Each month, I break down my finances and financial progress. This serves primarily to keep me accountable. I hope it also helps others see the power of an income centric approach to early retirement investing. Today’s report covers the month of December 2018 with year to date updates.
music selection: “I Want A New Drug” — Huey Lewis And The News
weigh-in: 197.0 +0.4
Wells Fargo (taxable): This finished the month at 26,378 down from 28,124 at last month end. That is a 6.21% monthly loss. Year to date, this account is down 4,303 or 14.02%.
Interactive Brokers (taxable): Here I finished the month at 159,221 down from 239,105 last month. That is a monthly loss of 33.41% and a year to date result of minus 50.83%. There is no putting lipstick on the pig. I got cut in half by being over exposed to volatility.
Interactive Brokers (tIRA): This account is down to 146,729 from 158,135 last month. The monthly loss is 7.21% and my year to date result is a 10.01% loss. The account is narrowly trailing the benchmark.
HSA: This account is down 769 on the period to 2,567. That is a 23.05% move in the wrong direction. For the year, I am down 833 or 25.61%. This account is expected to decline a few percent a year (excluding new contributions) as I spent from it for doctor’s appointments and medication.
Checking: Cash is down to 8,588 from 8,747. That is a 1.79% decrease from last month. Year to date cash has changed by minus 28.51%, driven by spending and transfers to HSA.
Total investable assets come to 343,483 down 21.48% from 437,444 last month. The year to date mark is minus 35.14%. I am down heavily versus the S&P benchmark including after deducting spending.
Don’t forget to see the long term trend at Lizard King’s Transparency Page.
Income tax: I have a 12,945 tax asset on deposit with the service. Because of the mishap with UVXY, I expect to have a trivial tax liability this year and should even qualify for the maximum ACA subsidy. Net tax rate could be negative for 2018.
I have automatic withdrawals from my taxable investing accounts set to provide a cash income of 25,000 a year. Against a liquid net worth of 343,483 that is a withdrawal rate of 7.89%. I earned 1,248 in options premium income during the month of December and cleared 36,176 in options for the year or 1.45 times budget. Additionally, my income centric approach to investing includes 27,111 in expected distributions, dividends, and interest for the year or an additional 108.44% of budget. In the event of a downtown, I should be immune to the need to “sell at the bottom”. At the same time, I can expect steady and robust growth to keep ahead of inflation. Together, my budget is covered 2.53 times over by portfolio earnings. This is a great comfort as the portfolio balance declines with the market correction as I am not obligated to sell shares into a downturn to meet budget.
Spending was 2,592 for the month, which is over the 2,000 target as is normal during Christmas. For the full year I spent 26,559. Without the 5,000 or so I spent on Stansberry products, I’d be well under budget and should be under budget going forward. I am however 1,559 over budget for the year. It won’t count as spending because I classify movements from one account to another as “transfers” rather than “spending” but cash will deplete by 3,450 in January to further fund my HSA.
I earned 150 this month or 138 after payroll taxes for my efforts at the Memorial Hills UD municipal water board. It is a small amount but over a year’s time it adds up to another full social security credit. This should improve my eventual payout when I reach qualifying age.
Devour your prey raptors!