In about 7 days we will usher in a new decade. The decade of teens, will soon be bygone, a decade of American prosperity in which markets (S&P 500) returned 250 % on the upside, never once dipping more than 20 % from the peak. Assuming nothing goes wrong in the last few days that remain of trading, this will officially be the decade of no-bear markets!

The soon to be bygone decade will be the one in which Mr and Mrs AVI became parents to two wonderful kids, satisfied the American dream of home ownership, went through the difficult decision of renegading nationality of our birth-country to become citizens of the land of birth of our children, made big career move out of the ivory tower world of academia into the real world and all the while making steady progress towards climbing the wealth ladder into the top 10th quartile of American household net-worth.

Into the new year and continuing on into the new decade, AVI family want to continue the steady march upwards along the wealth-ladder. Speaking of which, I came across an interesting chart (reproduced below) from a blog article by Nick Magiulli from https://ofdollarsanddata.com, which is reproduced below:

 

I think it is a very clever way of thinking about wealth based on net worth. The ladder is designed based off the assumption that for each category of the ladder, the marginal spending decision represents about 0.01 % of net worth level.

I can easily identify the stage in Mr AVI life during graduate school days when grocery prices did matter a lot, warranting a bus ride to save-a-lot store about 6 miles from where I lived, instead of visiting local Albertsons store, a mere 10-min walking distance from my place.

The math for spending an additional $100 on restaurants for an individual (or family) with net worth of $1 M and upwards totally makes sense. Occasional expense of about 0.01 % of net worth on fine dining experience is not going to impact net worth for millionaires in any meaningful way. However, on its own, a thought of spending $100 in total, let alone an incremental spending, on restaurant experience is unthinkable and to be honest,  AVI family hardly ever ventures out into restaurants spending upwards of $100 for any given visit. There is something to be said about living-a-life a little! or as Nick Magiulli puts it, “there is lot more to life than saving money“.

Net Worth Update

Getting back to the topic for today, the net worth numbers for AVI family on Christmas eve are as follows:

• Net worth as percentage of AVI family FI number: 61.67 %
• Liquid net worth/ debt ratio: 1.457
• Cash balance/ Two years living expense ratio: 1.066

And the table summarizing the distribution of AVI family net worth

Asset		Percent of FI Nov 23	Percent of FI Dec 24	Percent Change
	Checking Accounts	0.88	0.58	-34.09
	Saving Accounts	4.48	4.7	4.91
	CDs	3.204	3.249	1.4
	Non-Retirement Brokerage Accounts	24.24	25.12	3.63
	Retirement-Brokerage Accounts (IRA, Roth, Rollover)	16.46	16.85	2.37
	401-K	1.26	1.33	5.56
	Primary Residence	31.74	31.33	-1.29
Liability
	Mortgage	23.11	22.96	-0.65
	Credit Cards	0.2	0.13	-30
Net Worth		60.59	61.67	1.78

• I am seeing a continuous drain in my immediate cash balance account, which is a good thing. Cash account offer 0 % interest and there should be no reason to hold any cash beyond the monthly fixed expense needs.
• Saw a nice bump up in savings account balance, basically moving funds around from cash account into interest bearing savings account. Across various savings account, my interest rate now stands at about 1.79 %
• Saw marginal growth in active investment accounts, which is on par with the growth of S&P 500 index.
• Retirement accounts are hedged, which is reflected in sub-par growth relative to the markets.
• 401 K balance is creeping upwards at a steady pace, gains contributed to by employee matching contributions.
• Residential property values creeped downwards in the past month.. nothing much Mr AVI can do about it.
• Saw a nice drop in credit card expense, reflective of payments on new car purchase.
• Overall though,we saw marginal growth in net worth, reflective of subdued market returns in the past month.

The chart below, tracks the growth in AVI family net worth in relation to various assets, through the year (from the time I began tracking the numbers in details).

The steady growth in net worth is reflective of a solid investment gains in actively managed accounts. Growth in home equity was primarily driven by paying down mortgage, with marginal contributions coming from increase in home prices. Cash balance saw the highest growth, especially around later September, in response to the anticipated big-family purchase of a new AVI-family vehicle.

Overall, Mr AVI is quite satisfied with how the last year of the teens decade has evolved in terms of finances. Into the new year, Mr AVI wants to

• Read at least 6 books for the year, make sure to include fiction reading into the mix. I have spent better half of 2019 reading a lot about one particular topic- personal finance and investing. I want to increase my repertoire of books beyond finance primarily to better build my language skills.
• Write more. Since I began actively managing my blog, my cadence has been 1 article per week or 4 articles per month. An important objective for new year would be to increase the writing cadence to 6 articles per month.
• Work on improving note taking and knowledge retention methods. This is an important objective for me, if I am to progress towards efficient blog writing skills.
• Get health in order. The food-perks offered by my current employer coupled with bare minimum physical activity has led me to put on some weight. If I am to make a dent here, I need a health goal for 2020— completing 5K run by middle of the year and 10K run by end of 2020 should be achievable if I am to put my mind to it! and finally
• Grow net worth to 3 quarters of AVI family FI number.

5 resolutions-quite manageable I think. Will make a note to update on how I am progressing towards these goals half way through 2020.

Video/Book/Article/Audio for the Week

• The battle of billionaires: Bill Ackman and Carl Icahn dueling live on CNBC over their positions on opposite side of the trade in the global nutritional supplement company, Herbalife. Bill Ackman’s fight against Herbalife was also featured in an excellent documentary, Betting on Zero
• Stanley Druckenmiller’s 2020 outlook. Its always fascinating to see how down-to-earth some of these extremely successful investors are in their appreciation of luck as a key contributing factor for their success, which for many started with the ovarian lottery
• Paul Graham on having kids. The last few paragraphs are precinct and worth a read for all my millennial married work colleagues, who do not foresee kids as part of their future!