Ouch. I knew even before calculating my net worth this month it was going to be particularly terrible. To put it lightly the market took a complete shit, and in terms of my net worth I am almost completely correlated to the market. When the broad market moves one way so does my net worth. I am obviously not 1 for 1 as my largest asset is my house, but all the same, I knew it was going to be painful writing this post. My hunch was correct. The only thing that made me feel better this month was a post written by fellow blogger, Lazy Man and Money, titled “Investing Tip: Focus on Accumulating Shares” in which he shared,
The stock market is down nearly 7% to start the year. For the first time since 2008 it looks like the bull market will give way to the bear market. I imagine a lot of investors are nervous. I get it. It’s scary to see a large loss of money in such a short time.
I try not to look at the money. That may sound silly considering that money is the whole point of investing.
Instead of looking at the money, I try to accumulate shares of index funds and, occasionally, individual good companies. This focus leads me to react differently to a market downturn.
He goes on to discuss about picking up stocks when they are on sale a topic I have discussed a few times. The post gave me a quick kick in the butt to stop feeling sorry for myself. Who gives a shit if the net worth number is an ugly abomination? I didn’t stop investing in my 401(k), in fact and like LMM points out – I picked up more shares! It was a quick gut check that made me feel a little bit better.
Calculating my Net Worth
- My Cash Savings Accounts – I only really count my emergency savings since everything else is ear marked to be spent elsewhere. This cash account is a bit under where The Wife and I would like, as such, we try to increase it a little every month.
- My 401(k) – Just keep throwing part of my paycheck at my 401(k) even though I sort of hate my 401k. I do not actively trade this account, but every time there is a sharp decline (like we had in January 2016) I will move whatever little cash that is in the account that has accumulated over to a fund. This is different then the pure market timing technique I took part in a little while ago.
- Wife’s Non-Qualified Account – This is money that The Wife had way before we were married. It was gifts from her parents and grandparents, and thus receives its own little partition. I like to think about it as a super emergency fund.
- The Wife’s Roth IRA – The Wife has zero appetite for risk, so this account hold 3 broad market etfs (DGRO, IJH and IVV) as well as a small position that I will trade when the mood should strike (this position is currently in $GT).
- My Dividend Investment Portfolio – Easily my favorite part of my financial
empirehut. This account is correlated to the broad market, so it took a real bad hurting this past month.
- Home Value – A lot of bloggers seem to stress over home value. In my old place I just rounded to a number that I thought I’d sell for (I was off by less than 1%). I am just going to keep using my purchase price through 2016 (like I did for 2015, 2014 and most of 2013 when I bought the place). No real reason to worry about it as I am not going anywhere any time soon.
- My Traditional IRA – I was actively trading this account also, but I made the financial confession that I was speculating in some really shitty stocks. For the past few months I have been transitioning the holds into long term holds that I felt were undervalued ($HOG, $GT, etc.)
- My Mortgage – Every so often I think about putting money towards the mortgage but I always back off.
- Law School debt – A while back I paid off the much smaller of the loans I have a while before this category makes any significant moves.
- Credit Card debt – All at 0%
My Net Worth Growth
- From January 2016 to February 2016 my net worth decreased a nauseating 4.22%
To put this in perspective this is the largest month over month drop that I have ever experienced. I guess things can only go up from here, right?