more (i.e. comment) and write interesting topics.
  • Write/publish a book on finance.  I wrote one for new graduates in 2017, but I have identified an area of the community which hasn’t been served as well in the past. Hopefully I can assist with something here.

Personal:

  • Increase weight lifted by 10% from 2018 (increased by 12.7% in 2017). I want to continue to improve my strength as I get older, instead of just wasting away
  • Average 3 hours of cardio per week (currently averaging about an hour). Again, want to improve my fitness
  • Take part in at least one long bike ride, like MS bike-a-thon (80 miles)
  • Backpack over 100 miles on AT (did over 100 in 2017)
  • Begin volunteering at Pennsbury Manor at their joiner’s shop (woodworking)
  • Reduce weight by 20 lbs. from Jan 2018 (lost 9 lbs. in 2017). Again, I want to get in better shape as I get closer to financial independence
  • Read at least one book a month. Trying to learn new things and keep my mind shop. Started this in August 2017, and I’ve been doing fairly well with it.

Travel:

  • Visit a national park (visited Shenandoah NP in 2017)
  • Visit family in Tennessee, Vermont and New York. Family is very important to me. One of the things I am looking forward to with financial independence is the opportunity to visit family more often
  • Visit Portland, OR and northern California. Mrs. 39 Months has a craft class she wants to take in Portland, so I’ll go as well, and run around in Portland, when it’s over, we want to visit the Park in Northern California with the Redwoods.
  • Visit Ellis Island. Wanted to do this in 2017, but didn’t make it. As 50% Czech from immigrant great grandparents from the turn of the century, I believe they went through there, and I want to see it
  • Go on an international trip. Not sure which one (Canada, Caribbean, etc.) but I’d like to get out this year.
  • Visit the Asheville NC area. It’s one of the areas that we are considering retiring to (close to my old home in Tennessee, interesting crafts, shops & outdoor sports, etc.). Trying to learn more about the area (we’ve been there a couple of times).

 

So those are my somewhat ambitious goals for 2018. I am going to do my best to hit them, so wish me luck.

 

What are your goals for 2018?

 

Mr. 39 Months

2017 Goals & Performance

Like so many others in the FIRE community, I thought I’d go over my 2017 goals and see how I did, in order to prepare for my 2018 objectives. I’ve been doing this for years, but haven’t had a blog to put it out there before now. I have to say, the Blog does help to both motivate me to push for bigger goals, and to keep things in perspective (there are always people in the FIRE community doing better than you – or at least looking like they are doing better than you on their blog).

2017 Goals:

Finance Goals:

  1. Save $33K in tax-advantaged accounts (Roth IRA, 401K, etc.) – Grade A: Overall saved almost $37K for the year
  2. Save $26K in regular accounts (brokerage accounts, after-tax, etc.) – Grade A: Saved $26.5K for the year
  3. Increase dividend income for all accounts (401K, brokerage, IRA, etc) to $18K for the year – Grade A: Total of almost $22K for the year
  4. Passive income covers 65% of base living expenses (taxes, utilities, etc.) – Grade A: Due to higher dividend payments, came in at 73.6%
  5. Net Worth beats my traditional 6.1% per year rate – grade A: Great stock year and putting in a lot of money led to a 12.3% increase in my net worth. From $1.27M to $1.42M! Yah

Overall for finance, I had to rate it as a A! Time to push the goals a lot more

Business Goals:

  1. Begin attending local Real Estate investors meeting (REIA). Grade C: Attended one meeting in July, but work and other issues kept me from going to more. Plan on starting to attend regularly and to pay for membership in January.
  2. Start a Blog – Grade A: Started the blog in April, total of 81 posts, 54 comments, and over 2,000 page views. Pretty small for most FIRE blogs, but I’m happy with it to start. Was able to post an average of twice a week, and I think that is a good amount. Was able to get over the “six month hump” where many bloggers dry up.
  3. Publish Student Finance BookGrade A: Completed the book on finance and work for students graduating. Its an e-book for $0.99, done more to get the info out there than to make tons of money (so far, its only sold 3 copies). I’ve got ideas on a second book, maybe for 2018.

Overall, for Business, I’d give myself a B.

