Over 750K invested

Today, our investment accounts have now hit the biggest financial milestone to date: surpassing $750,000 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.

The US stock market has hit new all time highs, and so has our investment account balances.  The US market has returned over 37% over the past year, and over 18% just in 2021.  There is a lot of positive news out there.  Big corporations have never been more profitable.  Retail sales are up.  Consumer spending is up.  The travel industry has opened up.  And while there are still many people and families hit hard by the economic impacts of the coronavirus, the stock market is not the economy.  This new highly contagious delta variant of the coronavirus does not seem to be discouraging investors.

Sadly, our chance to squash COVID-19 completely may be behind us.  Blame it on the anti-vaxxers.  All we can do now is continue to practice good hygiene, wear masks and social distance when appropriate.  Life, and the economy, moves on.

We are quickly moving towards a 70/30 asset allocation, which is likely where we will hold at long term.  This portfolio will help us stay invested during stock market rallies, corrections and even crashes.  I’ve learned the hard way that my market timing skills are poor.

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

July 2010: I opened up my first Roth IRA investment account.

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

April 7, 2021: 700K

July 24, 2021: 750K

We’ve been investing for over 10 years now.  Keep saving and investing my friends!

401K in my 401K

I just hit a new major financial milestone: 401K in my 401K!  This new milestone comes from 10 years worth of contributions and investment returns.  When I first started to invest in my 401K, I started with a 3% contribution per paycheck.  Then I slowly increased my contributions by 1% every few months.  I was finally able to start maxing out my contributions about 7 years ago. 

The low rate of return is due to a conservative asset allocation.  About 50% of the portfolio is currently sitting in a stable value fund earning a guaranteed 2%.  As I’ve shared before, back in late February 2020 and then in early March 2020 I sold a majority portion of my 401K into a stable value fund with a guaranteed rate of return of 2.5% (the rate has dropped down to 2% now).  I watched as the stock market continued to tank and I thought that I was so smart for correctly timing the market. 

Then when the stock market started roaring back in late March 2020, I didn’t have the guts to put my entire balance back into my stock market funds.  I sat on the sidelines with this huge stable value fund balance.  Market timing is extremely difficult because you need to perfectly time 2 different transactions: when to sell and when to buy.  I’ve been dollar cost averaging the stable value fund back into a total market fund over the last year.  Thankfully, we didn’t fiddle with our other accounts too much during this time. 

If I had simply just held on to my funds without selling in 2020, my account value would have been MUCH higher by now (probably over $180,000 higher!) due to a ~60% increase in the US stock market since late March 2020.  I wasn’t able to time the market properly and missed out on some huge gains.  Oops - an expensive lesson learned.  The stock market crash last year taught me that my risk tolerance wasn’t as high as I thought it was (previously 90/10).  Our overall portfolio (IRA, taxable, HSA) is now 70% stocks and 30% bonds - and will probably stay that way moving forward. 

My current new 401K contributions consist of:

71% Fidelity S&P 500 Index Fund (FXAIX) 

6% Fidelity Mid Cap Index (FSMDX) 

13% Vanguard Small Cap Growth Index (VSGAX) 

10% Vanguard Health Care Index (VHCIX)

My wife is also maxing out her 401K with international stock market funds to further diversify our investments.  We are Coast FI now but will continue to invest towards our financial freedom.  Here is the Fioneers’ definition of Coast FI:

“Coast FI is when someone already has enough invested in their retirement accounts that would grow to provide them with a comfortable traditional retirement. They wouldn’t need to add another dollar. If someone has achieved Coast FI, it means that they only need to cover their actual costs of living with active income.”  

You can find a great Coast FI calculator here.  How is your financial progress?  Keep investing my friends.

Over 700K invested

Today, our investment accounts have now hit the biggest financial milestone to date: surpassing $700,000 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 both incredible and slightly scary how well the stock market is doing.  There are great reasons for why the market will continue to soar.  There are equally good reasons for why the market is frothy and will crash soon.  The current market sentiment is that the economy will continue to improve.  Covid deaths are declining, millions are getting their covid vaccines, businesses are re-opening, and consumer confidence is up.  There is pent up demand to travel, visit amusement parks, attend sporting events and spend money.  This is great for the economy and investors believe the economy will continue to boom.  

