2015 Year-End Net Worth Update

Goodbye 2015

2015 is over and 2016 is already upon us.  

At the end of 2015 we had BIG changes in the life of the Tako family.  Most notably, we took the big leap into financial independence and said goodbye to my large corporate salary.  This will have a large effect on the growth of our net worth going forward, but we’re confident the impact to our lifestyle will be minimal.  If anything, we expect life to improve in 2016.

Our net worth increased by around 14% in 2015 due to savings, and a larger return on our investments than the averages.  Let’s look at the exact numbers:

The Lowdown

Our net worth is a little over $2 million dollars.  Approximately $1.8 million of that is assets we can liquidate quickly (if needs be).  If we spend on average $50,000 per year (which is pretty close), we could sustain that level of spending for 36 years even if the market had a 0% return.  Another way of saying this is: we have 36 times our annual spending in liquid net worth.

Update on 1/4/16:  Woops!  I forgot some assets that are in the process of being merged into Tax-Deferred Account #2.  That amount will grow the total net worth number by approximately $30k, once the asset transfer is complete.

Taxable Accounts 1 & 2

Taxable accounts 1 and 2 are our primary investment portfolios.  We hold mainly individual stocks in these accounts, but also hold REITs, Preferred Shares, and cash equivalent money market funds.  We’ve beaten the S&P500 index on average for the last 10 years, so we feel comfortable with what we’re doing here.  Most personal finance blogs will tell you to invest in index funds.  That’s good advice.  Investing in individual stocks is not for everyone, we get that.  But, we don’t mind being a little different when the results are on our side.

Tax-deferred Accounts 1 & 2

These accounts are our 401k’s and IRA’s.  These tax deferred accounts are mainly Vanguard Index funds, with a little bit of employer stock from when we worked at a public company.  We probably won’t touch these accounts for many years and will let them grow.

Cash Accounts

Pretty self explanatory here.  This cash is used primarily for paying the regular bills.  These accounts are a little on the low side this year due to some major house maintenance in 2015.  Ideally I’d like to see one years worth of expenses here.

Real Estate (90% of Zillow estimate)

Zillow quotes the value of our house at $656,394.  90% of that is $590,754.60.  Using recent comparables from houses sold in my neighborhood, I think that’s pretty accurate.  Possibly a little low.  We have roughly $303,448.35 left on our mortgage.  Subtract one from the other and you get our equity value: $287,306.25.  Our longer term plan is to sell the house in the HCOL (High Cost of Living) area and move to some place more affordable (and more kid friendly).

What? So simple?

That’s pretty much it.  We keep things pretty simple in the Tako household.  I’m not even going to bother adding small items like the value of our cars or other trappings of modern life.  If I tried hard, I could find some items to bump up the net worth value by at least $20,000.

We don’t get fancy with investments either.  We haven’t gone into rentals or bought into private businesses.  We don’t own any loans, tax liens, or obscure investment products.  There’s really no need for all that.  You can make fantastic gains by owning (the right) simple investment products, available from your brokerage account.  It all added up to some amazing gains in 2015.  That said, I don’t expect that kind of increase to repeat in 2016.

Next time, we’ll look at Mr. Tako’s dividend income for 2015, which was pretty outrageous…I think we may have broken $100,000 in dividend income this year.  How did you do in 2015?