My Personal Finance Journey

Personal finance observation, musing and decisions in a journey toward financial independence by 2020 with at least $3 million.

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Monthly Update - January 2010 ($970,356, +$452)

Contributed by mm | February 5, 2010 5:54 PM PST

6398-networth.jpgIf I can only add less than $500 to our net worth tally every month, it will take us another five years to reach the 7-figure milestone. On the other hand, the tiny improvement in January is not exactly bad, considering the brutal market condition.

On the income side, we started the year with a positive note. Aside from our regular income, many long-term business relationships are again generating cash results, which helped our cash stockpiling. We continue to save about 40% of our regular income.

The result from the investment side is cloudy at best. After suffering some loss, we continued our flight to safety which gradually lowered our risk-taking positions. The employee stock option lost 30% of its value at the end of 2009, although we hedged some of the loss. We will have a portfolio report later with more details.

So, welcome to my net worth report for a while:


More notes:

- We continue to be very defensive in our asset allocation, keeping almost 60% in cash and a sizable fixed income position in our mutual fund holdings. I am still the believer that we haven't seen the end of the financial crisis yet.

- The "Other Investments" line includes the accounting value of the "covered call" we sold to hedge our employee stock option position. (Detailed discussion is here, here and here.)

- Our receivable primarily includes our rental deposit as well as some expected tax refund.

So, we are still within a stone's throw of our seven-figure ambition. Of course, in this economy, one can never retire on a million dollar nest egg, especially we are still in our mid-thirties. What's the next milestone we should set? $2 million? Or $3 million?

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JMT Commented on February 6, 2010

have you thought about the income you will need to retire? is it 80% of your current income? 1 million is a great goal, but to last you 40-50 years it is not near enough. additionally have you decided on what type of portfolio you can have in your later years to generate income?

John Galt Commented on February 8, 2010

a few thoughts:
1.) you failed to see the financial crisis coming. What makes you think you will be able to accuarately anticipate when it will be "over"?
2.) "In this economy, one can never retire on a million dollar nest egg." Are you kidding?? What a foolish statement. Totally depends on your cost of living. Plenty of people need much less, and plenty need much more. As JMT pointed out, without deciding what your number is, you're pursuing arbitrary goals.

Ed Commented on February 10, 2010

To the comments above, I highly doubt he has any intentions of retiring once he hits the million dollar mark. It is simply a mildstone. You gotta set small goals and adjust those goals as you progress. What's wrong with that. Of course 1 million is certainly not a small goal but it is all relative. I recently have been setting our goals in 50k intervals. Obviously the seems to fit the definition of small goals a little closer, but nevertheless. I would shot for 2 then go from there.

JC Commented on February 16, 2010

I think 1 million bucks is a good goal. its easy to be critical of others goals when it doesn't math our own. I think that once it is attained a new goal can be set, and reaching it will be much easier.

Dolores Commented on February 17, 2010

My husband and I planned on retiring five years from now in Florida but housing prices are so low there, we’re thinking it might be worth it to make the leap now, and maybe even work part-time. Our lender Intercontinental Capital Group could give us a rate below 5, which is lower than anything we’ve ever had before. Do you think prices and rates will be like this in five years?

SR Commented on February 22, 2010

Very inspiring. Any reason you don't have real estate (e.g. house) included in your calculations?

Justin's Advice Commented on February 24, 2010

Go for at least 3 million. If you really want to retire comfortably nowadays, and not work AT ALL, then 3 million seems very safe to me.

SR Commented on February 26, 2010

It's easy to calculate how much you will need for retirement - It's the present value of all the future withdrawals from retirement to death; at the time of retirement. I have seen recommendations that suggest you will need 70-85% of your income after retirement. Don't forget to include inflation in your calculations

Barrons Commented on February 26, 2010

Man! You really need to improve your investment side. Otherwise your hard earned $$$ will be eaten by inflation. If you have time, you can read Jeremy Siegel, Jeremy Grantham, and David Swensen's books. You will know your current high cash portfolio is "Defensive" in short term but disastrous in long term.

China Barrons

Pokerman Commented on February 28, 2010

Hi, I´m following your blog for quite a long time and love it. I have a similiar target, but its tougher: i want to get 1 Million dollars by playing online poker within one year. Since had some bad luck with stocks in the past, I want to try it this way and i think it´s really feasible... I´m blogging too about my target, if you´re interessted just look at - maybe I´m gonna get to 1 Million before you do :)

Savings Commented on July 7, 2010

Some financial institutions offer online-only savings accounts. These usually pay higher interest rates and sometimes carry higher security restrictions.
it's good site

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