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.