November 2020 Financial Update

What would 2020 be if we didn’t have a record breaking month for the markets on top of everything else that has happened this year.

In our October update I mentioned that the four market drivers going forward will be Stimulus, unemployment, growth and covid. With at least two covid vaccines now ready and waiting for approval the markets made major moves upward in anticipation of a post pandemic environment.

Additionally there are signs that stimulus talks are picking up again in Washington. I’m not holding my breath on a deal yet, but if talks are successful this time it could help people and businesses bridge the gap between the time the vaccines are approved and when they are made available to the general public. I think this is what needs to happen before we can get back to meaningful positive growth and lower unemployment rates. It’s always nice to have a positive month but there is still a long way to go before the economy gets back on steady ground.

Last month I also mentioned that we were trying to decide on how to go about selling our house to get the best price and pay the lowest commission to maximize our payout. It appears that it is hard to have it both ways. The lower commission methods tend to result in a lower price while the opposite seems true for higher commission methods.

One thing that happened in the last couple of weeks was that our neighbor put her house up for sale. She just went with a standard broker service and probably agreed to the standard 6% commission rate. Her house sold in just a couple of days and the buyer paid well over her asking price as there were several bidders. So in essence they paid her commission. I’m not so sure she would have got that price without the broker facilitating a little bidding war. So maybe the answer is to use the standard service and try to negotiate a slightly discounted commission? We have time to decide but I’m not a real estate guru and feel a little out of my depth on this subject.

One thing to note is that the comp on the sale of our neighbors house is far below what we include in our net worth numbers. I had the urge to update our calculations and give a big fat boost to our net worth. I ultimately decided to hold off for a couple of reasons. First, we have to pay commission on the sale so now that’s more or less built into our calculation. Second, we have decided to use a portion of our payout to pay a chunk of our sons college tuition so he is not saddled with crippling student loans.

For those of you that have been with us for awhile you will recall this was something we had always considered doing. Due to life circumstances we knew we would only have one child. Because of this we set up a Roth IRA as a college savings vehicle when he was born instead of a 529 account. This move allows us to have more flexibility with the funds depending on his education choices. Now that we are at that time of life we could simply tap the account and pay out what we put into it. But with home values way up and the markets turning out highs I’m more inclined to keep the Roth IRA funded and let it continue to grow. We will be selling our home at a high point in the market and we will have the cash to meet our college commitment. So this feels like the better route to go financially for all of us.

As for our current finances after a roaring month in the markets………………

Here is where we ended the month of November 2020:

Portfolio = $1,182,501

Portfolio Goal = $1,500,000

Amount needed to reach goal = $317,499

Our portfolio increased by $110,977 or 10.36% from the end of October

Year-to-date our portfolio is up 12.89%

Net Worth = $1,396,017

This is an increase of $108,561 or 8.43% from the end of October

Year-to-date our Net Worth is up 11.60%

So there you have it, our first $100k monthly gain! It is amazing to think that our portfolio gained six figures in a single month. But it is was equally amazing to have lost six figures in March, so I will be happy with the gain but with a side of cautious optimism. You never know what the future holds.

Our net worth didn’t keep pace with our portfolio this month as business was a little slow and our receivables decreased. Additionally I did a checkup on some depreciating assets and made a couple of small adjustments to keep them in line with current market values. This could have easily been offset, and then some, by updating our home value to reflect the current market value, but for the reasons mentioned above I decided to not make that adjustment.

I’m looking forward to seeing what December holds. It’s that wonderful time of the year when we spread Christmas cheer and collect dividend and capital gain payouts. This December is a bit of a wildcard with all of the dividend cuts. But on the flip side we had a market crash which has now evolved into a massive run up. The question will be how much in capital gains was locked in during this timeframe. In 2018 we had a huge capital gain payout in December of over $20k for one of our funds and that put us at $45k for our portfolio that year . However in 2019 our entire portfolio only paid out $30k.

At the time I attributed this drop to the fact that the markets tanked pretty good at the end of 2018 and funds we eager to lock in their gains. In 2019 the opposite happened and the markets were strong and there was no reason to repeat that process. With 2020 being a year of extreme selling followed by extreme buying it’s anyone’s guess what payouts will look like, but I can’t wait to find out!

We are just a couple of month’s away from moving to full time RV life. The planning continues and barring any unforeseen delays we hope to make our move in early to mid February. We look forward to sharing our adventure with you and keeping you updated on our plans as they evolve.

Thank you as always for taking time to read our blog.

Until next time……………………..

Joe

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