July 2016 Net Worth: $788,000 (+3.5%)

My net worth is up pretty significantly this month however other than saving a decent amount into our home loan offset account I didn't actually do all that much which is a little disappointing.

I still have plenty to do with respect to my personal finances before I'm in a position where I'm happy to just sit back and let my investments do their thing.  These are just some of the things that I'm looking to do:

1. Get my individual stock holdings down to 10 individual stocks (currently at 11).  
• I've been doing quite a lot of work on this and have managed to narrow what I hold
• This does not mean that I only want to hold 10 securities. I'm willing to hold far more than that in broad based index funds but those are pretty much set and forget type investments that I don't need to think about all that much
• I want to hold at maximum 10 individual stocks.  Any more than this and I honestly do not have enough time in the day to do them justice and I end up not knowing enough about the stocks I own
  
2. Progressively transfer stock holdings into my wife's name
• I currently hold most of my share investments in my name which is incredibly inefficient from a tax point of view (given that she is in a lower income tax bracket)
• As I sell shares over time I want to move more and more into her name
  
3. Work out what I want to do with my managed funds
• Several years ago my parents gave me a portfolio of managed funds and they have slowly been growing over time
• However they are quite high fee and they do tend to create tax issues for me each year so I need to work out what I am doing with these
  
4. Move cash and stock progressively out of my interactive brokers account
• Interactive Brokers is a great platform if you are looking to trade frequently
• My investing methodology has been changing over time and I am far more a buy and hold forever type of person...interactive brokers isn't great for this especially given the inability to participate in DRPs or receive franking credits

I could keep going however these are just a few of the larger things I need to do to get my portfolio into shape over time.  Some of these I just need to sit down a do a bit of work and others I can only do opportunistically.

However that's enough about the future plan...let's see how I've actually performed this month.

July was a bit of catch up month after a dreadful June...

I've outlined below how I performed in different areas

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...

June 2016 Net Worth: 761,000 (-1.5%)

I thought I would start this post with a quick thank you to those who still read this blog 5 years after it first started.  I know that I am posting less than I used to and it has gone from being a blog which disseminated some (hopefully) useful financial knowledge to pretty much a pure personal financial blog.

I know I've explained it before but I thought it would be worth recapping why I decided to post less.  Most of us only have a finite amount of time in the day and I had to decide how to spend mine.  Instead of posting on this blog (and indeed on other blogs which I write) I decided to scale that back and spend time actually investing and trying to get ahead financially.  There were plenty of things which I had planned to do financially which, frankly, were never getting done and I was spending hours each week writing blog posts.

I decided that a better use of my time was to focus on my business of investing.  Unfortunately this has meant that I have far less time to post here.

With that being said I do still enjoy tracking my financial progress and it does allow me to take stock once a month of where I am at.  This month I will also do an annual review of how I have performed over the last year (I will upload that post in a few days time).

June 2016 was a tough month...

I don't think I'm the only one that had a tough month this month with markets going into a nose dive on the back of the unexpected Brexit vote.  My share investments tend to be higher risk and have a higher beta and my financial performance suffered significantly as a result.

Here is a summary of where I ended the month...

Now let's see where I took most of my pain this month...

May 2016 Net Worth: $773,300 (+2.5%)

I continue to honestly be surprised at how my net worth continues to rise month on month.  My wife and I have been talking about finances a lot this month.  As crazy as it sounds this is the first time in my life I have felt any anxiety about money at all.

Why am I feeling anxiety when I am doing pretty decently for my age (for those of you who don't know I just crossed the big 30 a few months ago)?  Housing is the reason.  My wife and I are saving for a new house and housing in the state I live in is incredibly expensive.  I keep going round and round in my head the different options:

• Do I sell some investment assets to be able to afford a better home?
• Do I compromise on where I live to buy something more affordable?
• Do I buy something more expensive and keep the investment assets but leverage myself more?
• Do we go for the area we want but perhaps not the house that we want?
• Can I afford to take extra leverage if I'm the sole bread winner and we have kids?

Obviously in a world with limited resources where I am not a multi-millionaire these are all very real questions and questions that lots of people ask...it's just my time to ask and go through these issues.

Why do I raise all of these issues in a post about my net worth?  I haven't been tracking my net worth performance this month all that closely and given the stress I have been feeling with the above questions it was a relief and pleasant surprise to see things continue to go well.

