OMG! We are Millionaires!

[FoolFromAZ]

The $1 million is not net worth. It is just financial assets - stocks, bonds, and cash. It does not include our personal residence, collectibles, cars, jewelry, etc.

We do not own any investment property.

Our asset allocation as of 12/31/17 was:
81% stock (75% domestic, 6% international)
14% bond
5% cash

As I mentioned elsewhere (maybe in this thread), I am working to shift that a bit more conservative. Since the first of the year, I did take the stock allocation down by 1% and directed some new money into bonds as well. I haven't recalculated the allocation yet as I haven't had a chance but it's probably 1-2% lower in stocks right now.

Thanks for your response and congrats once again. I have a couple more question if you don’t mind me asking, what was the AA during your 30s, 40s, etc. Did you have to rebalance every once in a while or you set particular AA and kept adding? How did you get through 2000 and 2008 recessions? Did your portfolio lose more than 20% of its value? Did you think about moving some of equities to bond or stable? Sorry for too many questions. You may answer questions you are comfortable answering. Thx.

[disneysteve]

what was the AA during your 30s, 40s, etc. Did you have to rebalance every once in a while or you set particular AA and kept adding? How did you get through 2000 and 2008 recessions? Did your portfolio lose more than 20% of its value? Did you think about moving some of equities to bond or stable?

All good questions. I had either a thread or a blog post a while back where I listed the year-end value of our portfolio every year since I started tracking it in the early 1990s. Let me see if I can find that. We definitely took a big hit in 2008 but recovered relatively quickly. I didn't make any changes during that time. I stayed the course and rode the recovery.

As for 2000, I don't recall off the top of my head. For sure, we didn't have nearly as much money back then so I'm sure the impact was a lot less significant.

I don't think I have the AA figures over the years but I'll check. I think I might have had a basic breakdown on my spreadsheet but not a detailed accounting.

[bjl584]

As for 2000, I don't recall off the top of my head. For sure, we didn't have nearly as much money back then so I'm sure the impact was a lot less significant.

I remember 2000 quite well. That's when I graduated college.

I had exactly $0 to my name.

[disneysteve]

I remember 2000 quite well. That's when I graduated college.

I had exactly $0 to my name.

I'm a bit older than you. I finished residency in '93 so in 2000 I had been in practice for 7 years. We had some money at that point but not a huge amount relatively speaking. I was still paying off 100K in student loans, we had purchased our house in '94 and had our daughter in '95 so we hadn't done a lot of wealth building quite yet.

[disneysteve]

Here's the thread with our portfolio balances:

https://www.savingadvice.com/forums/investing-banking/86154-portfolio-balance-over-25-years.html

I pulled out two data points to address your questions FoolFromAZ.

1999: $152,896
2000: $136,426 (out of work for 3 months then took job at lower salary)
2002: $136,270

and

2007: $393,595
2008: $280,208 (market crash)
2009: $395,673 (back to pre-crash level)

So the 2000 figures were skewed by the fact that I left my job in February of that year and was out of work until April when I took a new position at a considerably lower salary. It's hard to say how much of the change was due to that and how much was due to investment returns.

But it's clear what happened 2007-2009. Our portfolio lost about 29% 2007-2008. But it was back to the 2007 level by end of 2009.

[FoolFromAZ]

Here's the thread with our portfolio balances:

https://www.savingadvice.com/forums/investing-banking/86154-portfolio-balance-over-25-years.html

I pulled out two data points to address your questions FoolFromAZ.

1999: $152,896
2000: $136,426 (out of work for 3 months then took job at lower salary)
2002: $136,270

and

2007: $393,595
2008: $280,208 (market crash)
2009: $395,673 (back to pre-crash level)

So the 2000 figures were skewed by the fact that I left my job in February of that year and was out of work until April when I took a new position at a considerably lower salary. It's hard to say how much of the change was due to that and how much was due to investment returns.

But it's clear what happened 2007-2009. Our portfolio lost about 29% 2007-2008. But it was back to the 2007 level by end of 2009.

Thanks so much for your answers.

[tripods68]

Your the classic “Millionaire Nextdoor” who drives an old Toyota.

[terri77]

Woohoo! Congratulations! I can't wait to join that club myself.

[disneysteve]

Your the classic “Millionaire Nextdoor” who drives an old Toyota.

Exactly. And I'm okay with that. I'm driving a 2006. I'm hoping to have it about 4-5 more years.

[disneysteve]

I know you said you were in disney at the moment. Lets say your entire vacation will cost you $5k. I bet your accounts grew more than $5k since Jan 1 of this year thus paying for your vacation. The market has been off to a good start.

I was reminded of this comment just now. I am not one to constantly monitor our holdings but I'm in the process of making some changes to my spreadsheet so I just updated the numbers.

Since 12/31/17, our portfolio is up about $24,000. So your point about our accounts growing by more than the cost of our recent vacation is quite accurate. The trip cost us about $4,600 but our portfolio grew by over 5 times that amount.

[corn18]

I was reminded of this comment just now. I am not one to constantly monitor our holdings but I'm in the process of making some changes to my spreadsheet so I just updated the numbers.

Since 12/31/17, our portfolio is up about $24,000. So your point about our accounts growing by more than the cost of our recent vacation is quite accurate. The trip cost us about $4,600 but our portfolio grew by over 5 times that amount.

Careful, the expense is real, the gains are unrealized. You'll have to cash in some of that $24,000 to make it real.

I'm up just shy of $80,000 YTD. It could all go away and then some on Monday.

[disneysteve]

Careful, the expense is real, the gains are unrealized. You'll have to cash in some of that $24,000 to make it real.

I'm up just shy of $80,000 YTD. It could all go away and then some on Monday.

Absolutely. I didn’t mean to imply we were spending based on that. It’s only on paper. It’s just interesting to see how quickly things can change, up or down.

[corn18]

Absolutely. I didn’t mean to imply we were spending based on that. It’s only on paper. It’s just interesting to see how quickly things can change, up or down.

Sometimes I wish I had more control like TexasHusker and wasn't at the mercy of the random walk down Wall Street. But it is what it is.

[disneysteve]

Sometimes I wish I had more control like TexasHusker

What makes you think real estate gives you more control? You go from liquid assets that you can buy and sell in seconds to ones that can take weeks or months to buy and sell. You are dependent on individual renters to pay their bills on time and not damage your property. If you have a vacancy, it takes time to fill it during which time you're on the hook for the expenses. And the real estate market goes up and down too. Not as wildly as the stock market for sure but we all know it's not a guaranteed win.

I think you need a much higher risk tolerance to be a real estate investor than to be a stock market investor. If it works for you, like it clearly does for TH, that's fantastic. Me? No way I'm getting involved in that.

[disneysteve]

Since 12/31/17, our portfolio is up about $24,000.

This was incorrect. I must have gotten interrupted or distracted. I hadn't fully updated my spreadsheet.

It turns out that our portfolio is actually up over $58,000 since 12/31/17.

That just boggles my mind.