Wednesday, February 28, 2007

Monthly Review - February (revised)

My net worth increased by 3.1% in February.

This was a big and surprising result. I had expected a much smaller increase after watching the markets fall in the last few days of the month. Here are the highlights:

1. most of my funds actually ended the month higher than they started. Even though there were losses in the last few days, the gains made before Chinese New Year were greater;

2. I continued to dollar cost average into Asian and European small companies funds;

3. I made no other investments;

4. I received a nice boost to my work related income (business has been good recently);

5. I have fully provided for tax, our next holiday and some minor repair work on one of my properties;

6. my investment in silver did very well;

7. my balance sheet is kept in Hong Kong dollars (which is pegged to the US$). Currency movements where in my favour this month and made a major contribution to the increase in net worth.

So far the year is off to a very good start.


(1) I mistakenly published a draft before month end which did not reflect the changes to asset values on the last day of the month. The result was a small downward adjustment to the increase for the month from 3.2% to 3.1% (very close to January's increase);

(2) properties have not been revalued for some time and the values shown in the balance sheet do not represent current values. I have no plans to sell, so see no need to "guess" at current values.


L. Marie Joseph said...

The market took quite a beating, glad to see you was not affected to much

Anonymous said...

what is your net worth vs income ratio? It is very impressive to increase net worth 3% per month.

traineeinvestor said...

Thanks. With a heavy weighting in real estate, the portfolio is not as sensitive to short term fluctuations in equity markets as might otherwise be the case. Also, currency movements where a big factor last month.

I have not looked at net worth v income ratios for some time. I did numbers on the rather crude PAW/UAW formula in The Millionaire Next Door several years ago. One of the weaknesses with the calculation is that it does not take into account people whose income changes significantly in relatively short time periods. As an example, if you use the basic formula (net worth/(income*age/10)) we get a number which is about 1.25 as at the end of 2206. This is ok but not fantastic. However, if I run the numbers for the end of 2007 assuming a 10% ROI for 2007, we will have a number of about 1.57. The big jump is due not only to increases in net worth but also to a fall in household income.

I do not expect net worth to increase at 3% per month on a sustainable basis.

L. Marie Joseph said...

My portfolio is mainly stocks -- 401k, espp, IRA, Brokage acct.

The only thing I have is my home and cash savings that is not stocks.

I need to diversify more, maybe a rental or look into some businesses.

When you are well diverse, you are more stable.