We are conservatively riding this wild stock market.  At this time, we are more comfortable with less risk of financial loss than missing out on bigger financial gains.  Being too conservative has risks though - I don’t even want to think about how much potential upside we have missed out on!  Our portfolio is currently sitting at about 67% stocks and 33% bonds and slowly moving towards a 70/30 asset allocation.  

The stock market can continue to go up or it can sharply pull back.  No one can really predict the future.  Our asset allocation keeps us invested and helps us sleep well at night.  

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

July 2010: I opened up my first Roth IRA investment account.

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

April 7, 2021: 700K

We continue to hit new financial milestones, with each milestone coming sooner than the one before it.  The power of compounding is truly incredible.  We are looking forward to reaching financial freedom.  Keep investing my friends.

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.

Milestone reached: over 300K invested in my 401K

A 401K is a retirement savings plan sponsored by your employer that allows you to contribute part of your paycheck towards your retirement before taxes are taken out.  Contributions into your 401K lower your adjusted gross income, which may lower your tax liability.  

I just hit a new milestone in my 401K: my investments have surpassed 300K in value! 

I started contributing into my 401K a little over 8 years ago in October 2011 with a 3% contribution from my paycheck.  When I first started contributing to my 401K, I couldn’t imagine it ever being possible to max out my contributions to $17,500 (the limit back then).

I increased my contributions over time, just 1% every few months.  Slight increases in my contributions made it easier to adjust to slightly decreased paychecks.  Salary increases also helped make increased contributions and lifestyle adjustments easier.  By June 2014, I was finally able to max out my 401K. 

During the last 8 years, the market has gone up and it has gone down.  I continued to make contributions with each paycheck.  When the stock market declined, I picked up more shares of my index funds.  When the market reached new highs, I picked up less shares.

Time in the market is much more important than timing the market.  Investing in a 401K consistently puts money into your account with each paycheck, whether the market is up or down.  You’ll end up fine even if you only invest at market peaks, as long as you stay the course with your investments and not panic when the stock market has a crash or correction.

  

If your employer offers a 401K, I highly recommend contributing to it.  It’s the best way to consistently invest on autopilot.  And since your contributions are taken out of your paycheck directly, you won’t miss the money when you get paid.  If your company offers a match, definitely contribute up to it.  Saying no to a 401K match is turning away free money.  Match contributions from your company do NOT count towards your maximum individual contribution amount.  

My 401K is 90% invested in 3 funds designed to mimic VTSAX, the Vanguard Total Stock Market (71% S&P Fund, 6% Vanguard Mid Cap, 13% Vanguard Small Cap Growth) as well as 10% into a Vanguard Health Care index.  

Starting next year in 2020, the maximum contribution for 401K will be $19,500 (for those ages 50 and over, the additional "catch-up" contribution limit will rise to $6,500).  I’m looking forward to the increased limits.  If you are not currently maxing out your 401K, try to increase your contributions.  Even 1% increases can make a huge difference over time.   

Over 500K invested

Our investment accounts have hit another financial milestone, surpassing $500,000 in value!  This includes money in our 401Ks, Roth IRAs, taxable accounts, and 529.  This does not include money in our checking accounts, savings accounts, home equity or rental property equity.

Here are some 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

Our investments are simple and our contributions are automatic.  We invest in index funds that track the US stock market (63%), international stock market (27%), and US bond market (10%).  Index fund investing allows us to diversify our portfolio and keep our costs very low.

We’ve had a good run, but we could have a stock market crash any day now.  Stock market volatility is normal.  In the long term, I expect that our balances will continue to hit all time highs.  We will continue to stay the course with our investments on our way towards financial freedom.  I'm looking forward to sharing more of our progress.

Here's a fun read from Stop Ironing Shirts regarding the power of saving $500,000 early on: The First $500,000.  At this point on our investment journey, we can coast our way towards financial freedom.