I’m Just Saving…Net Worth Update

This is going to be another personal finance diary entry, where I will briefly track my accumulation (or not) of assets. 

I am actually not going to track total net worth on a monthly basis.  As I mentioned in the last of these “just saving” posts, a big hunk of my net worth is tied up in illiquid and relatively hard to value assets.  I am including my personal residence in that category.  So, I am just going to track liquid assets on a monthly basis and then maybe once a year I will take a stab at sharpening the pencil on the whole ball of wax.

I do not really maintain and track a budget.  I do think they are good for surveying the status of one’s finances and/or getting a little jump-start on discipline where it is lacking.  I used a tight budget a few years back to get my spending in line and just get really granular on evaluating spending decisions.

I have a draft post on a related point in some (premature) state, so I don’t want to delve too deeply, but now I prefer to automate savings and household spending as much as possible.  This way I do not have to exert mental effort to comply with the budget (or forego spending).  Rather, I would have to affirmatively divert funds from the plan to engage in unplanned spending.  Sure I can do it, but I’ve got the Nudge working in my favor.

I use separate accounts, such as an automatic split of my paycheck into savings and then a portion into an account for household expenses. If the household expense account needs to draft from another account, I know expenditures exceeded the allotted funds.  I reevaluate the allocations of cash on at least a yearly basis.

I have also found it beneficial to sort of stress my budget occasionally, such as maxing out the 401(k) when I wasn’t really sure I had enough cash.  After a few months, you get used to it and you are fine (or you’re not and you can lower the contributions for a little breathing room).  To me, setting the automatic transactions and just sort of staying lean on cash are more like making “lifestyle changes” versus crash dieting in the weight loss context.

I do think tracking helps keep one on plan and motivated though.  So I’m just tracking the bottom line figure versus tracking all of the inputs.  If something surprising pops out, I will examine my accounts to see if we accidentally paid daycare two kidneys rather than the standard fee of one. I use Mint to track most of my transactions. [I know you were expecting the obligatory seven affiliate links to Personal Capital, but honestly, I haven’t had that great luck with it correctly tracking my investments, much less all my spending].  I also use the Mad Fientist FI Tracker to keep track of the invested/liquid assets over time.

Anyhow, I am not trying to give the impression I have all the answers. I’m just a guy with a blog tracking some stuff. We will see how it goes.

This month

When last we convened to discuss my private laundry, I recorded that I had about $172,000 in marketable securities as of the end of February.  I am glad to be doing this update today as the markets dipped over 2% today.  These numbers will not reflect that move.

After the lead in, this feels very anti-climactic, but my marketable securities total as of the end of March 2018 is ~ $175,000.

Scanning through my Mint accounts, I think this is pretty much all due to savings, with virtually zero appreciation.  That sounds about right, as the S&P 500 was down ~ 2.2% and I have a material allocation to fixed income investments, including I Bonds.

While I have most of my assets in capitalization weighted index funds, in my largest account I allow myself to adjust the stock allocation between 60% and 90% depending upon valuations (I look at several indicators of market valuations to make this determination).  So right now, I’m at 60% and have a pretty large allocation to fixed income (pretty much all short duration like…I Bonds). Actually, I guess this is similar to one of the timing strategies you can backtest, as discussed in my prior post on Portfolio Visualizer (the one where you modify allocations based on CAPE).

I also have about 20% of my assets allocated to a DIY (of course) trend following strategy.  I may write about it in the future but I basically follow a long-term simple moving average and go to short duration fixed income (or longer term, if the real yield is not below the historic mean) when the trend is negative. But this is long and strong at this time (although the signal is getting kind of close to triggering a sale after the recent weakness). I have all of this memorialized in a written Investment Policy Statement, but I can amend by consent, with a meeting of one.  I do think it serves to limit the ability to make impulse decisions though.  You at least have to stop and think before you amend your IPS (or violate it).

I will likely discuss these two accounts/strategies more in future posts (unless they suck wind, in which case, you will never hear a peep).  Thanks for reading and I hope you have a happy Trade War Tuesday!