Monthly portfolio update – December 2018

So when I started this FIRE journey, one thing that I learnt early was that financial independence simply meant having enough income to replace your expenses. As a result, at the start of December I decided that I would give You Need A Budget (commonly known as ‘YNAB’) a whirl since I had heard good things from it on other personal finance websites and blogs. I will be using the free 31 day trial to see whether it is something that I want to be using moving forward since it is a subscription based model but many people have told me the benefits they have gained from using YNAB outweigh the cost of it.

So far it has been a great way for me to track where every dollar has been going to and how it compares to how my planned budget. The great thing about YNAB is also that it allows me to track my credit card and other assets such as superannuation, real estate, cryptocurrency and shares however these require me to manually adjust their values which is less convenient than using an Excel spreadsheet or Google sheets to track them using data sources which allow them to update themselves. I guess there’s never a perfect solution, but YNAB is pretty good so I’ll be using it for now.

Anyway, you came here for a portfolio update, so without further delay, let’s run through my current net worth calculations;

Assets: $1,119,595.52, consisting of a mix of shares, real estate (PPR and an investment property), a mutual fund and superannuation.

Liabilities: $678,378.85 which is made up mostly by mortgages for PPR and the investment property, and a small HECS balance from my university studies.

Net Worth: $441,216.27. I know being a mid-twenties male that this is a very fortunate position to be in, but I am what people would call equity rich, cash flow poor as the majority of my income every paycheck goes towards the repayment of mortgages. You are all probably wondering whether I got here with the help of my parents. The short answer is yes. The long answer is that I am paying off their mortgage for them and the only way I was willing to do that is if the house was in my name so hence the large asset base and also large mortgage balance.

Review of the Month

December was an expensive month for me – there was quite a bit of gift giving in December with Christmas presents, a few friend’s birthdays and road trips over the holidays which got me spending a little more than usual. However I don’t regret spending this money, because it is in fact the festive season and it is great to have a nice break from work and studying to recharge the batteries before the new year starts.

The markets took a tumble and the share portfolio isn’t looking great, but I see this as a little kink in the road of long term investing. My focus for the coming year is to continue to pay down my mortgage debt and investing $1,000 AUD a month into the share market so I do not miss out on the effects of compounding over the medium to long term.

Goals for 2019

  • Continue to aggressively pay down mortgage debt and find other sources of income (i.e. side hustles) to accelerate this process. I am aiming to debt free before the age of 30 which is ridiculously ambitious but I feel like anything is possible if one sets their mind to it.
  • Consistently invest $1,000 a month into the share market without hesitation to build my dividend income stream. Most of my current portfolio is sitting in the Vanguard Diversified High Growth Index Fund (VDHG.ASX) but I have recently revised my asset allocations and chosen to pursue a more dividend (Thornhill) approach to investing. I will be following this by investing my monthly $1,000 contribution towards a listed investment company (LIC ) if trading below net tangible asset value (NTA), otherwise into the BetaShares Australia 200 ETC (A200.ASX) which is the lowest cost Australian index fund out on the market right now as far as I’m aware.

Anyway, that’s it for now. I hope you enjoyed the post – I’m looking forward to sharing many more in the future!

Wishing you all the best in the new year…

Advertisements

7 thoughts on “Monthly portfolio update – December 2018

    1. Hi

      Thanks for dropping by!

      I have thought about this in the past and I think you lose the benefit of compounding significantly by delaying investment into stocks especially given the recent market downturn.

      I am however going to dump my bonus from work (if I get it you this year) into the mortgages.

      In theory the most optimal thing to do would be whatever gets me the highest return and by rough estimates, the mortgages give me a return of 4% after tax whereas shares over the long run give me a return of 6-8% after tax.

      If interest rates start to creep up on my mortgages then potentially I’d reconsider?

      Liked by 1 person

  1. Just wanted to say I have enjoyed looking through you blog and will be following your journey with interest. Great job on the good start, to have that much capital behind you at your age is a massive advantage. I wish I’d had the simplicity of just having access to VDHG when I started my journey. Don’t underrate the simplicity! 🙂

    Liked by 1 person

    1. Thank you very much for dropping by! I appreciate it.

      Yes, I do believe starting young is important so I have tried to get into some good habits early on in life while I still can before regret kicks in later on in life.

      I follow your blog quite avidly so thank you for being a source of inspiration and motivation for me to start this blog!

      Like

  2. Just wondering how the property ownership deal with your parents work.

    Did they initially buy the property with a mortgage, then transfer both the home title and remaining debt to you? Do they still live in the property?

    Like others said, given the overall equity market sentiment at the moment and the likelihood of an interest rate hike, I would go with the guaranteed tax free return of paying down the mortgage over buying more shares at this point in time.

    Good luck!

    Like

    1. Thanks for dropping by! Appreciate it 🙂

      My parents are old and tending towards working less due to toiling away at physically labour intensive jobs earlier in their lives. You are correct – home title and remaining debt has been transferred to me. They do still live in the property and plan to do so for the foreseeable future at this point in time. I guess you can say it’s like a early inheritance, but I also get the debt as well as the asset (so the majority of net worth that you see in my post is tied up in house equity).

      It was the only way I was willing to help my parents with their debt since their skillset/s are not highly sought after and they are older (late 50s, early 60s) so also have trouble finding employment as companies are not willing to hire and train people who will retire just around the corner. They both had a bad run of health issues that prevented them from continuing to operate the family business, which is what funded the purchase of this house in the first place. I guess you can just call it a run of bad luck?

      Regardless I’ve got no issue with helping them with their debt, and I love being able to give my parents the peace of mind that they can retire and still have a roof over their head.

      Like

      1. Seems like a fair deal, and like you said it’s basically just an early inheritance. Good on you for helping your parents out.

        Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.