So now we’re in 2019 already. This is my second net worth update. So here we go!
Figure 1: Investment value and market value of my index funds
In figure 1 you can see my index fund value as of 1. jan. 2019, but it wasn’t before I sold my apartment in july (and then bought a new one 50/50 with my spouse) I got serious with the investing. In august I used leverage/gearing to buy index funds for aprox. 35.000 $.
The interest rate I got for this stock loan is 2,19 %, and that’s really low. I’m letting the inflation “eat” up my loan costs. And as long as I expect 7 % annually interest rate for my index funds, I consider this as a good choice.
Criterias for leveraging my index funds
To get 2,19 % interest rate, I have to fulfill some conditions in my brokerage account:
-My funds has to be diversified, but none of my index funds can contain over 60 % of the total value. (The biggest index fund I have to this date is 48 % of the total).
-The stock loan has to be lower than 40 % of my total loan value (the loan value is 80 % of total value). My current stock loan is 30,5 % of my total value.
If I meet these criterias (which I do), I qualify for 2,19 % interest rate. If some of the criterias isn’t met anymore, I’ll head up to 4,44 % interest rate.
Figure 2: The connection between my earnings (income), spendings and my monthly FI money. As a result I will become FI when the blue and red line aligns!
In figure 2 you can see the connection between what I earn, what I spend and how much I can safely withdraw every month according to the 4 % rule. 2018 has really been a flat market, but anyway it’s motivating to see that I can safely withdraw 467 $ every month for the rest of my life. Therefore I will do everything I can to raise this dollar amount in the future. As you all know my goal is to save up 600.000 USD. This means my monthly FI money goal is 2000 USD each month. I’m aprox. 1/4 to my goal and it feels great!
Portfolio results for 2018
My portfolio was down 6,72 % in 2018 (consisting of aprox. 70 % MSCI World and 30 % MSCI Emerging Markets), and I must admit that this has been a though first year for a new investor. But I’m not giving up, I will become FI even if it takes longer time than I wish for. You can read about my goals for 2019 here!
For 2018 as a whole, my average spending was 1701 $ and my average earning was 4313 $.
Table 1: The connection between my earnings (income), spendings, value of my funds and my monthly FI money
This table shows the same as figure 2, but I thought it would be interesting for all the money nerds out there to see the details.
Net worth index funds: 129.494 $ (down 4915 $ from last month!)
Mortgage / pension / student loan / stock loan
We own an apartment 50/50 that has a total value of 515.000 $. That means my share is 257.500 $.
While this sounds good, my share of the mortgage is 196.711 $. This is much lower than last month, and the main reason for this is the currency conversion between USD/NOK. The interest rate is 2.15 % on this loan.
Net worth housing: 60.789 $ (up 4289 $ from last month)
My current pension is 45.130 $. This is of course a really iliquid asset class, because I can’t hit withdraw the amount before I’m 62 years old. But I think I should include it, it’s what J Money call a “benefit pension”. That means I can see my present pension value. Read more about that here. Do you include your pension in your net worth?
Net worth pension: 45.130 $
After nine years with different studies I got 55.000 in student loans. In my country the university has no fees, so this is a loan covering basic living expenses while you’re at the studies. The interest rate is 2.09 %.
Net worth student loan: 55.000 $
My stock loan, which I consider good debt (2,19 % interest rate) is currently at 32850 $.
Net worth stock loan: 32850 $
Total net worth
Index funds: 129.494 $
Mortgage: 60.789 $
Pension: 45.130 $
Student loan: 55.000 $
Stock loan: 32850 $
In conclusion my total net worth is: 147.563 (down 675 $ from last month).