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 - May 2010 ($965,329, -$45,686)

Contributed by mm | June 7, 2010 4:34 PM PST

6398-networth.jpgThe renewed global economic uncertainty and ensuing stock market "correction" dealt a big blow to our portfolio. Our net worth retreated to 6-figure with a monthly drop of 4.5%.

Most damage was done to our vested employee stock option positions, which behave disproportionately to the change in the underlying company stock. Our partial hedge helped, but not much. On the other hand, our continued "light" exposure in equity positions spared us from more severe damage.

So, how does it feel as a millionaire club drop-out?

Actually, I feel very good. Why? Since the beginning of the year, we chose to be very risk-reverse with the belief that the bull market had grown teeth and politicians cannot solve a debt problem by issuing more debt. During the same period, we have steadily lowered our equity exposure from over 30% to less than 18% at the end of May. With over $600k cash at hand and another $150k+ in low-risk fixed income funds, all we can pray for is for the market to take another skydive and present much more valuation opportunities.

So, it doesn't bother us much that our net worth dropped from 7-figure to 6-figure. With a solidly growing career, our saver's mentality that preserves 50% of our after-tax income, and the void of any debt obligations, whatever the market can do to our net worth now won't affect how we live our lives in the next decade. Yes, we are in it for the long run.

6408-networth.jpg

Additional notes:

1) We redeemed about $42k of equity funds in the middle of May amid the global sell-off. We continued to add to our fixed-income holdings, primarily in inflation-protected bonds (thru a Vanguard fund).
2) Our employee stock options will expire between 2011 and 2013. All options with 2011 maturity have been properly hedged.
3) Summer is coming and the family will have vacation in NYC and Orlando in late June and early July. I always enjoy the time to research and arrange the next trip and this time is no exception. Cannot wait to relax after a busy spring.

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Deborah Commented on June 7, 2010

Overall, you are doing well. I looked back to October of 07, the peak before the challenge and you are up from there. I am sure a lot of people can not claim that.


2million Commented on June 7, 2010

MM- I'm curious about your current living situation - are you still living in China or have you returned to the US? Im also wondering if your planning on buying real estate whether your located at. thanks!


MM Commented on June 8, 2010

2million - thank you for asking. Currently i'm still living in China. Local real estate market is too hot and i'm renting now.


Penny Commented on June 10, 2010

Looks like you've got everything planned out. Good for you for being such a great saver. I'm sure you'll be back in that 7 figure in no time. ;)


Mike Commented on June 20, 2010

I prefer to rent rather than buy. It is simply cheaper, especially in places like Hongkong.


Putixing Commented on June 23, 2010

Thanks for the report. Your fixed income funds are performing extremely well amid the downturn. Any chance you can shed some light about your strategy or selections?



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