Tuesday, 9 January 2018

December 2017 Net Worth Performance Review

As I mentioned in my June 2017 Net Worth post, I will be popping back in periodically to update my net worth on this blog.  As I mentioned in that post I have been spending far more of my time working on my net worth and improving it rather than writing about it and I think the results are really paying off.

December 2017 Net Worth: $1,300,000

When I first started tracking my net worth in July 2011 I had a net worth of $120,000.  For it to have grown 10x in 6.5 years absolutely blows my mind.  

Before I get into the nitty gritty here are the high level numbers for December:

As you can see I haven't really had any change in my liabilities over the year and the increase from $880,000 to $1,300,000 was entirely driven by the increase in my assets over the year.

However as I mentioned in June there are a few things going on in the assets column that I should highlight:

There is a lot happening in the assets column so I thought I would explain the large moving parts and why things have moved the way that they have:

Controlled Investment Assets: +$50,000 (+17%)

My controlled investment assets are exactly what they sound like - they are the assets where I actively choose the investments and the timing of any entry or exit - I like to think of it as my 'active portfolio'.

The stock market during the year was incredibly strong and the 12% increase in the value of my stock portfolio probably doesn't do the performance justice as I have been selling stock throughout the year and holding it in cash as I find it harder to find investment opportunities.

The uninvested cash component is significantly higher as I have USD holdings which I am waiting to transfer back to Australia but the US dollar has been quite weak and I'm not keen to lock in 10%+ losses from currency alone.

Restricted Investment Assets: +$80,000 (+62%)

This was an area where I really didn't expect to do so well during the year however the performance of my retirement accounts as well as well as restricted employer grants have continued to do remarkably well.

I don't really control the investments in these accounts and I view it far more as a passive account that is going to do what it is going to do with little input from me.

Non Investment Assets: +$300,000 (+35%)

My non investment assets are where a significant amount of the net worth gains have come from this year however there is one quirk I should point out straight away.  Until June 2017 I recorded my principal place of residence at cost however this didn't accurately reflect my net worth position given how much my property had gone up in value so I took to using the average of 3 different property valuation apps and averaging these.

The increase in the value of my home from $480,000 to $710,000 drove a significant amount of my net worth increase. Honestly the value increase wasn't that large - a better comparison is probably with I recorded in my June 2017 Net Worth update post - at that point 6 months ago my home was valued at $640,000 so I saw a $70,000 increase in the last 6 months which is insane.  House prices in my city have been going crazy for a while now and it's just started to get to the area in which I live.

My non investment cash holdings were a genuine cash increase during the year as my wife and I save for a new, larger home in a better neighbourhood.  I hate seeing lazy cash and I now have more cash than the value of my offset account but we haven't found our next home quite yet.

How financially free am I?

As outlined in June my goal is to earn $100,000 p.a. (in 2016 dollars) in investment income.  In 2017 dollars that equates to ~$102,500.

In order to earn this $102,500 I require $2.9m in total net assets (including home value).  I currently have a $1.3m net worth and so I am $1.6m short of achieving financial freedom.

This compares to being $1.8m short at June 2017 so I am chipping away at this goal reasonably quickly.

Wrapping up...

Writing these posts always make me think about what I'm doing and where I could be doing better so I may come back and write a few very specific posts about what I have done to improve certain aspects of my net worth on a slightly more regular basis.


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  2. Crypto is a no go!

    Great post mate. I always check in every few weeks to see you if post. You are one of the rare and excellent Australian financial independence bloggers.

    Congratulations on your progress.