Another year is in the bag.  Short version is I narrowly missed the performance of indexing to the S&P.  Indexers rejoice and jeer at the active investor!

music selection:  “One Step Up” — Bruce Springsteen

Each month, I review my financial results for the period and year to date.  This includes a summary of my spending, budget, and some ratios to benchmark portfolio performance.  Hopefully, someone is inspired by this to achieve Financial Independence.

 

ASSETS:
Wells Fargo (taxable): This finished the month up 160 dollars at 29,159.  That is a 0.55% monthly increase and good for 10.54% annual gain.  This account also produces 9.03% in annual distributions, which sweep to my checking.  The account is bond centric with most investments in Closed End Funds for safety and income.

Interactive Brokers (taxable): Here I finished the month at 184,463 down from 198,473 last month.  That is a monthly loss of 7.06% and year to date gain of 15.85%.  I struggled here this year as I transitioned my options strategy from covered calls to net debit spreads.

Interactive Brokers (tIRA): This account is up 2,187 to 166,258 versus last month.  The monthly gain is 1.33% and the year to date gain is 13.32% despite converting about 13,000 to Roth.

Interactive Brokers (Roth): This is up 600 dollars to 13,820.  The monthly gain is 4.54% and the year to date gain is meaningless as the account started the year at 0.

HSA: This account is up 829 on the period to 9,439.  That is a 9.63% move in the right direction or 267.77% gain year to date, driven largely by my annual contribution.  This account is still “small” and will see wild swings until it has more ballast.

Checking: Cash is down to 10,481 from 12,615.  That is a 16.92% decrease from last month and 22.04% gain year to date.  I have suspended my monthly withdrawals from Interactive Brokers through the end of the year as I am flush with cash.  This will allow me to raise some brokerage cash for the downturn.

Total investable assets come to 413,620 down 2.97% from 425,998 last month and up 20.42% from 343,483 year to date.

Don’t forget to see the long term trend at Lizard King’s Transparency Page.

 

LIABILITIES:

Home: paid

Car: paid

Income tax: I have a 7,050 income tax prepayment asset.  I am over estimated and will not be making a fourth estimated tax payment after the first of the year.  I have converted some of my tIRA to Roth to increase my MAGI for ACA subsidy purposes.  The net result will be almost free healthcare and a tax refund in April/May.

 

WITHDRAWAL RATE:

I have suspended withdrawals from my taxable investing accounts set to provide a cash income of 25,000 a year.  I am instead drawing down cash but I continue to use the 25,000 number to calculate withdrawal rate.  Against a liquid net worth of 413,620 that is a withdrawal rate of 6.04%.  I lost 800 in options premium income during the month of December, my first down month.  I earned 50% of budget from options trades this year.  Additionally, my income centric approach to investing includes 24,756 in expected distributions, dividends, and interest for the year or an additional 99.02% of budget.  Total budget is estimated to be covered 149.14%.  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.  I’ll update at year year to reflect withdrawal rate versus actual spending.

 

SPENDING:

Spending was 2,634 for the month, which is well above the 2,000 target.   The annual tally for spending was 23,237 or almost 2 thousand under budget.  This makes my effective withdrawal rate 5.62% and my coverage ratio from distributions and options 160.46% of budget covered by cash earnings.

 

OTHER INCOME:

I picked up 131 dollars from my efforts on the local Water Board.  Next month will see three additional checks for performing the annual Sales Tax Audit.

Devour your prey raptors!

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Financial Transparency for 2019

Never miss another opportunity to devour prey!

3 thoughts on “Financial Transparency for 2019

  • January 2, 2020 at 4:55 pm
    Permalink

    Well done! Two possible quibbles with the numbers:

    I think your 2019 effective withdrawal rate should be your 2019 spending divided by your NW at the start of 2019 (rather than NW at the end). 23,237/343,483 = 6.8%.

    Also, I calculate that your portfolio earned at least 27%. I do so as follows:

    (EndNW – StartNW + Spending)/StartNW = PortfolioReturn

    This approach is actually too conservative because I leave the denominator the same all year, as if the spending money were sitting in cash. If recalculated after each withdrawal I’m sure your ROI would be a couple points higher.

    So I think you did better than you give yourself credit for. Happy new year!

    Reply
    • January 2, 2020 at 11:49 pm
      Permalink

      Your math is valid too! I don’t want to let perfect become the enemy of good. At any rate, the goal is no longer to beat the index but to maintain spending and preserve capital. If people insist on only following blogs that “beat the market”, I think that is a little myopic. Beat the market at what cost?!?

      Reply
      • January 3, 2020 at 4:30 pm
        Permalink

        I think approximating the returns of a 100% stock portfolio, but with limited downside, is the point worth bragging about!

        Also, the emphasis in the blogosphere on matching the performance of an index seems kind of strange to me. The point isn’t to match an index, it’s risk-adjusted returns! A blogger who put 100% in AAPL a few years ago would have beat everyone, but in a reckless , luck-driven way.

        Reply

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