Alright, this is the big one. Today for the first time I unveil everything I have in all my accounts. After I go through each of my accounts, I’ll add it all up and then subtract my liabilities (really just one, my student loan) to arrive at my overall net worth.
Why do this? Simply because tracking my net worth is essential in letting me set the stage on how I can reach my retirement goal.
Ok let’s get started.
This takes up quite a percentage of my net worth. Probably more than it should. Conventional wisdom tells you to have 3-6 months of living expenses. This figure is probably closer to 12-16 months.
But I like having that extra security blanket (or two or three). Incase I lose my job, I won’t have to feel the stress of immediately finding another one. It gives me options such as doing some traveling so I can take stock on where my new path forward should be.
For many years this was my main account to build up but I haven’t contributed to it in a while and I don’t plan to any time soon. Any savings that doesn’t go into my 401k or IRA will go directly to my brokerage account. With that said, it does get .49% interest which adds up to around $20-$25 per month. I usually just add that to my checking for a little extra cash.
This is my biggest account by a healthy margin. And because it’s fairly large, the daily gains and losses certainly have more pop than my other accounts. My contribution for the year is on track to be just over $16,000 so I’m sort of close to maxing it out ($19,000 for 2019) but not quite. My employer does match 100% of the first 4% which comes out to around $3,200. Just remember, an employer’s match has no bearing on the maximum amount you can put in.
Roth IRA ($57,115.27)
I only contribute $300 per month to this account. If I were to max it out, it would be $500 per month as the government has set the maximum for all of 2019 to be $6000. I’d like to max this out eventually if I get bigger raises down the line.
This is the account I really want to build up because if I were to retire early, I won’t be able to tap into my 401k or IRA without incurring that pesky 10% penalty for both accounts. So I’m hoping to rely on this account in between the time I retire and when I turn 59 ½. Thus my reasoning to really focus on growing my money here.
My plan is to be a little more aggressive with this account than my 401k and IRA. I’ve been successful with picking individual stocks so far and plan to continue with that strategy. If you listen to mainstream financial pundits, they’ll strongly caution against that. But the more I learn about how balance sheets work, the value of P/E ratios and by subscribing to Seeking Alpha to get good stock tips, the more confident I feel in picking individual stocks. I don’t just want to rely on a typical 7-8% return per year. I’m good with that for my 401k and Roth IRA as I consider those my “safe” accounts. But for this account, I want to play around a bit. In the end, it’s all about growing money but if I just went with a simple S&P 500 index fund (although I will likely include that in my portfolio), things would get a little too boring for me. With that said, you can’t just blindly pick stocks and hope they go up. That’s just straight up gambling. Research needs to go into what stocks you need to buy. But that’s another topic for another day. (Probably a good time to put that I’m-not-a-financial-expert disclaimer somewhere on my site).
As far as what I actually have in this account, I have $1,645.60 in Apple stock and 1,094.34 in Facebook with the rest in cash (technically it’s in a money market fund). I’m holding a lot in cash right now because with a possible recession looming and earnings from many companies down year over year, I’m sensing a big drop where hopefully a bunch of stocks go on sale.
Side Business ($2,500)
I have a very small side business that I started with my business partner where we developed a web program that helps school districts facilitate their vendor bid processing. Although we don’t get paid a ton (around $3,500 a year that’s then split up), it’s about as passive incomey as it gets because very little maintenance is done. Right now we’re servicing two school districts and they simply send us a check every year for the rights to use our web program.
School Debt (-$3,014.92)
This is my only debt and thankfully it’s very manageable. I could easily pay it off now but since my interest rate is tax deductible, I don’t mind the monthly payments.
Lump Sum Accounts ($-)
I do have other two other cash accounts that together come out to be nine grand. I call these Lump Sum Accounts because they are dedicated to at some point buying expensive items like getting a new laptop, new car, traveling, etc. In the near future, I’ll definitely be using it for traveling, buying new tires and maybe getting Invisalign. So because I’ll definitely be using these accounts to buy some stuff in the near future, I don’t count them as part of my net worth. However, they do free me up to keep saving for the long term in my other accounts so there is a net worth building component there.
Ok, so when we add it all up and then subtract my student loan, we get:
NET WORTH = $264,948.77
Not too bad for a single guy in his thirties. But it’s still a far cry from where my target goals are.
And what are those target goals? Well, stay tuned for my next post and I’ll go over year by year where I expect my net worth to be.