Financially Possible

Snowball Quarterly Update: 1st Quarter 2017

The first quarter in 2017 has been an amazing and adventurous one, both personally and financially. My wife and I have documented some of those events here and here. Today, I’m providing an update to our scoreboard. When our scoreboard is moving toward an upward direction, I like to reference to it as a snowball.

What does a peacock have to do with net worth?

You might wonder why I chose a photo of a peacock as the featured image for this article. What does a peacock have to do with a scoreboard or snowball?

The peacock is symbolic in nature for me. I believe money itself buys little. The absolute best thing money can buy in this life is the freedom from having to worry about money (aka financial security). There are those who do not share my opinion and are constantly choosing to spend their money on all manners of status symbols, displaying their wealth to others like the creature shown above (as it was trying to attract a mate).

Let’s take a look at the following example:

Costco $7400 fridge

Does a $7400 fridge really make one’s life better? LG (Life’s Good) seems to think so. Ah hell, I think I’ll go order avocado toast every morning so that my family can never afford to buy a house. I really do hope very few of these fridges are being sold, but something tells me Costco has some clues on what they’re doing. Depending on where you live, the sales taxes alone on this fridge can be as high as $700.

Now, let’s return to the topic of this article. Over the last 91 days, our snowball has grown from $1,497,000 (from my last update) to $1,584,000. I summed the total on May 16th, 2017.

This $87,000 increase represented both savings and market gains on investments. Since my wife and I don’t (and do not like) to budget, I cannot say precisely how much of this gain was due to savings. However, I can say with confidence that the proportion from savings was between 20 and 30% (probably closer to 30).

The sales of some remaining stock options this past quarter also contributed a bit toward the savings number. At this point, I sold all my stock options, which freed me of those golden handcuffs.

Investment gains were responsible for 70 to 80% of the gains. Expressed as a percent, this is a 4.05 to 4.65% gain in a single quarter! Even on the bottom side, a 4% gain each and every quarter would result in a 17% gain (not 16%) on the year, which would be stellar. Yes, compound interest is magic.

As an investor, don’t expect those kind of quarterly or annual returns all the time. You take the good with the bad. I’m impressed given that a small amount of our investment balance is in cash and another 30% are in bonds which historically don’t have as high of a return (compared to stocks). If you’d like to read more about my personal asset allocation, see my article here.

In January and February of this year, many market analysts and participants felt stock prices were high. During such speculations, many might have been tempted to pull significant portions of their investments in stocks and move to cash (or to bonds). I’m so glad I was not among those investors.

In my typical fashion, I did nothing, which is my favorite thing to do. Or rather, I just did more of the same. I stayed on the course. I kept investing new savings to maintain the same asset allocation. It’s what I did last month, last year, and many years before. I plan to do the same next month, next year, and the years following. The only time I might deviate from this is if the market would to experience some turbulence. In that case, I’d do more of what i did in 2008 and 2009.

As I’m writing this, the markets are taking a beating today. US stocks are down 1.5%, international stocks are down 1.1%, but bonds are up 0.5%. Our investments, on the other hand, are only down a mere 0.7%. I feel great knowing that our asset allocations (aka diversification) are working to our advantage. Today’s update on our snowball doesn’t reflect today’s action in the markets — that’s just too difficult as prices change every second.

Enough about our snowball, let’s get yours rolling! I’d love to hear from you in the comment section below.

Please post any financial questions you can think of here for me to answer. If I don’t know the answer straight away, then I’ll research into the topic to find an answer for you. I love learning about anything financial. Also, feel free to follow along as I share practical and actionable tips to help you grow your wealth on my YouTube channel.

Help spread the message. We all can benefit from financial learning and I always welcome referrals!

4 thoughts on “Snowball Quarterly Update: 1st Quarter 2017

    1. Trip Post author

      Precisely right, there always will be people who buy it (whatever the it happens to be). My economics courses taught me that “supply creates its own demand”. My father likes to say “There’s an ass for every seat”. These are white collar and blue collar ways to say exactly the same thing.

      We were just in Costco two days ago and the spot that showcased the $7400 now showcases a $6000 fridge. Perhaps the price was just a bit too high to move many of them.

      As we discussed on Twitter, I really love the company I use for investing. I’ve actually referred seven other people to them over the years. I’m currently in the process of considering them as one of my affiliates, but I have certain concerns. I now plan on asking the company about my concerns while I investigate them as a potential affiliate.

    1. Trip Post author

      Thanks EL. We hit FI around the New Year, but some extra padding is nice as it affords some small upgrades to our lifestyle (and not just what we consider minimum). Best of luck to you as well during the remainder of the year.

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