One month has passed and it is time for Transparency mark II

music selection:  “Into The Nothing” — Breaking Benjamin

weigh-in: 212.6 +1.6 – doh!

ASSETS:

Wells Fargo (taxable): This finished the month at 21,239, down from 23,309 at year end.

Interactive Brokers (taxable): Here I finished the month at 165,501, down from 213,223 at year end.

Interactive Brokers (tIRA): This account is also down to 101,200, from 106,722 at year end.

Checking: Here is a bright spot up to 8,021, from 6,401 the prior month.

Total investable assets come to 295,961, down 15.36% from 349,655 at year end.

 

LIABILITIES:

Home: paid

Car: paid

Income tax: Still estimating about 11,500 due by 15JAN2017.  Roughly on track to cover the liability but it is going to be tight.

 

WITHDRAWAL RATE:

I am keeping my withdrawals at 2,800 dollars a month.  Versus my investable asset base of 295,961, that is a withdrawal rate of 11.35%.  Obviously, this is higher than last month and is approaching a range that makes me a little uncomfortable.  I expect roughly sideways market action for much of the year and should be able to recover if that holds.

 

SPENDING:

Spending was 1,702 for the month, well below the 2,000 target.  The month saw two major home expenses for chimney repair and water heater replacement.  I put all expenses on the credit card and pay the balance in full each month to collect 2% cash back.  So those expenses will actually show up on next month’s spending report.  Might go over budget.

Devour your prey raptors!

Sharing is caring!

Financial Transparency as of 31JAN2016

Never miss another opportunity to devour prey!

9 thoughts on “Financial Transparency as of 31JAN2016

  • February 1, 2016 at 8:42 pm
    Permalink

    Thanks for the update. As we’ve discussed before, your withdrawal rate made me uncomfortable before they reached this level 🙂
    Good luck

    Reply
  • February 2, 2016 at 12:03 pm
    Permalink

    You’re doing it though Raptor. What you’re buying every month with that $2800 is time. Congrats! Even if you bleed down your principal a little while you plan for the future, it still seems worth it to me.
    -Bryan

    Reply
    • February 2, 2016 at 5:55 pm
      Permalink

      Thanks for reading, Surfer. The great thing is I’m not really spending principal. Distributions, interest, and dividends cover my entire budget (except for maybe the one-off extra tax burden this year). I will be OK for decades, at least.

      Reply
  • February 2, 2016 at 5:06 pm
    Permalink

    Hi FV,

    It looks like your taxable IBKR account got decimated last month – down something like 21% – 22%. Is this volatility normal for you? In the years you have managed your investments, have you encountered such steep drawdowns before?

    To be honest, even a 3% – 4% dividend yield from a portfolio sometimes looks like “too much” and I ask myself “what could go wrong” so I can mitigate risks to income. You probably hear this a lot, but isn’t a 10% withdrawal rate a little risky?

    I don’t know everything about you, but I would be curious to see how much your annual dividend & interest income is as well as how you spend your expenses. Perhaps you like to live it up a little, or perhaps I am just super stingy, but I am not able to comprehend how you spend $2,000 – $2,800/month if you have a paid for house, don’t have work related expenses ( gas, car depr, work clothes, lunches out,).

    I don’t mean to be negative or offensive, but I am really curious about it all.

    Reply
    • February 2, 2016 at 10:00 pm
      Permalink

      Yeah, my taxable got hammered for the month. It is normal because I have a large allocation that can be thought of as “short volatility” that is leveraged via options. So when there is a spike of volatility, I get hit more than double to the downside. I make it up with superior returns on that section over long periods of time. At least it has always come back around for me so far. Last month also saw some MLPs of mine that are purely midstream tank with the price of oil/gas. That doesn’t make a whole lot of sense but I think KMI has the market spooked.

      The conventional wisdom is that 10% isn’t sustainable. That is, I guess, the whole point of why I blog about this; I disagree. My current forward 12 month dividend, distributions, and interest are currently 33,655 [9.4% vs cost basis for IB and 10.4% vs cost basis for WF]. So my budget is covered 100.16% right now. Some of those distributions could be cut and some might not materialize because I get called away before getting paid but it is a good ballpark figure. Having a healthy allocation to bonds and debt instruments is critical for me. The rest, when needed, comes from options premiums. This year, options premiums are probably going to the tax bill though.

      Yeah, I’m spendy pants. My only real expenses are utilities, food and liquor and I spend too much on all of them. I could easily cut back (and will if things get truly ugly) but for the most part I let myself have some luxuries like paying someone to mow the lawn. I have slowed down a little as of late and except for the home repairs, I think I’ll see monthly spending closer to the 1,700 range for most of the year. Time will tell. I might do a monthly spending report for quarter ends just to keep things fresh, especially if there is interest. I just didn’t think anyone would want to read yet another breakdown of cashflows, every finance blogger already does that and to me it is getting a little old.

      Reply
      • February 2, 2016 at 10:44 pm
        Permalink

        You got me curious and I did an estimate of what my cash out for Feb will be (its based mostly on Jan spending because of cc billing lag). I get about 1,550, even with the 600 or so I spent on home repairs. So a baseline month where there are no concerts, football games, etc, is only about 1,000/mo. I have a lot of wiggle room 😉

        Reply
  • February 4, 2016 at 4:12 pm
    Permalink

    Hello Raptor, I have a question for you,

    I’ve seen on several books and blogs that optimal distribution between fixed-income and equities is used to be 40%/60%, for a passive-investment strategy.

    On the other hand, by Trinity study, it is said that optimal distribution for a SWR of 4% is 25% fixed and 75% equities, again for passive investment.

    In the case of covered calls, what would it be the optimal distribution? Which is yours?

    Regards from Spain.

    Reply
    • February 4, 2016 at 5:01 pm
      Permalink

      I try to keep my portfolio in thirds for fixed income, high dividend yield, and options. It fluctuates with market conditions. I’m not sure there is a way to model what I am doing with a back test. And I’m not sure it matters. Psychology is a huge part of the story. If you can’t sleep at night, you will eventually shoot yourself in the foot by selling low. So, to me, the “optimal” allocation is a personal decision and is probably more heavily weighted towards fixed income than back-testing science recommends. Knowing what history shows can be useful but knowing yourself is more useful.

      Great to hear from a Spanish Lizard!

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.