This is my fifth net worth update. In march I had a 61,5 % savings rate, which I’m really happy about. So here we go with my net worth report!
Figure 1: Investment value and market value of my index funds
In figure 1 you can see my index fund value as of 1. april 2019. I sold my apartment in july 2018 (and then bought a new one 50/50 with my spouse). That was when I got serious with my investing.
A small part of my portfolio is at the moment leveraged (aprox. 4 %). Read why I use leverage and why I will continue to buy more stocks on margin in the future.
The interest rate I got for this leveraged 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 44,2 % of the total value).
-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 4,8 % 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 above 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 512,6 $ every month for the rest of my life.
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!
Recently I wrote a detailed post on how I will reach a 600.000 $ net worth in only 5 years. You can read it here.
Portfolio results for february 2019
My portfolio was up 2,85 % in march 2019 (my portfolio consists of aprox. 70 % MSCI World and 30 % MSCI Emerging Markets).
I need to have patience for the results.
Time in the market beats timing the market.
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 1 and 2, but I thought it would be interesting for all the money nerds out there to see the details.
Net worth index funds: 159.439 $ (up 4.436 $ 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
196.540 now 229.410 $.
This needs a little explaination.
I refinanced my mortgage to pay down some of my stock loan. The reason why I did this was because my mortgage loan is 1,90 %, while my stock loan is 2,19 %.
Net worth housing: 28090 $ (down 32.870 $ from last month).
My current pension is 47.727 $. I recently found out that I had a pension plan in a job I had as a teenager as well.
Pension is a really iliquid asset class, because I can’t withdraw the amount before I’m 62 years old. But I think I should include it, it’s what J. Money would 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: 47.727 $ (same as last month).
After nine years with different studies I got 54.284 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: 54.284 $ (down 261 $ from last month).
My stock loan, which I consider good debt (2,19 % interest rate) is currently at 6.136 $. I bought stocks on margin for aprox. 900 $ this month.
My stock loan is now lower due to refinancing of my mortgage.
Net worth stock loan: 6.136 $ (down 33.102 $ from last month).
Total net worth
Index funds: 159.439 $
Mortgage: 28.090 $
Pension: 47.727 $
Student loan: 54.284 $
Stock loan: 6.136 $
In conclusion my total net worth is: 174.836 $ (up 4.929 $ from last month).