Net worth status April 2021

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April 5, 2021
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Time for yet another monthly update on AVI family net worth status. As I noted in my last net worth update post, AVI family net worth has surpassed the semi-retirement phase of the 4 phase FIRE path (these being: accumulation; semi-retirement; financial independence and traditional-retirement), i.e., net worth is equal to or greater than AVI family FI number.

Starting from this post, in addition to tracking the net worth metric, I will also track our accessible net worth (ANW), and the goal will be to work towards stage 3 of FIRE path, where in ANW equals or surpasses the FI number.

With these preliminaries out of the way, on to the numbers as they stand at the start of April 2021.

  • Net Worth (as percentage of FI number): 105.63
  • Accessible Net Worth (as percentage of FI number): 68.1
  • Liquid Assets/ Debt Ratio: 3.217
  • Cash Balance/Two Year Living Expense Ratio: 1.235

Synopsis

  • Last update was in mid-March, as such, the delta’s reported are really for past 2 weeks as opposed to regular monthly changes.
  • Net worth seems to be moving upwards at rather a rapid clip, almost 3 % in the past 15 days. The key contributors being equity markets as well as fast growing residential property prices. The house that I reported as being listed for $865 K, in my last update, actually sold for a whopping One Million Dollars. Have a look here at what one can get for that price in our neighborhood.
  • I havent yet paid my monthly mortgage dues and hence we see no change in mortgage relative to my last update 15 days back.
  • Life-style inflation seems to slowly creep in AVI family and it is reflective of the 18 % increase in credit card liability. For example, in the last two weeks AVI family ordered dinner (instead of cooking at home) 4 times, double the number of times we usually do in any given 15 day period!
  • Yet another expense that crept in was some repairs on our dependable Toyota Prius. Did not know auxiliary batteries on these vehicles cost a bunch! While I could have saved some dough shopping around for replacement batteries, I chose to get the work done at dealer house instead! The rationale being, these batteries don’t get changed that often and its worth to get it done right once through a dealer than trying to cut corners to save some dough!
  • Kiddo recreational activities have begun, now that pandemic restrictions are petering out. The difference being, each activity now costs 4 times as much compared to pre-pandemic times. The reason, outdoor activities still mandate 6 fix distancing and that means fewer kids per session and therefore increased price per spot! To add some color, here are the numbers on 6 class swimming session: cost now $250, as opposed to $75 pre-pandemic!

AVI family expenses have clearly increased quite a bit! Yet, the rate at which AVI family net worth is increasing is rather impressive. To better understand why this is the case, we can look at the following chart:

The above chart shows the plot of monthly cash flow from AVI portfolio as percent of Mr AVI monthly salary from his tech-sector job for the year 2020!

This is quite a striking chart and an eye-opener for me! Cash flow from investing gains (or losses) for majority of months in the year 2020 were >100 % (positive or negative) of the income generated from full time employment.

What this means is that while market volatility is on the upside, portfolio growth can be awesome but the pain on the downside can be significant and can put quite a big dent in AVI cash flow and net worth! As such, it is now becoming increasingly important for me to pay much closer attention to my portfolio of investments! And that means, it is high time I revisit my investment philosophy and at the same time crystalize my investment process to sustain continued market participation for the long haul!

My next post will most likely be on the very topic of investment process! For now lets wrap the post with my summary of videos/articles/podcasts for the week

Video/Book/Article/Audios for this blog post

FIRE, Net Worth, Personal Finance
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