So how did I actually do this month?

My net worth performance breaks down as follows (note that totals may not add exactly as there are formulas which round everything to the nearest $100)

Let's walk through some of the major movements this month...

April 2016 Net Worth: $754,400 (+2.0%)

I was surprised how well I performed this month.  I actually spent a fair amount of time this month working on our personal finances and sorting out some admin problems we had (including spending about 2 hours speaking to my superannuation fund to make sure that there weren't any admin errors).

This month we focused a lot on trading and not a lot on investing.  I'm hoping to get back into investing more aggressively over the next few months.

Let's have a look at the breakdown in performance this month:

March 2016 Net Worth: $739,900 (+2.7%)

This month was a pretty good month...I managed to get away for a 2 week break overseas and also to do pretty well in terms of my net worth performance.

Instead of a long rambling summary I thought I would get straight into the numbers.  Below I have included a detailed breakdown of my net worth performance.

In line with the new way I disclose my net worth and the extra detail provided I thought I would address each of the major categories in turn.

Direct Share Investments: +$7,800

I didn't invest anything new in the share market this month and the total gain was due to positive share market moves.  Given the real pain I have taken over the last few months this was a welcome relief.  

Most of these gains came from industrial type stocks.  I made quite a large move into resources and oil exposures while the price was falling and given the low oil price these bets haven't paid off for me yet.  I'm currently considering investing more in this space but am a little gun shy at the moment

Other Investment Assets: +$4,500

February 2016 Net Worth: $720,300 (-1.0%)

This was my first negative month in 7 months which is a pretty good run rate when you think about it but I have a bit of an embarrassing fact to admit...I totally screwed up last month's net worth which actually did terribly...as in the worst performance I have ever had.

It was only because an error on my part that I thought I actually had a decent performance.  The error in last month's performance was due to a share consolidation that I had missed.  Basically the error was as follows:

• I have ~$4,000 worth of Hello World, an Australian listed travel agency
• Hello World did a 1 for 6 share consolidation which raised the price 6x
• I should have just adjusted the shares I held by the same amount but because I missed it (and my share prices populate) I looked like I had $24,000 worth of shars
• January's net worth was actually overstated by $20,000...instead of an increase of $13,000 I should have seen a decrease of $7,000 to $707,000

Why did I outline this?  Because I actually did reasonably well this month in increasing my net worth to $720,100 and my explanations wouldn't have made sense in the context of a falling net worth.

February 2016 Net worth...the detail

January 2016 Net Worth: $727,400 (+1.7%)

You may have noticed that over the last few months I have really dropped off on my posting schedule.  I have not uploaded any goals for this year and I haven't really been updating you on what has been going on in my financial life.

Originally this is because I was developing a new financial blog concept.  This blog was originally set up when I wanted to be rich and take over the world.  Since I started this blog however many things in my life have changed including my perspective on life.

I sat down and did some really hard thinking and worked out that...you know what?  I don't know what I would do with $90 million that I couldn't do with $5 million and what I want with the $5 million is more freedom rather than toys.  The only extravagance I would spring for is Business class airline seating (seriously!).

If I'm going to be honest with you I don't really know what I want anymore.  I'm in this odd place where I'm remarkably comfortable but I'm not really sure what comes next.   I'm not financially "free" yet and I'm going to keep working towards this goal but I haven't yet nailed down what a 'perfect' life would look like and until I do my goals are in a little bit of limbo.

With that out of the way - I will (for the foreseeable future) still be updating my net worth on this blog.  When I work out what I want to do next you will be the first to know.

January 2016 Net Worth...the detail:

December 2015 Net Worth: $715,000 (+2.1%) and Goal Tracker

Another month and another year have gone by and I'm incredibly happy with house this month and this year have panned out.  Not everything has gone to plan especially in relation to this I couldn't control (like the stock market) however having a plan in place for my own personal finances helped me whether some pretty tough conditions to come out far ahead of where I originally thought I would be.

Enough of the nostalgia and onto the numbers.  Below I have provided the usual summary of my net worth however I have gone into far more detail than I usually do on my goal tracker given I have just completed my goals for the year.

Net Worth: $715,000 (+2.1%)

	Value	% Change
Assets	$1,121,000	+1.1%
Liabilities	$406,000	-0.7%
Net worth	$715,000	+2.1%

This month I had hoped to increase my net worth to $705,000 so I was pleasantly surprised to see it increase far more than that.  Some of the increase was driven by large factors but a lot of it was just grinding along and following the plan I have laid down for myself.

