{"id":793,"date":"2019-09-25T21:56:17","date_gmt":"2019-09-26T03:56:17","guid":{"rendered":"https:\/\/modernfimily.com\/?p=793"},"modified":"2021-07-27T22:50:11","modified_gmt":"2021-07-28T04:50:11","slug":"quarterly-net-worth-asset-allocation-update","status":"publish","type":"post","link":"https:\/\/modernfimily.com\/quarterly-net-worth-asset-allocation-update\/","title":{"rendered":"Quarterly Net Worth Update: Q3 2019"},"content":{"rendered":"
We are going to dig further in this post to break down exactly where our current investments live. We\u2019ve decided to show this net worth update on a quarterly basis so here\u2019s to the first of many posts tracking our net worth. This post will make any visual learners out there like me happy, lots of charts to look at!\u00a0 You’ll also get a glimpse of the spreadsheet I’ve created to track our net worth.\u00a0 It’s nothing fancy but it checks off all the boxes for what I’m looking for when updating our portfolio figures.<\/p>\n
In the past we reviewed what our FIRE number is<\/a>, but where are we today? How do we compare to our FIRE number? How far away are we from reaching our FIRE number?<\/p>\n As of September 23, 2019 here is a breakdown of our liquid assets (home and car not included as these are illiquid!):<\/p>\n <\/span><\/p>\n <\/p>\n We also still have a mortgage in place that will be murdered in 2021. Currently there is $87,153 remaining here. So here\u2019s the total amount of our passive net worth:<\/p>\n <\/p>\n As we mentioned on our Millionaires Unveiled podcast interview<\/a>, we are very heavy in cash right now. In fact, our current overall breakdown is:<\/p>\n <\/p>\n <\/p>\n Whoa 24% in cash, say what?! During our wealth building phase we were NOT this heavy in cash. We are not financial advisors in any sense, but we would not recommend holding this much cash during your wealth accumulation phase unless you have a large purchase coming up such as a downpayment for a home.\u00a0 Now that we are approaching our FIRE number, we are being SUPER cautious and do not want to be heavy in stocks.<\/p>\n Some people reading this may think we are crazy and that we should have more faith in the market.\u00a0 With everything going on in the world, I’m a bit more weary these days and don’t want to see my portfolio drop by 50% overnight.\u00a0 Again, I’m only thinking this way because we are so close to withdrawing from our portfolio once we retire early and I do not want to fall victim to sequence of returns risk<\/a>. If the markets grow by 10+% yes of course we will be bummed to not see as big of gains to our portfolio as we could have had we been all in.\u00a0 However, at this point we are being very risk adverse just as anyone approaching typical retirement age would be.<\/p>\n Over the past few months we have shifted quite a bit of our stock allocation into bonds and cash.\u00a0 Our short term play is to be ~60% in stocks and our long term play is to be back at 90-100% in stocks like we were for a majority of our wealth accumulation phase.\u00a0 The game plan is to transition to that higher stock allocation over the next 5-10 years.<\/p>\n Our goal is to FIRE in approximately a year and a half from now.\u00a0 Over the next 1.5-years ~$87,000 of the cash will be going towards killing off our mortgage and we also use credit cards for everything which are set up on auto pay to come out of our US checking account each month. We are currently averaging an annual spend of ~$24,000\/year so in 1.5 years that\u2019s another $36,000 out of the checking account. So with the $215,328 we have in cash now we can expect to have ~$92,328 in cash remaining ($215,328-$87,000-$36,000) when we FIRE. The majority of this cash will sit in our Motive Savvy Saver high interest savings account<\/a> earning 2.8% interest and provide us with more than enough of a cash cushion in our first year or two of early retirement. So our cash portfolio isn’t necessarily doing nothing for us this whole time (it’s actually performing close to bonds lately…). This is still too much cash than what we want on hand so the plan is to throw ~$40,000 from our current cash fund at the market when a correction comes.\u00a0 This would be in addition to the $2,000\/month we are planning to throw into our stock index funds from my pay check each month until we FIRE.<\/p>\n To dig even further, here is a breakdown of the different accounts we have our non-cash investments in:<\/p>\n <\/p>\n As you can see, we are big fans of Vanguard, index funds, and low fees. If you are interested in learning more about any of the funds we invest in, click on the links below:<\/p>\n We want to highlight that we are in no way financial advisors and we are NOT recommending that you mimic our portfolio. We are simply documenting what we do. In fact, for most people reading this, you are likely still in your wealth accumulation phase and we\u2019d recommend to VTSAX and chill.