Net Worth Update – December 2015
I know this December net worth update is a little late, but given it is my first one since finding out I was an accidental millionaire, I hope I can be forgiven. My intent is to post updates at least every 6 months. The Australian tax year is from 1st July to the 30th June, so updates at the end of June and the end of December seem to fit perfectly. If anything notable changes I may post updates more often, but those two I intend to be a minimum. I also hope to start monitoring my passive income with regular updates, so stay tuned.
Net Worth – December 2015 – $1.15m
It has only been 2 months since I first realised that I bad become an accidental millionaire. I did not expect much to change for this post. But being motivated I started looking at everything with a newly found exuberance. Amazingly I found a few small typos and a missing asset. It didn’t change things too much, but did provide a nice little boost. You may argue that it is a little artificial, but I am quite happy to take it. I think of it like finding a $2 coin that you dropped behind the couch. It was always yours, it never left the house, and you were bound to come across it at some point; but when you do find it you still feel good. It still brings a smile to your face.
As will become normal for these net worth updates, I plan to have two graphs. The first is a graph showing asset distribution as a percentage over time. The second is a total net worth graph (including each class of assets). Before someone pulls me up, yes I know that superannuation (retirement savings) is not an asset class, and I know I have lumped cash in with bonds. The reason for pulling super out is that I like to see how much money I have that I can’t touch until I am older. It’s also nice to know what portion is getting a lower tax rate. Cash and bonds are together for historical reasons, I will seperate them at some point, but don’t hold your breath.
This first graph shows that the fixed interest component of my net worth is still on the way up. Given there are some predictions that 2016 may not be a good year for shares, I am not too worried about having fixed interest so high. I do want the green share line to become a larger portion of my net worth, however a lot of my super is actually in shares too. The most important thing for me in this graph is the downward trend for that blue property line. Apart from super contributions, just about everything went into our mortgage. This left us with most of our net worth in property. I would very much like to see that blue line dip below 50% is 2016. However I also have plans to buy an investment property in 2016, and those two plans do not mix.
The second graph shows that net worth is increasing. This is a good thing. One day I may get to the point where I have enough investments that my savings contributions cannot offset any losses each year, but today is not that day. You can see the purple fixed interest line taking a sharp rise after we paid off our mortgage and started saving again. The plan is for those savings to grow the purple (fixed/bonds) and green (shares) lines. The orange line will keep going up as I continue to max out my pre-tax super contributions each year. Now the home loan is paid off the blue property line is staying much flatter.
So, all things considered, this has been a good 6 months with asset distribution heading in the correct directions. As I said that may change to the wrong direction again if I do end up buying an investment property. Despite causing my net worth to be more un-balanced, I do like the idea of being positive in property (investment) rather than neutral (residence) or negative (zero/renting). I know this is not for everyone. So if you disagree let me know, and let me know why.
Well that’s it until the end of June 2016 (unless I feel the need to give an update before then). Hope you enjoyed it, now go do something proactive and see if your own finances need some TLC.
Wow! That is a huge jump over the last half of 2015! Nice job!
Thanks, although I am cheating a bit in the second half of 2015. I sold some untracked shares and that is now sitting as cash waiting to be redeployed. Unfortunately I don’t think it will happen again. But my goal is for an increase of $100k in all of 2016, so anything around that and I will be happy.
The Accidental Millionaire should be the title of your book. Congrats on this great milestone. Always nice seeing your assets continue to appreciate in value. Thanks for sharing your net worth update. Look forward to seeing how 2016 unfolds for you.
Book… eep – I think for 2016 I will just focus on keeping the blogging up. I think I managed a total of about 5 posts in 2015. Possibly one day. I do like writing.
A very nice nice position/update. To answer the question you pose about property..I don’t think property will be a large point of wealth in my life. The rental yields are very low at the moment, I can’t see rents rising much over the next few years. It takes a huge amount of capital to make any investment in direct property and you have to take on debt too. As long as you invest in the right companies, I think shares are a better option for me with all those points I raised.
thanks Tristan – I know what you are saying and agree with the current rental yield. I also look at that high blue line and want it to “balance up”. I suppose the reason I want to be positive in property is to be able to capitalise on one of the price spikes (http://www.rba.gov.au/speeches/2008/images/sp-so-270308-graph1.gif) by selling (and not my house). It is also a more stable method of leverage than margin lending with shares (and again I like the potential leverage can provide – at a controlled level). Although I do like the incremental nature and liquidity of shares. I suppose what I am saying is that at some point I will buy a rental, this is the first year I have been in a cash-positive (enough) position for that so I thought I would start looking. If I do find something out there everyone will know about it shortly after 🙂
I really enjoy the way you’ve shown your information in your graph and may do a presentation in a similar fashion, being the break-out between asset classes. It makes me realize I may also want to present it by industry classification, as my exposure to real estate (direct through ownership) and indirect through mortgage lending, REIT investing, etc. is high.
It is great to be able to read a blog and understand someone’s approach as it relates to your own and be able to modify accordingly.
Congratulations on the milestone and I look forward to seeing more in the future.
Thanks Mr Happy 🙂 I try and make understanding a priority as my thoughts often come out in a jumbled mess. I then get my partner to read over it and we find a way to turn the jumbled mess into a more logical order. Next post is almost ready, but had a pet die which has caused some tears and short term priority changes.