I have been meaning to complete my series on Portfolio Hedging for some time now. However, with two kids enrolled in full-time online classes, my mornings are now occupied taking care of kids and their schooling needs. Much of my for-pay work now happens in the evenings and as a result the times that I devoted to researching for blog posts are pretty much gone!

The consequence, missed weekly blog updates. For the remainder of the year (or atleast kids are home attending online school) I forsee a slack in  my blog post cadence.

That said, I want to atleast try and maintain the cadence on monthly updates to AVI family networth. So here we are, after a relatively brutle month of September, the first since end of March when the markets were down for the month, AVI family networth hardly budged from August numbers.

Have a look at the key numbers that I track month-to-month

• Net Worth (as a fraction of FI number) (NW): 78.04
• Liquid Assets/ Debt Ratio (LDR):  2.076 
• Cash balance/ Two Year Living Expense (CLE): 1.19

And here’s the chart tracing the progress for the year

Synopsis

• After a robust double digit increase in AVI family networth at the end of August, September turned out to be a dud!
• The cash balance in checking account swelled quite a bit in the past month, which was partly due to the semi-annual bonus from Mr AVI employer.
• AVI family is expecting some home-rennovation expense and the high amounts of cash in checking account is reserve to pay for the impending repairs and fixes.
• Property prices in our neighborhood have been increasing at a steady pace since the pandemic and the story has been no different in the month of September. I fully expect this trend to continue through the year.
• I was preccint in my synopsis of the impending market correction in my monthly networh update last month following the relentless rise we saw in the equity prices. And I was meaning to hedge my portfolio. Alas, that never happened and the pain was equally shared in my equity portfolio.
• However with the injection of cash, both the LDR and CLE metrics remain above the desired threshold of 2 and 1 respectively.

Musing

$1.8 Billion siphoned off a small bank in India! the number is simply stagerring. And I had never head of this story or the lead character in the play, Nirav Modi! Well now I have. Thanks to a wonderful mini Netflix series, titled Bad Boy Billionaires India. Worthy of a binge watch for folks who are particularly interested in real-life stories on business/finance fraud.

Oh I digress, back to the topic that I really want to talk about, state of American household networth in 2020!

According to the Survey of Consumer Finance data released on September 2020, the median networth (nominal, not adjusted for inflation) of an American household stands at $121,411, which is up from $97,225 in 2017. The data was primarily collected in 2019 and therefore may not include the impact of Covid-19 on American households!

Some additional numbers to note from this report, the average net-worth of American household stands at $746,821. Why such a discrepancy from the median numbers.. Well, there are quite a few Uber rich Americans out there who tend to skew the average to a higher number.. Think, Bezos and Gates and Buffetts of the world!

About 10.5 Million american households have millionaire status, by far the largest cohort of Millionaires anywhere in the world!

To be in the top 1 % of household networth in 2020, a household needs a net worth of $11,099,166 and to be in the top 0.5 %, a household needs networth of $43,207,732.

A millionaire status would qualify household to be very close to the 90 % quartile of the population and a family that has achieved fat-FIRE status (generally considered to be about $2.5 Million), would find itself in the top 5 % percentile of the american population.

What bucket does AVI family fall under? Top 7% percentile of the population would be about right!

Video/Book/Article/Audio for the Week

• Article: Buffet and Gates, both call this man a hero! That would be Chuck Feeney. Fascinating read on the guy who while alive has given away majority of his wealth for charitable causes, almost 8 Billion!
• Article: Fascinating read on the makings of a multi-bagger in the last 5 years! Unfortunately for me, none of the listed stocks appeared on my screen to investigate, something to chew over
• Article: Buffet invests in Japan. The following stat suffices to see the reason why, The companies Buffett purchased trade at a 35% discount to the broader Japanese TOPIX index and a whopping 79% discount to the S&P 500 on a price-to-book basis.
• Video: I already noted above, The Bad Boy Billionaires India is simply fascinating for a student of finance/investing such as myself