Some of the key factors which affected this month's performance included:

November 2015 Net Worth: $700,000 (+5.9%) and Goal Tracker

I love bonus month!  It's the one really big cash inflow that I have during the year and this year was no exception.  Bonus month helped my net worth jump almost 6% to hit the $700,000 mark for the first time.

Crossing these milestones is always a bit of a strange experience.  I technically know that I am building wealth but my life doesn't feel any different.  I'm still doing exactly the same thing day to day but the effect of compounding seems to be accelerating the process.

Net Worth: $700,000 (+5.9%)

	Value	% Change
Assets	$1,109,000	+2.7%
Liabilities	$409,000	-2.3%
Net worth	$700,000	+5.9%

This month my net worth increased $39,000 and there were a couple of huge factors that led to the increase.  For once most of it was actually expected (as opposed to hitting me from nowhere) but it was still pleasing to see everything running as expected.

My bonus got paid in the month

• My annual bonus forms a significant part of my income and it was paid this month.  I'm not going to go into the specifics of exactly how much it was but a good chunk of the increase this month was the bonus payment
• Part of my bonus is deferred for the next few years (although part of this gets paid out every October so if you read my post last month you will have seen a significant uplift from that)
• Tax is also taken out of my bonus payment automatically...given that it is taken out at close to the top marginal rate, I'm losing 50% of my bonus almost straight away
• Even with all these mitigating factors it was still nice to see a significant step up in the amount of cash I had on hand

I paid my tax bill during the month

• I had an absolutely massive tax bill this month...I owed the government more than $8,000!
• Most of this was due to my trading in shares and as I generate profits on my share portfolio I keep track of the capital gains tax I have owing which forms part of my liabilities above
• Although I paid out a significant amount in cash this month it actually didn't affect my net worth all that much as my liabilities stepped down by a similar amount

My investment portfolio continued to perform well

• My investment portfolio did rather well this month increasing by almost 2% over the month
• I also continued to contribute to my employee share plan and my employer continued to make superannuation payments on my behalf
• My investment portfolio (including my superannuation) represents approximately half of my net worth with the rest being the home I live in and the cash I am stocking away from my next house

My credit card balance remains stubbornly high

• One of the few disappointing aspects of this month's performance is how stubbornly high my credit card bill remains
• We are doing renovations on our home at the moment and everything we buy goes on the credit card...I think this is an area my wife and I probably need to focus on going forward.

When I look back

October 2015 Net Worth: $661,000 (+3.4%) and Goal Tracker

Apologies to everyone for my absence from the blog for a significant amount of time.  I went on my honeymoon for just over 5 weeks and although I have been back for about 3 weeks now I have made some major changes in my life (which I would love to share with you guys and I will do so in an upcoming post) which mean that I am now spending far less time blogging than I used to be.

These net worth posts will continue into the future though so if that's what you come to this blog for...have no fear!

Net Worth: $661,000 (+3.4%)

	Value	% Change
Assets	$1,079,000	+2.6%
Liabilities	$418,000	+1.3%
Net worth	$661,000	+3.4%

This change represents two months of net worth progress and although it pales in comparison to previous months where I really had gangbuster returns there was actually quite a lot going on under the hood.  The 3.4% increase above actually represented an $22,000 increase in my net worth and given the changes I'm going to outline below...I'm actually pretty happy with that!

Below are just a few of the items which affected my net worth over the last 2 months:

We paid for our honeymoon expenditure out of savings...but we continued to earn our wages at the same time

• My wife and I had fully funded our honeymoon through a years worth of savings.  I had accounted for the upcoming expenditure as a 'future liability' and so the cash saved for this honeymoon never really formed part of my net worth
• However while we were away for 5 weeks we didn't really spend any money that wasn't part of this savings AND we continued to each receive our wages
• This meant that we had far more cash in the bank when we returned than we originally anticipated
• We put all of this extra cash towards our home loan

My bonus shares vested this month...however this was a net negative

• As part of the bonus I receive from work I receive shares which I am not allowed to sell for a period of time
• I account for these shares as part of my net worth as I have no intention of leaving this job
• However there is a tax impact of actually being granted these shares and I don't know the impact of this until they actually vest
• This actually had a significant negative impact on my net worth this month

August 2015 Net Worth: $639,000 (+8.0%) and Goal Tracker

This month was massive for me.  I crossed the $1 million mark in terms of assets and my net worth crossed the $600,000 mark for the first time.

