It’s that time again! Well, actually this would be the second time doing this ever but I finally found some time to figure out how much my retirement nest egg has made. I would have given a report for the 1st quarter but since I’ve been too lazy, I’m combining this with my 2nd quarter results.
1st Quarter
My entire retirement income went up 5.49% since the end of 2006. When you subtract all my contributions as well as my company’s 401K match, the gains was a measely 0.40%. Definitely nothing to be proud of. The first 3 months was when the market pretty much traded sideways. There wasn’t alot of movement at this time as far as from my part. I was only contributing 7% to my 401K since I needed to squeeze out my paycheck due to vehicle maintenance expenses and setting aside some cash for my 6 months emergency fund.
2nd Quarter
My entire retirement income went up a whopping 20.21% since the end of 2006! That’s a 14.72% jump since the end of 1st quarter. After my contributions and company match were taken out, that gain was down to 7.98%. So what went right this time?
- I was given my annual review and got a bump in pay for that.
- I was also promoted and that further bumped my salary up.
- I paid off all my vehicle maintenance bills.
- The stock market also went bullish and is still doing so.
- Completely funded my emergency fund.
All these events made it possible for me to increase my 401K contributions to 30% of my take home pay. Yup the max! The best quarter I’ve had since I began monitoring my earnings.
Looking Ahead
I’ve got a vacation and car insurance to pay for that will suck up some money for this next quarter. Besides that I should see another steady increase since I will still be contributing 30% until I reach the maximum pre-tax cut-off. That probably won’t happen until early to mid 4th quarter. Just in time for Christmas shopping for some extra cash.
Last month I decided to bump my 401K contribution up to 30%. This change took place in my last pay check 2 weeks ago. And you know what? It wasn’t so bad. Getting promoted certainly help since my bump in my salary may have eased the pain a bit. This was good timing since I fully funded my emergency fund at the time of my promotion and I was going to contribute this amount regardless if I was getting promoted or not. In reality, a savings of 30% a pay check translated to only a decrease of $300 of my initial take home from last month. This will also decrease my taxable income for next tax season so I don’t give the government more than they deserve of my hard-earned money. Unfortunately, they cap the total amount of pretax dollars you can put in your 401K to $15K per year. I’m guessing they will stop me from my 30% savings by time Christmas roles around. This would be great timing since I’ll have extra cash for presents! It’ll be like a bonus every holiday season. 
I’m also not strapped for cash these days. I actually have a good amount of pocket change that is more than enough for a typical week’s miscellaneous expenditures.
Next step, buy investment properties…
2006 was certainly a year for me to remember. It was the year I finally became debt free. It was also the year where I learned how to manage my retirement money and began to seriously analyze and save for my future. My goal is to make my first million in 10 years. So far so good.
I am happy to report that my investments from 2006 went up 7.76%. This amount did not include contributions. With contributions, my portfolio rose 11.01%. The first quarter of 2006 I was up 5.74% from previous year’s amount. Second quarter performance sunk my portfolio down to -0.30% when the market sold off. By third quarter, I recovered my losses and was up 2.46%. I began making contributions to my 401K again in the 3rd and 4th quarter.
Based off of Robert Kiyosaki’s “You Can Choose To Be Rich” workbook, I was able to come up with the following analysis of my financial state.
HOW MUCH DO YOU KEEP? I kept 10.6% of my income.
Goal: Increase the percentage of income you keep.
DOES YOUR MONEY WORK FOR YOU? 2.5% of my income is working for me.
Goal: Increase your percentage of passive or portfolio income.
WHAT IS YOUR INCOME AFTER TAX? I pay 35% in taxes.
Goal: Decrease the amount of tax you pay.
HOW MUCH OF YOUR NET INCOME GOES TO HOUSING? 24.7% of my income goes to housing (thanks to coming back home to live with the folks).
Goal: Keep housing costs under 33% of net incoming.
WHAT IS YOUR RETURN ON ASSETS? My cash-on-asset return is 3.67%
Goal: Increase your cash-on-asset return.
HOW WEALTHY ARE YOU? I can live for 9.26 months without worrying about my expenses.
Note: Once your monthly passive income exceeds your monthly expenses, you’re infinitely wealthy because your assets are working for you.
Goal: To purchase assets that generate passive and/or portfolio income in excess of your monthly expenses.
If I was to give myself a grade, it would probably be a B or B-. I think I can do better as far as saving more and improving on these numbers. Let’s see what 2007 will bring.
On a side note, one of my guilty pleasure is being cancelled. Last episode February 22nd. 
