Chart showing net worth progression from December 2017 to May 2018

Last month I shared my net worth for the first time.

Related: Net Worth Update #1 - April 2018

It’s motivational to see the progress other bloggers are making on their net worth and hopefully, I can provide some motivation for others as well.

I shared my first net worth update back in April 2018 and have been sharing monthly updates since.

Here are my numbers for May 2018:

Cash Reserves
Savings Account$3,810    (-$2,123.37)
Checking Account$8,643    (+$8,614.79)
Total Cash Reserves$12,453  (+$6,491.42)
  
Non-Tax Advantaged Accounts
Vanguard VTSAX$22,790.56  (+$3,448.03)
Total Non-Tax Advantaged$22,790.56  (+$3,448.03)
  
Tax Advantaged Accounts
401(k)$20,282.29  (+$1,951.58)
Total Tax Advantaged$20,282.29  (+$1,951.58)
  
Net Worth$55,525.85  (+$11,891.03)

Progress

Here’s a look at my net worth progression since I started tracking it back in December of 2017:

Chart showing net worth progression from December 2017 to May 2018

My Investment Strategy

My “investment strategy” is dead simple.

Every month money goes straight from my paycheck into my 401(k) (the idea here is to reach the annual contribution limit of $18,500) and during the first week of the month I invest a lump sum into VTSAX (usually around $3,000 - I have yet to automate this, though I will at some point).

The rest of the money has been going into my savings and checking accounts, though I’m now close to my $15,000 “liquid” reserves safety net goal, so I’ll soon start increasing my monthly investment in VTSAX and leaving just enough in my savings and checking accounts to cover my monthly expenses.

My 401(k) is managed by Vanguard and it uses the Target Retirement 2060 Trust Select fund. This fund has a 90/10 stock to bond allocation.

Since my investments are basically split in half between my 401(k) and VTSAX ($20,282.29 and $22,790.56), that leaves me with roughly a 95/5 stock to bond allocation (VTSAX is purely stocks). As I invest more in VTSAX than in my 401(k), this allocation will continue to skew towards stocks. I’m young and got plenty of working years ahead of me, so I’m looking to be as aggressive as possible.

Here’s my total asset allocation:

Chart showing source of net worth (cash, stock, bond) by percentage

Recap

From April to May my net worth increased by $11,891.03!

This was the biggest month-over-month net worth increase ever for me, and by a good amount, for two reasons.

1. Uncle Sam gave me my money back 🇺🇸 💰. I started my first full-time job last August and received a signing bonus and relocation stipend when I joined. This money, since it was a bonus, was taxed at a flat 25%, resulting in a tax overpayment.

Come filing time, I was able to deduct some moving expenses (moved from Florida to Washington for my job) and student loan interest that had accrued (I am now debt free!).

All in all, the tax overpayment on the signing bonus/relocation stipend and the few deductions I was able to claim led to a $6,000 tax refund! 🎉 🎈 🎁

2. The stock market “recovered”. From April 20th (the day of my previous update) to May 20th, VTSAX increased from $66.92 a share to $68.74, for a 2.72% gain.

Most of my invested money is in VTSAX (I invest in it directly and 53% of my 401(k) is also in VTSAX), so this market gain gave me a little boost.

Stock price of VTSAX over April 2018

Where Did My Money Go?

This month I invested $3,000 in VTSAX, a lump sum buy on May 7th for $66.76 per share. I also invested $1,738 into my 401(k). The rest of my income went into my savings and checking accounts.

Where I’m Headed

One area where I’m currently leaving money on the table is my cash reserves. I still have the same Wells Fargo Savings account I opened in college which gives me a whopping .01% APY.

POINT. ZERO. ONE. PERCENT.

In June I’ll be opening a new savings account at either Ally or Capital One as they offer 1.60% APY (though Capital One requires a $10,000 minimum).

Assuming that I keep $15,000 (about a year’s worth of living expenses) in an Ally or Capital One savings account, this is an extra $238.50 ($15,000 * .016 - $15,000 * 0.0001) that I would be gaining every year. It doesn’t sound like a lot, but these annual $238.50 compounded at 6% (standard market return) over 10 years would turn into $3,759. Why turn down “free” money?

If you have any questions or comments or if you want to talk about financial independence, you can reach me at ziadig@gmail.com.