One of the interesting things about updating my net worth every month is that I totally ignore the larger numbers...I'm far more interested in how I'm performing month to month...but occasionally when I cross a bit milestone like $1 million in assets...that's pretty exciting!

So how did I do it and what changed?  Well read on below for details.

Net Worth: $639,000 (+8.0%)

	Value	% Change
Assets	$1,052,000	+6.3%
Liabilities	$412,000	+3.8%
Net worth	$639,000	+8.0%

This month was absolutely crazy for me.  I took a massive hit in my share portfolio as global share markets sank to their lowest levels in 4 years.  However offsetting that was a large increase in the value of my property.  I will go through this and more in my detailed explanations below.

July 2015 Net Worth: $592,000 (+5.6%) and Goal Tracker

My net worth increased by ~$32,000 and although I'd love to say it was because of some incredible investing on my behalf the answer was actually far simpler than that.  I got married during the month and we asked for cash gifts to help fund our honeymoon and people were far more generous than we could have imagined.

There were other incremental positives as well.  The share market bounced back after it's atrocious month last month and I slowly started to pay off my credit card debt.  There were also other swings and roundabouts which I will go into further detail about later.

In this month's round up I also look at the goals we managed to tick off during the month and I start to track the goals that I set at last month's 2015 Annual Review.

June 2015 Annual Report

The last year saw so many changes in my life and as I look at the financial impact of these changes it really struck me once more that you can't look at your financial life without examining your whole life.

Your financial life and position is a direct reflection of the whole life that you choose to lead.  As a very simple example if I had not been preparing for a wedding this year I probably would have had significantly more saved towards my house.  That being said if I wasn't looking at getting married in the short term I probably wouldn't be looking at saving for a house.

This was a transition year for me.  It was a year where things other than finances took centre stage and I didn't mind that...the work I had done over the past 4 or 5 years had put me in a position that a bunch of life changes were not going to significantly impact my life.

For those of you who read my blog regularly you may have noticed that I plan my financial goals with a December year end but I do my annual review on a June year basis.  This is purely a matter of history.  I started this blog in June 2010 and the logical time to do an annual review seemed to be a year after that point.  I have thought about changing that several times however it always provided a useful midpoint review of both my goals and my progress.

Goals: Achievements and progress

June 2015 Net Worth: $561,000 (-0.9%)

After an incredibly strong performance last month, this month saw my net worth slip by almost 1% driven almost entirely by an incredibly weak Australian share market.  In this post I'm going to highlight what happened to my net worth this month, what drove most of the chances and where I am heading in the future.

In the coming week I will also upload my annual performance review which tends to give far more detail about how my portfolio is structured.  My apologies for the late posting of this month's net worth.  I was on leave from work (and my computer) for a few weeks as I was getting married and moving home...I will also post more about what is happening on the personal front soon.

Before I take a deep dive into my performance this month let's have a look at the headline numbers.

May 2015 Net Worth: $566,000 (+2.6%) and Goal Tracker

I just had one of my best months ever in terms of net worth performance and it was completely unexpected.

I'm actually also getting rather close to $1 million in assets which is exciting (although as it comes to crunch time for my wedding my cash balance is going to go significantly which will take me further away from this point).

Before I dive too deep into the detail let's look at how this month panned out for me in terms of my net worth and savings goals.

What does Financial Freedom look like to me?

When I uploaded my recent post on what I would need to be financially free I didn't realise the impact that it would have on my life and the way I thought about it.  I did it because I thought it would be a cool thing to do and to track.

However thinking in terms of financial freedom has really changed the way I look at my approach to wealth generation.  Previously (as the name of this blog would suggest) it was all about becoming rich.  I didn't really have any plans for those riches...it just seemed like the right thing to aim for. Financial freedom is something else though...it allows you to choose the lifestyle that you want, when you want.

What does it mean to be financially free?

People describe financial freedom in a variety of different ways.  For some people it's about not having to wake up every day and go to work.  For others it's about having a security blanket so you know that you are never going to end up on the street.

Here is the definition I am using:

To be financially free is to be able to choose what I want to do, when I want to do it and not worry about the financial consequences of my decisions

Why did I underline the word 'worry' in the sentence above?  Well that's because most decisions have financial consequences.  Some of them large and some of them small.  If you run your own business, your decision to take a few months off can have huge financial consequences.