Personal Goals:

Its here where I was a little “spotty” on getting stuff done

  1. Increase weight lifted in exercise by 10% from Jan 2017 amount – Grade A: Increase by 12.7%. Need to get more intricate in my lifting plan
  2. Average 3 hours of cardio every week by end of year – Grade F: Averaging around 1 hour, like at the beginning of the year. Need to make time and get this done
  3. Go on an international trip – Grade F: Didn’t do it, was planning on the 4th qtr, but work and injuries to Mrs. 39 Months kept this from happening
  4. Visit a National Park – Grade A: Backpacked in Shenandoah National Park for a week. A lot of fun. Looking forward to doing another 100+ mile year on the Appalachian Trail this year.
  5. See the 2017 total solar eclipse – Grade F: Had to go on a business trip to California the week it happened, and CA was overcast the day of. Didn’t get the chance to see it at all!

Overall, I’d give myself a C for personal goals in 2017. Need to up my game, here.

 

For the most part, it was a good year, though some health issues at the end of the year for Mrs. 39 Months and myself kept it from being a completely awesome year. I’ll try and push myself some more in 2018, both financially, business-wise, and for the personal goals.

 

How was your 2017? Did you get done a lot of what you planned for?

 

Mr. 39 Months

Monthly update – Dec 2017

Keeping it rolling, only 31 months from Financial Independence!

Much better month in November (+1.32% gain) than October (+0.47%), especially at the end, where the market really jumped up. I started the month with $952K of invested assets, put in $4,108 into my various accounts (401K, Roth IRA, brokerage), and ended with $969K (almost to $1M, yay!). For the year, all total, I am still up around 9.6%, and that is with a 70% stock/REIT and 30% bond mix.

Bonds continue to not perform very well (up only about 0.1% for the month) but they are providing the stability that I want (in case of a market downturn). Surprisingly, the REITs were up (about 3.0% for the month) – maybe they are just returning to where they should have been after a pretty bad year. The International was OK for the month (up 0.8% for month), and the S&P 500 and small cap indexes really did well (around 3.1% for the month).

My dividend portfolio (from my dad’s inherited IRA) is up about 3.0%, primarily due to REITS, though the Chevron and
Verizon stocks did great (Chevron was up 9.2% in November). That at the same time that they are due to pump out some end-of-year dividends to help out (this may be the reason they are up – folks are buying them to get the dividend).

In the value portfolio

  • CSS Industries stock was down almost 10% for the month, and went into negative territory for the year. I’ll go through my 6-month stock analysis in a later post, as I try and determine whether to keep a stock
  • Gilead was down 0.2% for the month, but still up 10% for the year
  • Taho continues to underperform, down another  8.1%, and over 20% for the year. Legal troubles in Central America continue to be a drag
  • For December, I plan on continuing to put my investment money into my bond mutual fund. I want to get my allocation more in line there with a 33% REITS/ 33% bonds/33% stocks plan. This will call on me to probably buy bonds each month for the rest of the year
  • The big lesson for the value portfolio continues to be that I’m not a very good stock picker, or that I need to be patient (i.e. 3-5 years patient) in order for it to pay off.

I continue to make progress towards my FIRE goal. While I expect a market correction at some point, I think we will be able to weather it, provided the Zombie Apocalypse doesn’t come.

How did your November go? How are your plans for the year going?

 

Mr. 39 Months.

 

Monthly update – Nov 2017

Keeping it rolling, only 32 months from Financial Independence!

While September was a good month (1.26% gain), my October was kind of “middle of the road”, with a 0.47% growth. I started the month with $946K of invested assets (not counting savings), put $4,108 into my various accounts (401K, Roth IRA, brokerage), and ended with $953K. For the year, all total, I am still up around 8.26% (September really helped push me up)

Bonds and REITs were down a little in October (-0.3%), while the equity markets were up (+2.3%). My dividend portfolio (from my dad’s inherited IRA) is down -1.4%, and my value portfolio is down -3.2%. So again, my ability to pick stocks individually does not come close to matching the index fund investing method.

In the value portfolio

  • CSS Industries stock was up 4.2% for the month, and about 7.7% since I bought them a couple of months ago
  • Gilead lost -7.5% in October, but is still up 10.3% for the year
  • Taho lost -8.9%, and is down 13.7% for the year
  • Overall result of value investing play ytd is 1.8% for the last 4 months, or 7.2% annualized. Still not competing with the index funds.

