Sunday, January 26, 2020

Year 2018 in Review

No. That's still not a typo. I'm really going back to look at previous years' performance as I haven't been doing that for a while.
Review of 2017 is here and the review for 2016 is here. 

During 2018 I became a father for the second time which has been awesome in a way words cannot describe. Photo by mulan from Flickr, not my children.


This chart shows my 2018 portfolio value changes. The end of the year doesn't look too good..
Portfolio valuation and savings. The blue line is the value of my portfolio and the red line is cost of the portfolio, i.e., savings.

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

cost (= savings) 86 392 euro100 069 euro+13 677 euro
value118 336 euro122 966 euro+4 630 euro

Turns out 2018 wasn't a great year. During 2018 I managed to save only 13 677 euros which was down considerably from previous years (2017 was 19 807 euros2016 was 16 127 euros and 2015 was 12 167 euros). 
I can't say that I'd be disappointed with that number but I can't rejoice such a big decrease. That yearly savings works out to be 1140 euros per month

During the year, my net income was 45 151 euros which is roughly the same as last year.
(46 245 euros in 2017 and 37 600 euros in 2016). The net income went down because I paid some of last years taxes now this year, and this explains the lesser contribution also to some extent. I did get a raise at work which meant a couple of extra grands but not enough the outweigh other stuff. 

I also bought a car during the year, which swallowed a couple of grands. I went the frugal route and bought an old cheap clunker but had to make acute repairs to it, costing money but mostly a lot of effort. 

My savings rate for 2018 was only 30% of net income which I'm not happy about. 2016 and 2017 were both at 43% of net income


2018 wasn't great in the markets either. My portfolio is up in value by 4 630 euros during the year. But this is only due to savings. The market was down about -7.5% during the year which for my portfolio meant being down a bit over 9 000 euros.

2016 and 2017 were both up years of a bit more than 9k, so 2018 wiped away one of those years. Down years are inevitable in investing so I'm not too concerned about the loss.

The below chart shows the TWR return calculation (in green, left axis) and the EUR/USD (in burgundy, right axis) currency rate. It was looking a like a good year until about the start of October but then things went south fast! The year ended about -7.5% in the hole.

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 2018 I also paid off 5 340 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 it were considered an investment, my total contributions to my net worth would be 19 017 euros or 42% of net income (2017 was 54%2016 was 56% and 2015 was 46%).

My net worth during the year was up about 13 600 euros to roughly 153 900 euros but I don't really track my net worth. I'm mostly interested in my money generating portfolio.


2018 wasn't a particularly good year. Neither for savings or in the market. My savings were hindered by last year's tax trickery, while Mr Market turned negative in October. 

The year was also made worse by me doing tax loss harvesting sales on 28th of December 2018 which turned out to be the bottom of the market, so the worst possible day to make those sales. As a learning point, I should do tax loss harvesting throughout the year, not just on the last days.

Still, with constant dollar-cost-averaging during the year, my portfolio made new records during the year: 120k in May and 130k also in May. 

Outside of saving and investing, during 2018 I also became a father for the second time which has been awesome in a way words cannot describe.

All in all, 2018 wasn't great but it didn't suck either.

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