What I thought was a sure thing turned out to be a pretty big mistake. I lost 4.1% of my position in GLD in a matter of 6 days. Talk about volatile. I’m still watching GLD, XLE, and now EWJ which focuses on Japan. It’s looking like Japan might be starting a new trend pretty soon. But I’m going to be a little bit more cautious about this one.
I’m also learning that I have to be constantly monitoring my 401K’s portfolio. Within the past 2 months, my mutual funds have crept up higher and higher and now would be a bad time for me to jump into them since they seem to be overbought. Oh well, lesson learned.
Made my move today. Gold fell down to it’s 50 day moving average so I got out at $61.15. A 3% loss for GLD but very minimal damage to my overall portfolio. Looks like XLE is heading south as well. If it reaches its 50 day moving average, I’ll be out as well.
I was just looking over my choice of funds in my 401K and positioned myself in for GIEIX. This fund has been doing very well in the past 2 months since I dropped it from my portfolio nearly 60 days ago. It’s gone up a good 13% since June 14. I might be in it too late, but it looks like the trend is up for this fund so I’m taking a gamble on this one with 33% of my 401K. In any case my stop loss is in place just in case my hunch is wrong.
All my funds came over from Vanguard last week into my Scottrade account. I finally positioned myself in the following ETFs: SHY, XLE, and GLD. Because Scottrade’s cash position did not have any money market that came close to the yield of 4+% from my old money market fund, SHY was a recommended position. Its basically some a bond fund consisting of US Treasury Notes yielding between 2.6-4.7%. Its a relatively safe ETF which pays out monthly dividends yielding about 4.2+%. I’m 75% in SHY while the remaining 25% was split between XLE and GLD. XLE is my energy play whereas GLD is my position in gold. Both XLE and GLD performed well today. They’re both poised for a potentially higher trend with both being above their 200 day MA and right at their 50 day MA as well as making newer highs. Sitting in cash in my 401K is rather dull, but I’m waiting for more positive signs to move into the right position.
It’s some pretty scary times if you’re in the market right now. I had to assess my own portfolio and found that I’m only down 0.31% since the start of the year. Not bad considering that I had some pretty big losses in my 401K account. Thankfully I moved to cash at a timely manner. Next step is moving my Rollover IRA into Scottrade so I can begin trading some Bear Funds. Oh yeah, there are finally Bear market ETFs. I’ll be monitoring those closely. Moving to Scottrade should also get me situated for the next Bull market. Hopefully I can reach my 20% annual growth this year. I’m 8% behind where I should be.
On a side note, I told you Miami was going to be the NBA Champions. Now if I was only this good in predicting the market… 
My second playoff game came sooner that I had expected. Because of some unfortunate reason, I was offered the opportunity to see the Clippers again last night against the Suns in Game 6 of their series. Again the Clippers was victorious and forced a deciding Game 7 at Phoenix. It was very entertaining and our seats this time was at center court but still at the nose-bleeds. Thank goodness it was the Staples Center since it didn’t matter where we sat we were still in the middle of the action. I brought my Adalyn to her first NBA game ever. She was excited. Everything was fine until near the end when some dude 2 rows back fell over and push the guy behind us on her. She’s a little banged up on the shins, but I think she’ll be fine. What a way to enjoy the action after a nail-biting conclusion to my Spurs‘ game the night before where they inched by the Mavs by 1 point to foce a Game 6.
On another unrelated note, I finally put 59% of my position into cash. My trailing stop-loss mark was actually met today so I had to make that switch to cash to reduce further damage by this recent bearish market. Hopefully I’ll have to see if my move was right. Moving your money out of position seems a bit overwhelming. I am worried about the fees and tax implications. But since its in a roll-over IRA, I don’t think I have any issues with tax since an IRA’s capital gain does not impact my taxes since this is tax deferred. Also the money market mutual fund’s overall fee is only 0.13% per year. That’s about just a meal a year so no biggie. Now I have to do the same with the remaining 41% of my portfolio. Unfortunately, this one is in my 401K so I have to wait for a recent transaction I initiated. On May 12th, I moved the majority of that portfolio into a Small Cap and International Fund. Both sectors suffered a 6% decline so far since then. I would have only lost about 4% if I left it the way it was in multiple funds. Oh well, live and learn. I’m willing to move that into cash as soon as we hit about 10-12% stop-loss. Hopefully this will happen later since I can initiate another transaction. Only crappy part in dealing with my 401K is that you’re only allowed 2 transactions a month.
On a positive note, I’m looking to be completely debt free next Friday. I think I’m going to have it on video of me screaming, “I’m debt free!!!”, much like how those Dave Ramsey callers do it on his radio show. Hopefully I can post that on here when it happens.
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