For November, I plan on continuing to put my investment money into my bond mutual fund. I want to get my allocation more in line there with a 33% REITS/ 33% bonds/33% stocks plan. This will call on me to probably buy bonds each month for the rest of the year

Hope your Halloween was scary and exciting!

 

Mr. 39 Months.

Financial Update – Disaster File

 

If you remember back in July, I realized that I had to update our personal files, or our “Disaster Files.” This was the files showing investments, wills, titles, etc. Often folks do this once every so often (many times after a family member passes away) and then let it lie fallow till the next “emergency.” Yep, I was one of those folks, having not touched it since 2013. In my previous post I attached a couple of helpful documents that I hope folks find useful.

It’s been a bit of a “slog” as I have worked my way through, but here is where I am at the beginning of the 4th qtr.

No Description
1 Update Master List from 2013
2 Send Master list to Mrs. 39 Months
3 Price out updating wills
4 Redo filing cabinet with Master List & Disaster file #1
5 Household budget folder (budget goals, income statement, balance sheet, income/expense forecasts)
6 Housing Information (Title, insurance, receipts for work, property taxes)
7 Online passwords
8 Location of keys to safe deposit box – Mrs. 39 Months drawer
9 Credit records: Resolution of past debts (auto, home)
10 Home Insurance Policy
11 Net Worth’s 2009 to present
12 Annual updates for Jan 1, 2017 into investments
13 Investments (list of accounts, goal planning, annual balance sheet)
14 Taxes: Tax records for previous year, current year documents
15 Personal background info (Education, personal history, resume)
16 Credit: Resolution papers of past debts, credit card names, numbers & 1-800 number
17 Health insurance (Booklet from work, health history, medications, etc.)
18 Life Insurance (Insurance policies, etc.)
19 Safe Deposit: Title to Mrs. 39 Month’s auto, DD214, NY and KY marriage certificate, letter of last instructions, copy of will, personal property inventory, negatives of personal property, passports, old passports, Mrs. 39 Months’s birth certificate, Mr. 39 Months’s birth certificate, Mr. 39 Months’s SS card)
20 Letter of Last Instructions
21 latest credit report
22 Auto Info: Insurance coverage, policies, auto registration, repair/maintenance records
23 Instruction letter (where to find everything, computer passwords, etc.)
24 Setup dates for regular updates to the files (so I never have to do this again) – Jan 1 of each year

The hardest one to date what the letter of last instructions. It is here that you really start feeling your age and realize that it could end. You need to determine funeral arrangements, where to be buried, etc. It really does make you think. Still, it’s done and I have it in a fairly obvious place in the house, and have let key folks know where to find it.

So what do I have left?

1 Updated list of personal property
2 Pictures of personal property
3 Guarantees & warranties (appliances, cars, etc.)

The pictures of personal property actually might end up being a video (room by room) and description. Often these are better than just pictures. Guarantees & warranties may be something that I just start assembling as we purchase items, and stick in place.

I will probably start working on these in the New Year, as part of my “Jan 1” plan. I hope you folks are also doing some of the “slog” work that you need to do for FI.

Good luck!

 

Mr. 39 months.

 

 

 

 

 

Investment update – October 4, 2017

Okay, 33 months left till Financial Independence!

Overall, my investments were up $11,752 for September, a gain of 1.26%, which isn’t too shabby. Big gainers appeared to be Small Cap funds and the S&P500 funds. Internationals did OK as well. The bond funds and REITs continued to underperform, though not significantly enough to drive my results down. I remain happy with my current allocation in my 401Ks/IRAs:

  • 30% Bond intermediate Index Fund
  • 17.5% S&P 500 Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% International Index Fund
  • 17.5% REIT Index Fund

My father’s Inherited IRA, which I set up with an eye towards income, has returned 3.3% in dividends on an annual basis, and has gone up 0.9% for the quarter. While not as big a move as the S&P, Small Cap and International, I believe this portfolio is a lot more “stable” so I will continue to experiment with it for income.

 

My “fun money” account, which I use to try to value invest, has pretty much stayed even. The values have dropped somewhat, but this has been offset by dividends. I’m still excited about the potential for growth here, as some of my picks are dramatically undervalued. I just have to be patient.

 

Hope your October trick or treating goes well!

 

Mr. 39 Months.

