Up 35k on the  month.

music selection:  “Bleed” — Soulfly

Spending is on target for the month but way over for the year.  I am leaning towards increasing the budget in 2021.

ASSETS:

Wells Fargo (taxable): This finished the month up 597 dollars at 21,199.  The gain is 2.9% on the month and 26.9% decline year to date. This account also produces $141.00 in monthly distributions, which sweep to my checking.  I’ll be looking for more Closed End Funds to buy in that account as funds are available.

Interactive Brokers (taxable): This is up 8,261 on the month to 178,265 which is good for a 4.86% monthly gain.  Year to date, I am down here by 6.95%.

Interactive Brokers (tIRA): This account is up 22,689 on the month to 121,826. The monthly gain is 22.89% and the year to date loss is 26.72%, driven by my 50k distribution to taxable.

Interactive Brokers (Roth): This is up 478 dollars to 8,305.  The monthly gain is 6.11%,  and the year to date loss is 39.91%, driven by complete losses for shares held long in MRRL.

HSA: This account is up 582 on the period to 12,411. That is a move of 4.92% on the month and 44.15% gain on the year.  I had withdrawals for medications.

Checking: Cash is up to 7,767 from 7,464. That is a 4.06% increase from last month and 28.79% loss year to date. Monthly withdrawals from the taxable brokerage are set at 1,500 a month, my target spending.

Coins: I sold all my collectible coins to put the proceeds towards crypto.  I think BTC and ETH are better investments than precious metals right now plus they earn interest at BlockFI.

Crypto: I recently got started with Coinbase and BlockFI.  I earned $10 in free bitcoin for depositing and converting to coin $100.  I’ve earned an addition coin in CGLD, MKR, EOS, XLM, COMP, FIL, BAND, and ALGO for completing short educational videos at Coinbase.  You can do the same at the following affiliate link: https://www.coinbase.com/join/dauzat_2kq  If you do so, you will earn $10 in free Bitcoin for depositing at least $100 and I will earn the same bonus.  (Much appreciated).  I think everyone should have a small (not large!) amount of crypto currency as a hedge.  After selling my coins this account is up to 7,729, which is 72.13% return on my basis.

Total investable assets come to 322,247 up 16.23% from 277,476 last month and down 91,373 year to date or 22.09%.

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 9,865 income tax prepayment asset. This is all held to offset the tax hit from my tIRA conversion to taxable.  I think I can squeak by without an estimated payment in January.

WITHDRAWAL RATE:

I am resuming withdrawals from my taxable investing accounts set to provide a cash income of 18,000 a year.  I am going to calculate my withdrawal rate against a tightened budget of (18,000) going forward. Against a liquid net worth of 357,503 that is a withdrawal rate of 4.62%. I gained 8,375 in closed options trades during the month of October and covered 269.29% of 18,000 from options trades. Additionally, my income centric approach to investing includes 9,207 in expected distributions, dividends, and interest for the year or an additional 51.15% of the new budget. Total budget for the year was covered by 320.44%. This more than covered my spending for the year.  The options performance is picking up and I hope to deploy some profits into more closed end funds with yield to get my passive income back above budget.

SPENDING:

Spending was 1,427 for the month, which is just below the 1,500 target.  I tried really hard to get under 18,000 for the year and instead came in at 25,094 (last year’s budget!)  I think I will increase the budget to 1,800 a month withdrawals from taxable starting with the January withdrawal.  I had thought I needed to tighten my belt but I made it by just fine.  The current strategy to trade bear put spreads is highly defensive and profits (faster) if and when the market tanks again.

OTHER INCOME:

I picked up 150 dollars from my efforts on the local Water Board.  This  plus cash swept from taxable brokerage accounts come to $1,777 on the month.  I think I can reasonably keep up a $2,000/month pace but I am trying to belt tighten a little until I can trade my way out of a hole.  I am exploring employment opportunities as a contractor or as non-profit personnel.  If I can make 20k in a year as a contract (easy?) that seals the deal.  I prefer a non-profit even it is doesn’t pay well.   I want to feel good about what I am doing.

Devour your prey raptors!

Financial Transparency as of 31DEC2020

Never miss another opportunity to devour prey!

10 thoughts on “Financial Transparency as of 31DEC2020

  • January 4, 2021 at 10:01 pm
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    It’s probably best to budget for 25k. The belt-tightening campaign didn’t work – might as well face it. Your actual WR is 7% and that’s a huge headwind for portfolio appreciation.

