The portfolio changes:
↑ $55,600 were accumulated over the year and invested. This exceeded annual goal of $40,000 with my annual bonus almost fully invested and some additional efforts were put in. Otherwise the portfolio only gained 3% or $5,400 otherwise.
Primarily this was due to over exposure to cash & precisions metals. This year I reduced exposure to cash from 74% to 54%, with stock market portfolio allocation went from 18.5% to 39.5% (next year 2013 I expect it will go up to 49% or even %55).
↑ Company shares are slowly going up, as I am reinvesting all the dividends into the new shares. Annual gain is $800.
↑ Keeping emergency fund into GBP, allowed me to gain almost $3,000 on the differences in exchange rate. Albeit from 2008 it lost almost $18,000 as GBP was stronger back then and this is without taking inflation into account.
- Mutual funds invested into emerging markets did not bring any gain this year (To be fair $300). I started wondering whether it is worth keeping money there. Since 2008 there has been loss of 7%, but the currency lost 30% of its value as well. Grand total loss over the last 4 years $9,600
↑ Precious metals gained $2,400 this year.
↓€ lost about 3% towards $ this year, for my nest egg it meant $1,200 loss.
Diversificationat work in 2012:
All new investments and saving will go into stock market, but ultimately I am restricted by the size of the emergency fund, which will remain the same (sum wise).
Inflationadjusted the portfolio without savings lost money (3% gain is below inflation). The current investment model is not sustainable.
Goals vs. Achievements:
Our family budget is ballooned this year by 25%, but the quality of life stayed the same at the very best. The next year will stay the same at very best. However the new jobs allowing us to maintain savings targets, which is still OK but should we continue to life in the area we need to revise the financial independence target. Currently the new worth will let us stay out of jobs for 2,5 years.
We accumulate $7,000 towards durable goods replacement over 10 years and these are not reflected in the table above.
I have completed most of the goals for 2012 but some are still outstanding:
- Think about additional source of income.
- Create list of books to read & read them- 12 books in minimum.
- Publish reviews.
- Have solid understanding of mutual funds and energy sector stocks.
I am deeply concerned with not doing the educational l goals, as see them as corner stone for any further progress and sustainability.
The thing that even at the relatively high savings rate with the income we have it is unlikely to meet the financial independence goal in next 20+ years. We will be lucky to accumulate enough money to live during our retirement on the interest without touching the principal and pass it over to the kids.
There is always option to dramatically change life style and expenses by moving over to Philippines or Bali. I was led to believe you could easily live there on $3,000 a month, including renting an apartment.