Monday, July 06, 2009

2009 - mid-year review

All I can say about the financial results for the first half of 2009 is WOW! My net worth has grown by 43% since the beginning of the year.

Just about everything that could go right did go right....and then some. My financial objectives for 2009 (set back in early January) are here. Going through them one by one:

1. income from employment at my new job is now excellent (after a slow start to the year). Getting the payout from my old job also provided significant one time boost to my net worth;

2. I have added to my investments this year, buying funds, equities and a token amount of bonds. I have also invested in ELDs and CLDs. So far my investments (viewed as a whole) been highly profitable. I still hold quite a bit of cash (mostly as a result of last month's pay our from my old job), so I would have been better off being even more aggressive, but that is with the benefit of hindsight;

3. I did not buy another property. I looked back in January and February and decided that the market had not come back far enough. With prices now getting close to the 2008 Q1 peak, this was a bad call. While I will look for an additional property investment, I am not optimistic that I will find anything that meets my criteria;

4. my active trading on small caps has been profitable, but I do not pretend that the returns justify the risks. I will keep trading where it belongs - as a small hobby rather than a strategic asset allocation.

I did take advantage of aggressive lending practices by Hong Kong banks and refinance three mortgages. I also drew down additional principal against our home to fund an investment in my employer (instead of selling investments) given how low interest rates have got.

Where next? Obviously I cannot expect similar returns on investment or gains in net worth to repeat themselves. They don't need to. Steady savings, modest investment returns and avoidance of large risks with a clear objective of meeting my retirement objective by the end of 2011 or 2012 is what is required. Even if markets move against me in the second half of the year, 2009 should still be remembered as a stellar year for my financial progress.

In terms of vulnerability, I am exposed to the risk of losing my job, stock market risk, property market risk, interest rate risk and currency risk. I suppose this is a good thing - if I am not exposed to any risk then I would not be exposed to the potential to earn a worthwhile return on my investments.

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