Tuesday, January 12, 2021

Over 650K invested

Today, our investment accounts have now hit the biggest financial milestone to date: surpassing $650,000 in value!  

Our investment accounts include money in our 401Ks, Roth IRAs, taxable accounts, HSA and 529.  Index fund investing allows us to diversify our portfolio and keep our costs very low.  This does not include money in our checking accounts, savings accounts, home equity or rental property equity.

It’s hard to believe how fast the stock market has recovered since the crash in March and then exploded towards new highs.  There is a lot of bad news out there.  The U.S. COVID-19 death toll continues to rise to record highs.  Swamped hospitals are having to ration care for the surge of sick patients they are managing.  Racial tensions and inequalities have become more and more glaringly obvious.  Small businesses are suffering.  Unemployed people are suffering.  Just last week, domestic terrorists rioted and breached the U.S. Capital.  Yet none of this bad news seems to be putting a dent into stock market returns.  

The roaring stock market is due to a combination of historically low interest rates, government intervention to protect big corporations and record stimulus spending.  Despite all of the doom and gloom this year, stock market investors are forward looking.  

With the certainty of a new president and a Democratic control of the Senate, it’s likely that more will be spent on economic stimulus.  The COVID-19 vaccine roll out, while slow, promises to finally bring the coronavirus death toll down.  More industries can start to reopen, especially travel.  This will lead to increased consumer confidence - and spending.  The Federal Reserve has indicated that interest rates will stay low for the time being.  This helps businesses and individuals keep borrowing costs down.  Homeowners can refinance to record low interest rates to save more money.  The stock market looks attractive in this kind of environment. 

The harsh reality of this recovery is that the growing divide between the rich and poor continues to widen.  Those that are invested in the stock market have become more wealthy than ever before.  People in the hardest hit industries of this recession aren’t doing well at all.  Small business owners, travel, hospitality, performance and art industries are all suffering as lockdowns continue to punish them.  Those suffering are dependent on unemployment income and government assistance, which has been severely lacking.  Millennial-Revolution wrote a great post explaining what a K shaped recovery is here.  It really is unfair to be on the wrong side of this economic recovery.  I hope this new administration can better support those with the most needs.

We continue to ride this wild stock market.  As our investment accounts have grown, we have become more conservative with our stock to bond ratio.  Our portfolio is currently sitting at about 65% stocks and 35% bonds and slowly moving towards a 70/30 asset allocation.  While we are missing out on potentially greater returns, we are comfortable with the safety our bond funds provide. 

Here is a look back at the timeline of our previous investment milestones:

June 2, 2014: 100K

March 12, 2016: 200K

June 5, 2017: 300K 

July 15, 2018: 400K 

April 16, 2019: 450K

November 5, 2019: 500K 

January 18, 2020: 550K

November 7, 2020: 600K

January 12, 2021: 650K

Volatility in the stock market goes both down and up.  While we are enjoying our net worth gains right now, we will not be overly greedy.  We will continue to steadily invest towards our financial freedom.

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