Quarterly Update – Oct 1, 2017 (end of 3rd qtr)

Well, its early October, three-quarters of the way through the year, and another opportunity to compare my goals for 2017 to what I’ve actually done, both financial and personal/other. A lot of folks don’t like to do this sort of thing, but as an engineer and amateur financial junky, I actually love taking a look at these sort of things. Even when I’ve had a bad quarter (or bad year) I like to look at the numbers and see what my situation is, and the future outlook.

Ok, I’m a numbers geek.

So how am I doing in comparison to my goals for 2017 (the ones that I listed on April 30th)?

My Goals for 2017 (some financial, some not):

 Put in $33,000 in tax-advantaged accounts throughout the year. Grade A. I have put in $28,150 so far this year (including some bonus money) and am on track to hit my goal by December.

  1. Put in all bonuses, gifts, and our previous house payments into regular accounts (estimate of $26,000 year): Grade A. I have put in $22,375 so far this year, and I am on track to hit my goal by December.
  2. Increase dividend income from our investments to $18,000/year (and reinvest them): Grade B. I have $13,680 in dividends so far this year. Going to be touch and go to see if I hit this, but it looks like I am on track to hit $18,240.
  3. Get Passive income up to 65% of living expenses: Grade B. I am currently at 67.3% for the first 9 months. . To hit the goal I have to hope for some major dividend payouts in December.  We do continue to keep our living expenses low, though we did have to spend some money on home repairs which bumped it up a bit.
  4. Beat at 6% growth rate on our net worth: Grade A. I am at 8.64% so far, with three quarters of the year gone by. Even if the markets come back with 0 growth for the rest of the year, I’m good. Remember that the majority of my investments are in an allocation of 30% bonds, 17.5% REITs, and 52.5% stocks (split evenly between S&P500, Small cap and International)
  5. Begin attending local real estate investment association meetings, to learn about and begin preparing for real estate investing in 2018: Grade D. Went to first meeting in July, but haven’t joined the group yet. The last two months work has interfered with my ability to attend. Not sure when I will start investing in it, because all you hear right now is that the market is too hot. We will see. My goal here is to start studying and learning.
  6. Start a blog (i.e. this one). Grade A. Done
  7. Fitness: Increase weight lifted by 10% over the year. Grade D. Currently appear to have hit a wall, as I haven’t gone up hardly any for the last 3 months. Hurt my shoulder about a month ago, and that has set me back, and business travel has hurt me in September. Need to work on this.
  8. Average 3 hours of cardio each week. Grade D. Currently only averaging a little over 1.
  9. Go on an international trip. Grade D. Wanted to do something bigger this year, but Mrs. 39 months job situation killed chances for larger trip. Plan to go to Quebec or Montreal in October or November.
  10. Visit one national park. Grade D. Again, job situation hurt this. Have never been to Ellis Island, so may try for this.

So in looking at this, I think I am tracking well for the first nine months, with a lot of non-financial items coming up short.  Still got some work to do (especially in terms of personal fitness).

How are you doing on your goals for 2017?

 

Mr. 39 months

Monthly update – Sep, 2017

Keeping it rolling, only 34 months from Financial Independence!

After a great month for July (+$14,373), my August wasn’t exceptional. I started the month with $926K of invested assets (not counting savings), put $4,108 into my various accounts (401K, Roth IRA, brokerage), but ended the month at $928.6K, a 0.2% drop. For the year, all total, I am still up around 7.1%.

Bonds and REITs are up, probably because folks don’t expect the US Fed to raise rates for the rest of the year. My stock Index funds are down a bit. One of my “value” stocks that I purchased, Gilead (Stock symbol GILD) is up 10% for the month. I bought it because it was selling at a low P/E, and matched 5 of Benjamin Graham’s seven value indicators. Its up over 24% for the year, so a big win for me.

At the same time, using the same logic, I bought a lot of Tahoe enterprises (miner stock) that hit 5 of Graham’s points, and was selling below book value (i.e. the stock was less than what you’d get if you liquidated the company). So far, it’s dropped 10.6% for the year, primarily due to legal troubles. Still, the concept of value still holds, and if I have patience, it should still bounce back up (it has been on an uptick the last 2 weeks).

For September, I plan on putting my investment money into my bond mutual fund. I want to get my allocation more in line there with a 33% REITS/ 33% bonds/33% stocks plan. This will call on me to probably buy bonds each month for the rest of the year

 

Hope your August was fun and fulfilling!

 

Mr. 39 Months.