<\/p>\n For my visual learners, the chart below depicts how heavy we are in US index funds. A large majority (86.25%) of our investments from stocks or bonds are in either a US stock market index funds or US bond market index funds (a majority of the Vanguard Target 2045 fund is in US holdings). Some may argue that we should have more international funds in our portfolio but we feel comfortable with the 38% of our VTIVX which is in international funds is sufficient. It can be argued that many of the companies in the US stock index have a significant amount of business taking place abroad. Again, we are not here to argue or tell you what to do, we are simply showing you our story and methodology.<\/p>\n <\/p>\n And again, we would NOT recommend this portfolio if you are working on building up your portfolio and nowhere close to approaching your FIRE date. I would suggest to drastically bump up your stock market index fund percentage (VTSAX or VUN.TO) and decrease your bond index fund and cash percentages.\u00a0 I want to stress that this is just our short term plan with the final plan to be closer to 90-100% in equities.<\/p>\n Note that for the sake of this exercise, we are keeping all currencies as is in their current currency denomination, but as we mentioned in our previous post<\/a>, we are using currency arbitrage to keep our safe withdrawal rate below 4%.<\/p>\n As of this writing, 71% of our accounts are in USD and 29% are in CAD. If we converted all USD to CAD based off today\u2019s exchange rate of 1.32, we\u2019d be looking at a total of $1,106,158 CAD in our investment accounts.<\/p>\n Assuming $35,000 in annual expenses, this puts us at a 3.16% withdrawal rate.<\/p>\n For those who have been following along, you know that our FIRE number is $875,000.<\/p>\n So let\u2019s do some simple math: Only $61,291 left to go!<\/p>\n If we assume we will contribute $2,000\/month from my paycheck to this net $813,709 and our overall portfolio grows at 3%, then in 1 year we will be at $862,791. Assuming the same $2,000\/month contribution and 3% growth, in 2 years we will be at $913,366. So we are roughly at the 1.5-year mark to reach our FIRE number! If our portfolio grows at 7%, we will be there in less than a year.<\/p>\n Only time will tell!<\/p>\n As for our total net worth, we would then add in the value of our illiquid assets like our home and cars we well. Our townhouse is valued at roughly $315,000 and our cars combined are valued around $19,000. Of course we will not know the true value of these illiquid assets until we actually sell them down the road.<\/p>\n Adding these two figures into our net passive investments of $813,907 above gets us to a total net worth of: Those following along know we have a few other items in our portfolio that we like to hide behind the scenes as our true emergency fund such as my HSA, my pension, our child’s RESP, and all of Nic’s accounts so for the sake of this exercise we are not including them.<\/p>\n Voila! Stay tuned to see how our net worth has changed in 3 months when we check back in on this.<\/p>\n What is your asset allocation and where are you at on your journey (i.e. paying off debt, wealth accumulation, retired early, etc.)? Do you calculate your net worth?\u00a0 If so, how often do you check in on your accounts? As always, thanks for tuning in and comment below \ud83d\ude42<\/p>\n If you liked this article and want more content like this, please support this blog by sharing it.\u00a0 Not only does it help spread the FIRE, but it lets me know what content you find beneficial.\u00a0 Writing is NOT my strong suit and it honestly takes me hours to write each post so the more encouragement the better!\u00a0 Engaging in the comments below keeps me motivated.\u00a0 You can also support this blog by subscribing to receive emails anytime a new post is published.\u00a0 Thank you FImily!<\/p>\n We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.\u00a0 Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:<\/p>\n We are going to dig further in this post to break down exactly where our current investments live. We\u2019ve decided to show this net worth …<\/p>\nA Look Into Our Liquid Assets<\/h2>\n
Any Liabilities?<\/h2>\n
Hold The Phone.\u00a0 We Have How Much Cash?<\/h2>\n
What Are We Planning To Do With All Of This Cash?<\/h2>\n
What Do We Invest In?<\/h2>\n
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What About Currency?<\/h2>\n
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Where Do We Stand?<\/h2>\n
\n$875,000 – $813,709 = $61,291<\/p>\nOur Net Worth:<\/h2>\n
\n$1,147,709<\/p>\nSupport This Blog<\/h2>\n
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