    I doubt you’ll reach $635k and a 4% WR anytime soon without working or without winning a /wallstreetbets style YOLO gamble.

    If I had to stay retired and make, say, 7-10% per year, I’d consider wide 30 day condors with a fraction of my NW at a time, e.g. targeting a 10% return on 10% of my portfolio per month. That’ll work until it doesn’t, but when it doesn’t you can always roll the unchallenged side for a credit. Still, this doesn’t double your money any time soon.

    Reply
    • January 4, 2021 at 10:10 pm
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      I upped my distribution from the main taxable account to 1,800/mo from 1,500. That comes to 21,600. My Water Board money comes to at least 1,800 more for 23,400. Most years, I’ve come in under that amount. Oh yeah, I got the $600 stimulus payments and there could be more stimulus this year. I think I’m going to be reasonable but continue to “aim high” with my belt tightening.

      I like the wide condors but I’m already doing half of that with the in the money bear spreads. With the condor, the call side is vulnerable to black swan events to the downside (BS almost always negative). The bear spread performs beautifully if the market crashes during the holding period. I’ve studied the last Melt Up from Y2K and there were several 10% or more corrections on the way up. I want to be protected during those corrections while still earning from steady upside.

      Appreciate the advice. What are you trading these days?

      Reply
      • January 5, 2021 at 10:05 pm
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        I’m mostly in the broad indexes, selling far-out calls occasionally as the greed hits. Minor holdings include several REIT preferreds yielding around 6% each, a few of nursing home / healthcare REITs, Microsoft covered calls, NAVI, and short puts on Salesforce. I’m not “trading” much aside from monthly covered calls.

        I got left in the dust this summer because I was too timid, pessimistic, and stubborn, but for the last 3 months I’ve matched the performance of the S&P. The article below describes how stimulus was diverted into consumption and investment, and how there might be a lot more to go, so I’m flying unhedged for now.

        https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html

        Ideas I’m currently exploring include XLE, XLF, EWU maybe in a couple of months, EWJ, EEM, NLY, and particularly BATS.L. I’m also looking at regional banks like SFNC.

        Reply
        • January 5, 2021 at 10:56 pm
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          What is your thought process on NLY? It was a screaming buy at 3.5 and I was glad to get out at 8.00 (covered calls exercised). The current valuation looks frothy. I don’t usually place in the ETF/index sandboxes because the diversification suppresses Beta and therefore options premiums. Good if you buying options but bad if you are selling them!

          Reply
          • January 11, 2021 at 7:53 pm
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            I haven’t looked at NLY in much detail. It’s a candidate for put selling, IMO.

            The indexes are less volatile, but you can always sell closer to the money. Not having to worry about a lightning strike from a company-specific risk is the main bonus.

  • January 15, 2021 at 2:06 am
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    Velociraptor, glad to see you made it through 2020 and stayed retired. It looks like you are making great progress towards rebuilding your accounts.

    This year turned out to be very profitable for me (probably mostly dumb luck). I started the year around $400k and ended it with around $630k. I took out $30k for taxes which are going to be painful, and the portfolio is now worth around $613k as of today.

    Even better my FIRE portfolio is big enough for me to declare myself financially independent. I’m invested in 37 individual stocks and they generate around $34k in qualified dividend income based on 2020 payouts. I’m not surer what my div growth will look like, but because my base income is relatively large, even just 5% div growth will add an additional $2k in divs. That will also continue to compound on itself. So, its really going to add up over time. Compound growth is incredible.

    You can see what my portfolio looks like here:
    https://seekingalpha.com/instablog/3010451-123098567432/5543138-fire-fund-update-jan-2021

    I’m 44 and still working full time in IT. No point in retiring until the pandemic is under control. Not sure what I will do once it is handled. Unlike you I don’t own a home yet. So, I’m considering expating in South East Asia. I have a friend that has been an expat in Bangkok Thailand for years and loves it. Its opened my eyes that it might be something I would enjoy trying out.

    I’m not sure that I want to retire completely yet. I think part-time work, like the contractor work you mention in your post might be the way to go. I have just focused on hitting FIRE the last 20 years and haven’t given much thought about what I would do once I actually did it. If I do stay in the US and retire early I think I definitely need to go ahead and buy a house and pay it off before I stop working full time. I have been living in 1-bedroom apts since I was 18 and went off to college. Kind of sick of it, but it helped me keep my expenses low. I tracked my expenses in 2020 and spent around $29k not including health insurance and taxes.

