Net Worth Update #7 – June 2019

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Net worth: $180,000 - The market drops, but I'm not selling!

This is my 7th net worth update. In may I had a whopping 64,2 % savings rate, which I’m extremely happy about!

By Route 2 FI

Index Funds

In the figure below you can see my index fund value as of 1. june 2019. 

I sold my apartment in july 2018 (and then bought a new one 50/50 with my fiancee). That was when I got serious with my investing.

A small part of my portfolio is at the moment leveraged (aprox 6 %).

  • The blue line is the market value of my index funds: $163,073
  • The orange line is the investment value of my index funds: $159,121

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. 

As long as I expect 7 % annually interest rate (after inflation) for my index funds, I consider this as a good choice.

To get 2,19 % interest rate I have to fulfill these criterias at 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 43 % 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 6 % of my total loan value.
  • If one of the two criterias isn't met anymore, the interest rate will be 4,44 %
  • The figure above shows the connection between my income (orange), expenses (blue) and monthly FI money according to the 4% rule
  • As a result I will become financial independent when the blue and red line aligns
  • If I quit my job today and never took a paid job again - my monthly FI money would pay out $543,6 every month for the rest of my life

 

It’s motivating to see that I can safely withdraw 543,6 $ 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 $2,000 USD each month. I’m over 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.

 

Portfolio results for may 2019

My portfolio was down 4,25 % in may 2019 (my portfolio consists of aprox.
70 % MSCI World and 30 % MSCI Emerging Markets).

  • Averarage expenses in 2019 so far: $1841,9
  • In 2018 my average expenses was: $1701
  • Average income in 2019 so far: $4692,7
  • In 2018 my average income was: $4313
  • Monthly FI money as of may 2019: $543,6

Mortgage

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 $226,458.

The interest rate on the mortgage is 2,10 %.

Pension

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.

Do you include your pension in your net worth?

Student loan

After nine years with different studies I got $54,119 in student loans.

In Norway the university has no fees, so this is a loan covering basic living expenses while you're at the studies.

The interest rate is 2.17 %.
I'm not paying anything on this loan at the moment.

Stock Loan

My stock loan, which I consider good debt (2,19 % interest rate) is currently at $7,744.

I bought stocks on margin for aprox. 900 $ this month.

Total Net Worth

  • Index Funds: $163,073
  • Mortgage: $31,042
  • Pension: $47,727
  • Student Loan: $-54,119
  • Stock Loan: $-7,744
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Net Worth (USD $)

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8 Replies to “Net Worth Update #7 – June 2019”

  1. Congrats on that savings rate!!! It’s also awesome that you are 1/4 to your goal.

    I’m nervous about my ability to hold out through market changes. My unscientific way to handle it is just not to look at this point:)

    1. route2fi says: Reply

      Thank you, Savvy History!

      You should read “Your Money Or Your Brain” to deal with market psychology. Then you will handle the market a lot better I think 🙂 I got a copy of it if you’d like it 🙂

  2. Hey – love the update. I am going to include your updates in my monthly networth summaries, if that’s ok? I like the use of leverage. Not often you see that in FI/RE. I’ll also post to twitter.

    1. route2fi says: Reply

      Hey,

      Of course, mate!

      Do you use leverage as well?

      I have to check out your blog!

  3. Hey – nice post. Where did the little networth number thingy come from? Not sure the technical term, the one that makes the $ move up?

    I’ve also taken the liberty of adding you to my monthly reading list that I publish. Hope that’s ok!

    1. route2fi says: Reply

      Hey, my friend!

      It’s a function you can choose in Elementor for wordpress 🙂

      Of course it’s okey! 😀

      Enjoy your weekend, amigo!

  4. Hello,

    What is financial freedom in the excel sheet. Can you please let me know how you have calculated that

    1. route2fi says: Reply

      Hey, mate! It’s the value of my index funds divided by 25, then divided by 12.

      Makes sense?
      25 because of the 4%-rule. 12 because of 12 months.

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