Net Worth Update #6 – May 2019

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Net worth: $188,000 - Can I Retire Now!?

This is my sixth net worth update. In april I had a whopping 72,4 % 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. may 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 5%).

  • The blue line is the market value of my index funds: $170,334
  • The orange line is the investment value of my index funds: $154,988

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 43,4 % 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 5,1 % 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 $567,8 every month for the rest of my life

 

It’s motivating to see that I can safely withdraw 567,8 $ 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 april 2019

My portfolio was up 6,9 % in april 2019 (my portfolio consists of aprox.
70 % MSCI World and 30 % MSCI Emerging Markets).

  • Averarage expenses in 2019 so far: $1894,6
  • In 2018 my average expenses was: $1701
  • Average income in 2019 so far: $4725,2
  • In 2018 my average income was: $4313
  • Monthly FI money as of may 2019: $567,8

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 $226,907.

The interest rate on the mortgage is 1,90 %.

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 $53,973 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 $6,805.

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

Total Net Worth

  • Index Funds: $170,334
  • Mortgage: $30,593
  • Pension: $47,727
  • Student Loan: $-53,973
  • Stock Loan: $-6805
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Net Worth (USD $)

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4 Replies to “Net Worth Update #6 – May 2019”

  1. Congrats on an awesome month! That’s a record low monthly spend – good job 🙂

    1. route2fi says: Reply

      Thank you, Carl! It’s interesting to follow your journey 😀 I like that you separate in three different FI goals. Will there be any change in your journey when you reach the three year goal?
      Btw, how has your sessions increased on your blog from you started to this day?
      Any tips on where I should promote my blog besides Twitter?

  2. Great work this month R2FI. Passing the quarter way mark to your target much feel great. Also a 72% savings rate is incredible. That’s where the maths of hitting FI becomes really powerful.

    Having a specific target of 5 years must really help with the focus. As you know I’m thinking a lot about this at the moment. I think part of my issue is that I have never had a specific goal like this. I’ve just been saving hard as that’s “the right thing to do.” Now I’m approaching the point where I can walk away I’m being forced to think about what it was all really for.

    1. route2fi says: Reply

      Thank you so much, Caveman!
      Yes, it feels fantastic! And as you say, you will get a lot more motivated to reach FI if you have a clear goal! My 5 year goal is a really clear focus. I’m really looking forward to read about your goals and maybe to see some numbers? I’m sure it will help you to focus even more at the goal.
      The love I share for FI wouldn’t be the same if it wasn’t so clear in my head.
      I actually visualize often that I reach FI and fantasize about how great it will be to spend the days exactly as I want.
      The best of luck to you, and please inform me when you got that new post up! 😀

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