Tuesday, 12 July 2016

June 2016 Annual Report

This post is one I really enjoy writing every year.  I love looking back on the year and assessing how I did and also looking at what I wanted to achieve.

In some ways the last year has been a little boring on the financial front.  I have been building cash so that my wife and I can look at buying our new home so I haven't been as active with my investments as I was in the first few years of this blog.  However this year I have been doing a lot on the personal front and in cleaning up my share portfolio which had grown incredibly unfocused.

I will look at most of these points in detail below and this post is going to be one of my longer ones so feel free to skip to whatever section interests you most (I've tried to signpost it as well as I can)

Annual Net Worth Performance: +$200,000


Over the year to June 2016 my net worth increased from $561,000 to $761,000 and although this is a spectacularly large increase there are a few reasons why this is a one off which I will discuss below.  However even excluding these one offs my wife and I managed to do really well this year especially given the amount we have been doing in our personal lives including:
  • Getting married
  • Going on two overseas holidays
  • Doing some expensive renovations on our home


Although the net worth performance over the year looks pretty amazing there are a few one offs I should probably call out here:
  1. In 2015 I had adjusted my net worth down to account for the fact that we would have to spend a significant amount on our wedding and honeymoon so these big expenses didn't actually impact our net worth
  2. At our wedding in July last year our guests were incredibly generous (especially our parents) and this boosted our net worth by ~$30,000
  3. We had our home revalued in August last year by the bank and this added another $40,000 to our net worth over the year
However even allowing for this we still managed to do very well over the year.  Before I go into the details of what we did over the year it may be worth looking at how I have done since I started writing this blog over 5 years ago.

The power of continuous saving really does work...


In my first net worth post in July 2011 I had a net worth of $124,000 and 5 years later my net worth stands at $761,000...an increase of $637,000 which is mind blowing in quite a short period of time.  Now I'm no investment or savings guru...but the power of saving as much as I can every single month and having shorter term goals which feed into a larger goal has really worked for me.


 My net worth has grown at a cumulative average growth rate of 43.8% p.a. and although some of this has to do with the value of my investments increasing most of it was actually just working to increase my income and focus on my expenditures.

As my life has changed so has my asset mix


Looking at how my asset mix has shifted over time is really interesting as it basically shows what my focus has been in my life at various points in time.


In 2012 I had just bought my first investment property and all my assets basically centred on this one property.  After that I focused on increasing my cash balance a little so that I had a buffer in my investment property but for a few years my focus really became on balancing my investment portfolio particularly towards shares.

In 2016 my real focus has been on saving for a new home and for this reason the cash component of our investment portfolio has stepped up considerably.  I would expect this to continue increasing over the next 2 -3 years as we look to build a cash buffer sufficient to buy our new home while holding on to all of the other investments that we currently own.

Cash now forms 25% of my portfolio and the increase in my property valuation in the last year has meant that the proportion of my portfolio in property has remained relatively flat.

Shares and superannuation account for a smaller part of my portfolio this year because although I have been adding to them periodically they haven't been my focus and the returns over the last year have been so volatile that they actually account for less than you may imagine at first.

Looking back...and looking forward


When I wrote my annual review post at this time last year I said that by June 2016 I wanted a net worth of $700,000.  For the first time since I started writing these annual goals and posts I actually achieved my goal and beat it by close to 10%!

I honestly don't know what to expect from the coming year but I'm willing to set a goal and make it an aggressive one:
By June 2017 my aim is to have a net worth of $900,000
I don't expect to have any one off large impacts on my net worth this year so it's all going to be me....so how do I want to achieve it?  Well this implies a net worth increase of $140,000 and I want this to be made up of:

  1. A $100,000 increase in my cash balance
  2. A $15,000 increase in my superannuation balance
  3. A $25,000 increase in the value of my share portfolio



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