2016 Net Worth Review

Yes, I know it is June already.  I am a little late in reviewing my net worth growth from last year.  I promised details on 2016, so here it goes.

Overall, 2016 was a very productive year with all of our accounts and net worth growing substantially.  For 2016, our overall net worth grew 33%, significantly beating last years 17% growth.  Here is a breakdown of our contributions for 2016:

  • $31,500 to brokerage account #1
  • $12,100 to DRIP/DSPP accounts via transfer agents
  • $4,000 to our states 529 plan
  • $16,681 to my companies ESPP account at a 15% discount
  • $36,000 to our employers 401k plans, plus the companies contribution
  • Vested shares of Mrs. TPM restricted stock.
  • Paid down an additional $15,496 to our home mortgage

Retirement Portfolio

I have a confession, I moved employers too much and carry too many 401k accounts to keep track of.  In my early retirement, I hopefully will find the time to centralize all of these accounts.  I am finding it very difficult to keep track of all the accounts and some of the investment choices in the accounts are not that great.

I try to keep our retirement funds at a 70% equity/30% fixed income ratio.  I am open to being more aggressive with our retirement savings, but alas Mrs. TPM is not.  We have negotiated this ratio after our early years of a 50%/50% split.  Primary the equity portion of this invested in S&P 500 index where available.

I do however hold some company stock of one of my old employers, IBM.  I am still waiting to see if they can transform the company.  It seems Warren Buffet finally changed his mind on his investment in IBM.  For now, I hold it for the tax free dividend growth.

Overall, our retirement balance grew 19% with a mix of new money and growth of our investments.

Taxable Portfolio

Please bare with me, I don’t mean to brag with this one but I can barely hold in my excitement to share this.  2016 was an absolutely fantastic year for returns in our taxable accounts.  We managed over a 35% return with a pretty conservative portfolio!  This crushed the 9.54% return for the S&P or the 12.25% return with dividends reinvested.  My return includes dividends reinvested.  I hope every year can be this good!  Realistically if I can even beat the S&P consistently, I will take it.  

Our taxable portfolio is 100% invested in individual companies.  The foundation of the portfolio is and always will be Dividend Growth Stocks.  These are mostly blue chip stocks that were selected when they are undervalued by Mr. Market.  Most of these companies held up nicely during the last recession.  Some of them I have held for nearly a decade.

Early in 2016, I sold a few consumer good companies and one bank stock.  I felt that the valuations had approach nose bleed territory.  I reinvested the bulk of these funds into  3 value stocks.  One of these pays a dividend, but I don’t consider it as a dividend growth stock as it has not grown the dividend.  My plan is to hold it until it reaches fair value and then sell it.

Each one of these value stocks did very well for 2016.  One of these has since retreated in 2017.  I am considering selling at least one of them when it reaches favorable tax treatment.  Other then these few sales, turnover has been extremely low. 

One of them I am currently considering selling.   It has ballooned into a very large position of the overall portfolio.  After the 2016 run up, it currently makes of 16.74% of my portfolio.  I usually get very uncomfortable if one company is greater than 10% of the entire portfolio.  Not to mention it is a cyclical business and if there is a downturn to the economy, it might significantly impact the companies earnings.  However, it is still very undervalued and the company is expecting significant growth.   So I hold for now.

Real Estate

Zillow has the value of our primary residence at 4.8% growth for 2016. This is acceptable, but nowhere near the appreciation seen in other parts of the country.  Unfortunately we will likely never see the appreciation of other major US cities.

We currently have a 46% equity position in our home at Zillow’s approximate value.  We have no intention to move in the near future.

Our only real estate holding (other than REIT’s) is our primary residence.  In the future I will likely diversify more with physical real estate.  With both of us working and two little kids, I never really considered this an option for us.  We have been very time poor and adding a rental would be too much burden on our time.

Looking Towards 2017

We are predicting our 2017 net worth growth won’t be nearly as good as 2016.  Especially with my resigning from my company.  Not to mention, the overall stock market valuations are stretched if looking at the shiller PE sitting at near 30. However, Jeremy Siegel the author of one of my favorite books on investing, “Stocks for the Long Run” has a differing point of view.  Its interesting hearing both of these experts point of view.  I don’t believe anyone really knows what will happen for the rest of this year.

However, we are expecting a correction anytime.


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