I'm not aiming for a system where

How much do I need to be financially free?

When I first started writing this blog I stated that my goal was to have $90 million dollars by the year 2031.  I gave myself 20 years to reach that goal of and to be rich.  However a question I haven't really considered before is "how much do I need to be financially free?".

Being rich is great but the real step change in ones life is when they are financially free.  When they are no longer tied to their job and have the freedom to choose what to do with their life.  I was recently reading a post on 2millionblog (the blog which motivated me to start writing this blog actually) where the author had a clear target for financial freedom and was measuring his progress towards this target.

I thought this was a brilliant idea and I've decided to give it a go myself.

Step 1: What sort of income do you require?

According to various sources a 'comfortable' retirement for older people is something like $60,000 a year for a couple in Australia.  I'm not really planning on living like a retired grandparent so I'm probably going to need more than this.

Having said that I won't need as much as my current income as when I am financially free I will not have a home loan to pay down and will not have many of the expenses that come with having to go to work and make a living each day.

I settled on $100,000 as the income I would need to be financially free (in today's dollars).  At $100,000 per year I would not be 'rich' but I certainly would not be tied to my job and I would have the freedom to decide whether I wanted to work or whether I wanted to do something else.

Step 2: Work out where this income is going to come from

This is a reasonably simple exercise.  What classes of assets do I feel competent investing in and where do I think I can earn income (and in what proportions).  I split it something like this

• Cash / Bonds: $10,000
• Rental Properties: $30,000
• Stocks: $50,000
• Business Income: $10,000

Don't forget that

April 2015 Net Worth: $551,000 (+0.4%) and Goal Tracker

It's once again time to update my net worth and this month has seen some serious swings in the composition of my net worth even though the actual numbers didn't change all that much.  I continue to keep track of my 'future liabilities' (see this post for an explanation of them).  As at the end of April my future liabilities sit at $43,000 (down from $52,000 in March).

April 2015 Net Worth: $551,000 (+0.4%)

	Value	% Change
Assets	$965,000	+0.0%
Liabilities	$413,000	-0.4%
Net worth	$551,000	+0.4%

My performance this month at the headline level was actually quite lackluster and didn't quite live up to the modest $553,000 goal I had set at the end of last month.  However under the rather flat result there were a more movements and portfolio changes than I have had in a very long time. I've outlined some of the changes that were made this month below:

• A significant re-organisation of my share portfolio
• Recently I have been talking pretty consistently about how much the Australian share market has run and how I have been starting to get uncomfortable with being invested at these levels
• Well in the last month I put my money where my mouth is.  I sold some pretty big parcels of shares...some of which I wrote about and others which are just a continual re-balancing of my portfolio
• In the month I sold ~$30,000 of shares and made a significant profit...however from a net worth standpoint it was actually a negative
• This is because I account for the current market value of my shares in my net worth however it is only when I sell them that I actually generate capital gains liabilities
• Selling the shares therefore didn't increase my asset value but it did increase my liabilities to the tune of ~$4,000

Finding, gaining and keeping a mentor

How do we get ahead in our careers and our financial life?  It's a question that many of us ask all the time.  If you have read any books on getting ahead you will almost certainly have been told that seeking out the right mentors is incredibly important.  The problem that most of us face is twofold:

1. How on earth do we find a mentor who is where we want to be in life?
2. When we do find them how do we convince them to take an interest in us?

I suspect that most of us would love to be mentored by Warren Buffet or Bill Ackman but that's never going to happen.  I also have never really liked 'mentoring programs' that workplaces and student organisations typically run.  The mentors often treat it as an obligation and they are never really seem to have a real interest in you personally succeeding.

I therefore concluded that mentoring, while great in theory, was never really going to work in practice...until it did for me.  I found a mentor without actually searching for one and the experience has been far more positive than I originally imaged.

How did I find my mentor?

I didn't go out searching for a mentor.  I've always found the concept quite strange.  Of course there were people I wanted to learn off and I certainly didn't think I could do it all myself...however what did I have to offer?  Why would they take a particular interest in my life?  I found a mentor without intending to find one.  I'm not even sure that he realises that we have effectively fallen into that sort of relationship.

Where did I find my mentor?

My mentor is actually a