    Reply
    • January 15, 2021 at 2:36 am
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      First off, jh. Gogogogogogogo! You seem to be rocking it! I looked at your portfolio and I’m little concerned about the concentration in fossil fuel stocks. Substantially all greenfield electricity generation project in the US over the last 5 years have been renewable. I worked in the fossil fuel industry (oil field services firm) during my tenure in the conventional economy and understand why it is sometimes attractive as an investment. But I think the writing is on the wall. If renewables beat coal and o/g during the Trump administration, the long term prospects are dim. I like (somewhat) BP and RDS-B as they are pivoting their capex spending to renewable projects. They are transitioning from O&G companies to pure “energy” companies.

      I understand about a paid off house. The geographic arbitrage concept is powerful (see the blog of Mr Free At 33 – Chaing Mai-Thailand). I’d do the same if I didn’t have family and other connections in Houston. Health insurance is the big ??? but it mostly goes away if you go abroad.

      Anyway, gogogogogogogo! You impress me.

      Reply
  • January 15, 2021 at 5:35 am
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    Thanks Velociraptor! I’m amazed at how much I progress I was able to make last year. It really helped a lot. It still hasn’t kicked in that I’m financially independent. Mentally I’m still thinking FIRE is something 10+ years away from achieving and I need to keep grinding it out.

    So, on the energy companies, I agree oil & gas is declining, but what I think will happen is that both XOM and CVX will simply copy what RDS.B and BP are doing at some point and start expanding into solar/wind or something else energy related. Most of the money I have allocated to energy are in those two US majors. I just don’t think either one of them are going to be suicidal and refuse to adapt. I could see XOM expand more into chemicals as they are already huge there.

    Even with the carnage in Oil & Gas the last couple of years, both XOM and CVX are still gigantic $200 B dollar companies with huge cash flow. They have the financial means to switch to renewables or whatever else they decide to do.

    The other energy companies I own are midstream pipeline companies and I think those pipelines will stay useful even if not transporting oil/ng. Just like railroad companies that used to transport coal. There is no better way to transport liquid and gas products around the US, and it would be pretty much impossible to replicate that infrastructure from scratch given all the regulations.

    What do you think of my counter arguments? 😉

    Yes! I also followed Mr Free at 33. I wish he kept posting life updates on his blog, those were really interesting to follow. The quality of life he is/was getting over there for the cost is incredible. My friend that lives in Bangkok for like the last five years (teaching english) has confirmed everything Mr Free wrote about the cost of living differences. I think if I were to expat in South East Asia my living expenses would easily drop down to $18k per year with no change in standard of living. Also health insurance would be a big reason to make that change.

    Reply
    • January 15, 2021 at 4:21 pm
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      I’m with you on CVX, I think they will be late pivoters. XOM is being very stubborn, has doubled down on O&G and is defending an unsustainable distribution. I like pipelines in theory but most of them trade as MLPs and I find they don’t pay me enough to be worth the K-1 trouble at tax time. I’d consider adding midstream exposure in the future at attractive prices so long as I can find ones organized as C-corps.

      I’ve considered geographic arbitrage myself. Although, I am thinking, brush up on my spanish and try Costa Rica or Nicaragua or even Panama (they use the US Dollar as currency). Ultimately, I’m unlikely to leave Houston so long as I still have family here. And the house is paid for, it is a cozy feeling.

      Regarding FI but not RE – it is damn difficult to make that transition mentally. I sort of hedged with a plan to test the waters and ‘barista-FIRE’ if the budget was too tight. It turned out to be unnecessary. I can tell you that once you pull the trigger, you will be in a weird head space for at least 6 months. Every person I’ve discussed the process of actually unplugging with experienced a 6+ month “decompression” period. I’ll offer a little advice 1) read Thoreau’s “Walden”. It’s not a book about a man who goes into the woods to fiddle fart around. It is a book about a man who goes into himself (to fiddle fart around). Important thing to do in your life. 2) Do a core values exercise. You will find plenty of good ones with a Google search. You can’t build your own perfect life in FIRE until you understand what it is you value. Hint: the core values work told you adopt are likely not reflective of your true inner self. Repeat the core values exercise ever 3-5 years because we change and grow as people over time.

      Devour your prey!

      Reply
  • January 15, 2021 at 9:54 pm
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    Thanks a lot Velociraptor, I really appreciate the advice!

    Reply

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