2018 Wrap Up - How did you do?

[disneysteve]

2018 was obviously a difficult year for those who invest in equities as most of us here do. How did you fare? I just finished our year-end financial spreadsheet. We finished the year up slightly, so not a complete disaster. For the year, our portfolio was up 2.23%. We also reduced our mortgage balance by a little over $12,700. So net worth for the year is up by about $35,000. Not great but at least it's positive.

[Jluke]

Looking only at investment accounts:

with new contributions (appx $43k) my investments were only 14k higher than last year.

Mortgage principal decreased about 9k, which is good given it was the first year of 30-year term.

[srblanco7]

Primarily invested in equities and ended 2018 with an increase in portfolio value of 4.5% for the year (note - this includes what we contributed). Solid returns on a private company stock investment offset our losses in the stock market (pretty much a "wash"). The increase in our portfolio was substantially equivalent to our 2018 contributions.

[corn18]

Total savings went up $70k. Can't quite figure out what all the ins and outs were as we bought a house and put 20% down and that came out of savings.

NW went up $183k, which again, with all the ins and outs, I can't quite figure out why, just that it is up.

So, yeah?

2019 is shaping up to be a seminal year for us. NW could hit $2M depending on how my RSU's do.

[james.hendrickson]

I've been mulling over how to best allocate my capital for 2018. Were any of you guys successful in opening up a new stream of income last year?

[kork13]

Thanks for starting the thread, it reminded me to go in & log our numbers for the year.

The major numbers:
Net Worth: +$138k (up 19%)
Homes: +$19k (up 3%)
Mortgages: -$106k (paid off our rental's $86k mortgage, $30k paid down on our current home)
Investments: -$4.5k (used a large chunk of investments to pay off the rental... but investment returns of +3.7k/up ~2%)
Cash Savings: +$16k

It'll be interesting to see how things shape up in 2019. My wife will be medically retired from the military & going back to school (she's settling on a 1-2yr Physical Therapy Assistant program for the moment, to start her into the field), and I'm likely going to get reassigned/moved somewhere by the military. With any luck, I'm hoping to get selected for a career field change as well (fingers crossed). So I expect that our finances will be in flux for alot of 2019.

[disneysteve]

Just for clarity, I know we don't all use "net worth" to mean the same thing. For me, it is purely our financial assets - savings, checking, stocks, bonds, mutual funds - minus any debt. It doesn't include the value of our house, cars, or other belongings.

[corn18]

Just for clarity, I know we don't all use "net worth" to mean the same thing. For me, it is purely our financial assets - savings, checking, stocks, bonds, mutual funds - minus any debt. It doesn't include the value of our house, cars, or other belongings.

The definition of net worth is discussed ad nausea on the bogleheads forum. It really is incredibly simple: assets-liabilities. Any other definition is not net worth.

The issue usually centers around someone including cars, houses and other assets. Who cares? It doesn't change the definition of net worth.

I don't particularly care about net worth because I can't retire on $2M of net worth. I need $150k / year of income. If I own a $2.3M house free and clear and have no savings, I can't retire. If I own a $500k house with $1.8M in savings, I can retire tomorrow. So I track savings with more interest than net worth. But I don't call it NW.

[disneysteve]

The definition of net worth is discussed ad nausea on the bogleheads forum. It really is incredibly simple: assets-liabilities. Any other definition is not net worth.

I agree. Your true net worth is exactly that, but like you, I'm not at all concerned about our net worth. I'm only concerned about our financial assets. Based on current expenses, we need $2.1M in investable assets to generate the income we want in retirement. How much our house or cars or jewelry or collectibles or furniture is worth is irrelevant as none of those things generate income.

So I suppose I shouldn't call my number net worth. Is there actually a commonly accepted term that I should be using instead? What's the right word for financial assets minus debts?

[Jluke]

So I suppose I shouldn't call my number net worth. Is there actually a commonly accepted term that I should be using instead? What's the right word for financial assets minus debts?

liquid net worth

The part of an individual's net worth that can be readily turned into cash. Liquid net worth includes investments such as stocks and mutual funds, but does not include assets that are difficult to readily convert, such as real estate or cars.

[Scallywag]

Things like houses or land used to be referred to as "immovable property" as opposed to cash which was "movable".

[disneysteve]

I did some tweaking of my "final" numbers. It turns out I was missing something. A stock we own had spun off a division and issued new shares. I missed that somehow (another problem with not getting paper statements as per my other thread on that subject). Our position ended the year worth about $1,300. Not a huge amount but more is better, right.

Also, I have always listed our savings bonds on the spreadsheet at face value, not actual current redemption value. I finally decided to change that and start using what the things are actually worth, which is over $18,000 more than face value at this point, so that had more of an impact on the bottom line. It makes comparing to last year fuzzy since I calculated differently that time but it will work going forward.

[Like2Plan]

We are down about $150 from last years' grand total. Not so good when you consider our contributions for this year. One bright note is we are doing conversions to Roth and we now have about 5% more Roth compared to last year so I feel we are making some progress there.

DH is retiring this year, so it's going to be our last year for contributing to a 401k and a spousal Roth. Then, we are going to switch to taking distributions which might be difficult to get used to at first.

[disneysteve]

We are down about $150 from last years' grand total. Not so good when you consider our contributions for this year.

The amount we're "up" for the year is definitely less than we contributed.

DH is retiring this year, so it's going to be our last year for contributing to a 401k and a spousal Roth. Then, we are going to switch to taking distributions which might be difficult to get used to at first.

I'm sure that will be very strange. Over the past couple of years, I've seen more and more articles in the financial publications about drawing from your retirement accounts. It used to be all about putting money away but as more and more baby boomers retire, the focus has shifted a bit which is certainly helpful.

While I'm looking forward to retiring, I'm not looking forward to actually starting to spend our savings. That will be a huge mental shift that will definitely take some getting used to.

[corn18]

I know we are going to struggle with withdrawal vs. savings. I am examining the myriad withdrawal methods and not sure where we will end up. I am liking the variable percentage withdrawal method right now. SWR is more of a "can I retire" method vs. what will I do in retirement. And then I always have the spreadsheet that includes a SPIA. I am seriously considering buying a 15 year period certain SPIA @ age 55. It would generate $54,000 / year which matches my SS @ age 70. That would give us $45k of COLA pension and the SPIA for $99k of guaranteed income from 55 to 70. Then SS will kick in and continue the $99k but now it would all be COLA adjusted. The nominal return on the SPIA right now is only 2.4% and is not COLA, so there is some risk there. The $99k covers all of our expenses except vacations. The SPIA would cost us $675k and would leave us with $1.1M that we would use for whatever we want. If I use a 4% withdrawal rate, that means we would have $44k/year for vacations or whatever else we want. That should be plenty.

Still have to get to $1.8M with a paid off house.