Time flies, I can’t believe it’s May already. We’re almost half way through the year. It’s almost time for a midyear review, CY18.
Quick summary on what’s happening in April 2018:
- We got an updated house prices from our realtor (“Comps” / “CMA”). This explains the increase value on Equity chart below.
- I opened two real estate crowdfunding accounts: PeerStreet and RealtyShares.
- We hit the one million dollar mark on paper!
Note: The FI chart below is the “What if we sell everything” scenario. That is, it factors 10% of total equity’s worth for the cost of selling. But since we’re not selling, factoring the 10% back in, we’re at $1.1M net worth up to date.
FI Progress: April 2018
Stock/Bond-wise, we hit a plateau in April comparing to March. My investment is mostly resolved around VTSAX, VXUS, VYM, and VBTLX (Vanguard’s low cost index fund). Equity is 100% real estate, currently spread across 2 rentals and 1 primary residence. Seattle’s real estate is still hot, for now, we’ll continue to ride the uptick in real estate. At some point in the near future, I’m planning to re-balance real estate and stocks to be more like 50-50 spread.
Thanks to Seattle’s hot housing market, the house values had increased significantly. It’s supply and demand, there’s just not enough inventory in this area comparing to the buyers pool. Thus, the fast appreciation.
As I mentioned above, the chart above is the “What if we sell everything” scenario. That is, it incorporate 10% closing cost on total equity, in the event of we sell all real estates. So, since we’re not selling any physical equity, the truer on paper net worth is $1,120,000 up to date. We hit the million dollar mark, yeah!
While $1M is a lot of money, it’s not as big of a pile as it used to be, especially in the coastal cities like Seattle. Since we have no immediate plan to move inland yet, we wouldn’t call it a FIRE yet. While it’s doable, it’ll still be challenging to retire with $1M in this city. Our goal is to fatFIRE, as PhysicianOnFire described it in this article. That is, passive income of $100k/year with 4% rule ($2.5M of capital). This way, we have more options on where we want to retire.
I started to invest in real estate crowdfunding, namely PeerStreet and RealtyShares. I put $6,000 in PeerStreet and $5,000 in RealtyShares to start with and start investing on notes with 8% returns over 12-24 months period. I’ll blog my experience through these investment vehicles. But if you’re interested, use my referral link above to get 1% yield bump on PeerStreet. As for RealtyShares, ask for the $100 sign up bonus when the sales representative contacts you. Note that there’s an accredited investor requirement to invest on the platforms above. Fundrise is another option that doesn’t have that requirement.
I also started to incorporate the value of our Honda CRV ($15k) to the equity calculation.
I use Personal Capital (highly recommended free app / website) to keep track of my investment and cash. Once you link all of your online accounts to Personal Capital, your progress is tracked here automatically. Use my referral link here to get $20 from Personal Capital once you link a qualified investment account to your new account.
As for Real Estate Equity, Personal Capital gets the market value from Zillow, thus it tends to be off. It’s best to get the value from your local real estate professional based on comparable sold properties.
Saving Progress: April 2018
Our saving goal for 2018 is $90,000. Read this article on how I allocate these money in various tax-optimized investment vehicles. I think we are still on target. There will be temptations throughout the year to overspend on vacation and shopping, but posting this monthly helps us to be discipline.
We hit over 50% of our yearly goal, so this is good. Since we have our first baby, we don’t go out as often as before. The money that we used to spend eating out is allocated to investment instead. There’s more optimization that we can do, but missRandom is my checks and balances to ensure I don’t go to the extreme frugality and sacrifice our enjoyment during the journey 🙂
We live a simple, frugal live. But we’re still far from being minimalist. There are areas in our life that can still be optimized, but at the same time, keeping my family happy makes me happy! So there are checks and balances. You spend on things that matter to you. You don’t even spend a dime on things that matter to other people (but not to you).
Since we plan to retire on 2025, this is not a sprint. But it is not a marathon either. It’s super easy to be a consumer in America. But delay gratification is the key to early retirement. You get to pick and choose what you want to save now and spend later. It’s a good idea to measure your progress against your goal periodically and be flexible to make adjustment in order to stay on the course when life throws a curve ball.