Today marks the first financial transparency post at the Raptor.
music selection: “The Wild & The Young” — Quiet Riot
I’m going to do these posts in five categories; Assets, Liabilities, Other, Withdrawal Rate, and Spending. There will be nothing to report in the Spending category until next month.
I have two taxable brokerage accounts and one traditional IRA brokerage account, as well as a checking account. These make up the entirety of my invest-able assets.
Wells Fargo (taxable): 23,309 – this account holds mostly closed end municipal bond funds.
Interactive Brokers (taxable): 213,223 – this account holds my discounted bonds, high yield securities, and options trades.
Interactive Brokers (tIRA): 106,722 – this account holds dividend growth plays and insurance companies with strong underwriting histories.
Checking: 6,401 – boring old cash.
This brings my total liquid net worth to 349,655. A lot of people will try to tell you it is impossible for an American to retire on that little money. Check back with me in 40 years and we’ll see if they are right or wrong.
I have no debt. But I’m doing this analysis not in the sense of US GAAP assets and liabilities but in the sense of investing. In that case, I consider my home and my care financial liabilities.
Home: It is paid for and has a market value of about 110,000. It costs me about 4,000 dollars a year in insurance, real estate taxes, and maintenance.
Car: The raptor-mobile is a paid for 2002 Chevy Cavalier with 150,000 or so miles. It has no mechanical problems but consumes fuel and oil. It requires about 400 dollars a year to keep minimum liability insurance on it. It also eventually needs to be replaced. This goes against the early retirement community grain, but I like to buy my cars new so I’m looking about a 15,000 dollar need in the not too distant future.
Income tax: My options strategy used to be quite different and focused on writing options at LEAP expiries. I later discovered the time decay curve and that the sweet spot was at six weeks. But I have some legacy positions that close this 15th that will generate just under 46,000 in short term capital gains. At my 25% marginal tax rate, I owe an un-budgeted 11,500 in additional tax liability. I’ll need about 1,300 in additional monthly options trading income to fund this liability so 2106 is going to be tight.
I have some low quality numismatic gold and silver coins. Their value is primarily driven by their metal content and are thus not something I consider a performing asset. I hold them as zombie apocalypse level financial disaster insurance. These have a market value of about 3,500 dollars.
I have my main taxable account set to send me 2,800 dollars a month to my checking account via direct deposit. That is 33,600 a year. Against my liquid net worth of 349,655 that is a withdrawal rate of 9.61%, quite a lot higher than the conventional wisdom says is plausible. My projected 12 month take from dividends, distributions, and interest is 31,578. So 93.98% of my need is met before any options trades. I normally need about 170 dollars a month in options trades to cover the shortfall, a low hurdle. This year however has the big income tax bill hanging over me and requires closer to 1,500 in monthly options premiums. I may end up drawing down from the stockpile to meet needs this year.
Spending runs about 2,000 a month but varies widely. I’ll report a summary next month as my totals withdrawn from checking by direct draft and for each of my credit cards. I don’t see much point in making this another budget blog. I’m not that frugal and there isn’t much to be learned from me on that front.
Devour your prey raptors!