Six Month Review Template – here is what I do

Well, it is halfway through the year, and typically that is time for FIRE folks to take stock of their investments, finances and goals, and to make adjustments, change allocations, re-balance portfolios, and see how they are doing. I figure it would be a good series of postings if I went over what I do in early January and July, every six months. You may have different timing (more frequent, different times of the year, etc.) – but I think a lot of these are things you could include in your own mid-year and end-of-year reviews.

Typically, I spend several hours on this, and my sequence of review is as follows:

  1. Review Investment performance/make decisions on any changes: Emphasis on performance of any individual stocks I own.
  2. Review asset allocation: Do I keep current allocation or change, what is current percentage allocation vs. plan, etc. Rebalance as necessary
  3. Review spending of last 6 months vs. budget: What went well, where am I falling down, what adjustments need to get made
  4. Goals: How am I doing against my planned goals for the year? Are there some that need to get added? Are there some that need to get dropped? What do I need to emphasize over the next 6 months to attain them
  5. Celebration: This comes at the end, when I take the time to celebrate my “wins” in some fashion. Too often folks concentrate on things that went wrong, and don’t practice “gratitude” for the good things that happen to them. Take the time to do this for your emotional well-being

Again, doing this takes several hours of work, typically spread out over a week. I find it very useful to keeping me on track.

 Step 1: Investment Performance

I use a simple excel spreadsheet to track my investment performance. I know there are all sorts of online tools and software available, but when I have used them in the past, I find that keeping them up to date is sometimes difficult, linking them can lead to issues, and it is almost impossible to fix an issue online or in the software once it is in place. I had all sorts of travails with Quicken’s software and its linkage to my accounts – I ended up spending as much time fixing issues with its downloads as I would if I just tracked it myself  – so about ten years ago I started manually tracking it with an excel spreadsheet, and I’ve been happier ever since.

I set up my excel sheet so that I could go online to each of my accounts and hand key in the updated stock price and shares (shares may go up with reinvested dividends or my monthly contributions). A formula in the next column comes up with the total, which I can compare to the online value. I then have a column for the previous month’s value and what I contributed that month. I can also do this for the Jan 1 value and the six months of investments. By doing this and comparing, I can see how each investment did and how I did overall (see sample below, showing IRA and Roth IRA):

 

Name Current Price Current Shares  Current Value  Cost Basis as of 1/3/18 + investments Gain/ Loss for six Months 2018
TRowe Price S&P 500  $            72.93 411.9  $           30,041  $                 29,540  $                               500
Extended Equity Market Index  $            29.89 1,043.3  $           31,185  $                 29,673  $                          1,513
International Equity Index  $            14.01 1,977.1  $           27,699  $                 28,806  $                       (1,107)
Real Estate  $            28.29 1,045.2  $           29,568  $                 29,580  $                               (12)
US Bond Enhanced Index  $            10.68 4,123.8  $           44,042  $                 44,612  $                            (570)
Equity Index 500  $            72.93 226.6  $           16,636  $                 16,359  $                               277
Extended Equity Market Index  $            29.89 570.3  $           17,154  $                 16,328  $                               826
International Equity Index  $            14.01 1,126.1  $           15,885  $                 16,509  $                            (624)
Real Estate  $            28.29 572.6  $           16,306  $                 16,274  $                                  32

So how did we do? Well, like most folks for the first half of the year, we pretty much treaded water (or lost a little).

Retirement Accounts: Remember, my allocation for these is:

  • 30% Bond Index Fund
  • 17.5% S&P500 Index Fund
  • 17.5% International Index Fund
  • 17.5% Small Cap Index Fund
  • 17.5% REIT Index Fund

I ended up being about 0.14% up here. Not a lot to scream about, but at least I’m back in the black here for the first time since January. Winners were the small cap funds, and a little with the S&P500. International and bond funds were losers, with REITs staying about even. Everybody has fluctuated a lot this year, but the asset allocation has smoothed it somewhat. I was thinking of moving out of REITs a bit (going to 10% allocation) but after seeing their improved performance, I think I’ll stick with the allocation I have.

Dividend Income Account: Allocation:

  • 25% Dividend Stocks
  • 25% REITs
  • 50% Bond Index Funds

For the year, this account is down -0.2%. Since its 50% bonds and bonds suffered, I can see why it’s down. It continues to kick off dividends at around a 3.2% overall rate, so it is doing what it was designed to do. Not much capital appreciation though, so until interest rates rise, you really can’t look at surviving on dividends alone in a retirement situation.

Value Investing Account: Allocation:

  • 4% in individual value stocks I picked myself (2 stocks, 20% for each)
  • 60% in Vanguard Value Index fund & USAA Total Stock Market Fund

Here is where I really “crapped the bed” for the first six months. Overall, counting the $9K I invested in it, I am down -18.9% (-$10,089). The key culprits are the two stocks I have remaining in this. I tried to use value investing methodology to pick two stocks which seemed down, but they have continued to drop. Gilead Sciences is down -8.9% from my purchase, and Cia Basico is down -47.0%!  As I’ve noted, it appears I am a terrible individual stock picker. When I look at both of them, the both appear much undervalued, but I may not have complete data. As I have stated before, I’m going to keep them till the end of the year, but if I don’t see any real improvement, then I’ll end up just selling and going to a “total market” index fund.

Next time, we’ll look at how I re-allocate funds in mid-year.

 

Mr. 39 Months.

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