Saturday, January 7, 2017

Last stop before the big one

Little league 11 by Frank Pierson


90k! What? Already? Yes, just 2 months after making 80k, I've gained my next 10k to 90k. That was super quick – I hadn't expected to make 90k so soon.

A big part this 10k was generated by the market. Since the 80k in November, I've made contributions of around 4 400 euros and the market has returned around 6 800 euros. Thank you Mr Market!

...or should that be Mr Trump? The last 2 months' ”trump rally” has been great for the portfolio. It only took 57 days to go from 80k to 90k!


Here's my portfolio breakdown as of 6th of January 2017 (actually the first 90k was on the 3rd but I didn't record my portfolio breakdown then):


10.11.16 06.01.17 change
Savings account 5043 7575 +2532
Passive funds, broad 26698 30172 +3474
Passive funds, niches 8411 9734 +1323
Actively managed funds 6579 6603 +24
Listed stocks 24954 24930 -24
Unlisted stocks 5250 5250 0
Fixed income 100 100 0
Cash 4258 6012 +1754
Total 81293 90376 +9083


I don't think it is realistic or probably to think that I'd make the next 10k, 6 figures, so soon. Actually my guess is for the markets to remain rather flat for the next year, or possibly correct down. Schiller CAPE is currently over 28.

Tuesday, January 3, 2017

Year 2016 in review



What a year this has been once again, what a year! A lot has happened in world politics and my personal life. At the same time the markets have gained some more and been, in my opinion, overall less dramatic than I would have expected.

Savings

This chart shows my 2016 portfolio value changes. That bump on the last day is a contribution of 2 500 euros to my savings account I made on the last day of the year. This money is going to be put to work in a more efficient manner once I decide the place.

Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio.

Let's look at the numbers for my portfolio cost and value in more detail in a table:


31.12.201530.12.2016change
cost (= savings) 50 458 euro66 585 euro+16 127 euro
value63 820 euro89 189 euro+25 369 euro

Woot? So, during 2016 I managed to save an astonishing 16 127 euros (2015 was 12 167 euros). I am really happy with that number. That's about 1 344 euros (1014) per month.


During the year, my net income was about 37 600 euros so my savings rate was a very nice 43% (last year was only 33%). Where exactly the extra savings came from I'm not really sure, probably less upkeep on the apartment, but I didn't really skimp on anything, just lived life as before.

Growth


But I'm even more happy with the next number, the value of my portfolio is up 25 369 euros during the year. That means that the market produced about 9 242 euros or about +12% in gains for me. This is super sweet and the biggest gain in terms of euros I've ever made!



The below chart shows the TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate. The TWR was down more than 10% in February but crossed over to the positive side during the summer and made most of it's gains in the last two months (thanks Mr Trump, I guess...). My portfolio is quite heavily weighted towards dollar nominated stuff so there's a definite correlation with the EUR/USD exchange rate as seen below.

TWR return calculation (in green, left scale) and the EUR/USD (in burgundy, right scale) currency rate.

Mortgage and net worth

During 2016 I also paid off 4815 euros of my mortgage. There's still plenty left. As the euribor rates are super low at the moment, I don't see any reason to contribute more than minimum to mortgage for the time being.


I can't tell yet if this will be considered an investment or not but if were an investment, my total contributions to my net worth would be 20 942 euros or about 56% (2015 was 46%) of my net income.

My net worth was up during the year about 27 500 euros to roughly 108 500 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.

Conclusion


In last year's review, I went on to ponder whether we were headed off a cliff, and in February it certainly looked like that until it all turned around. I'm still inclined to think that the future is uncertain: stocks are the only game in town as interest are so low and market valuations are very high. The probability of good returns in future is diminishing as the current bull marches on. So what will I do? Keep adding to my portfolio with dollar cost averaging, just like until now. Godspeed for 2017!