Well hello! With Labor Day this weekend — marking the social end of summer — and the autumnal equinox a few weeks away — marking the celestial end of summer — we must have crossed into September, affording me another opportunity to take stock of my long-term goals of paying off debt and saving for retirement.
At the start of August, I found myself breathtakingly close to a net worth of zero — just $5,000 away after starting this blog with a negative net worth over $150,000 — and set the audacious goal of getting all the way home in one month.
I had put myself in a great position to hit zero this early after some very aggressive debt pay down and a whole lot of help from my investment portfolio. Would the same factors take me home to zero in August?! Let’s find out.
Not this time.
My retirement portfolio fell by a spectacular 5 percent. Of course, I fought back as best as I could by paying off thousands in debt and making thousands in new contributions to my retirement accounts, but alas, it was nowhere near enough and, for the first time since I started this blog, I ended a month with a lower net worth than I started it.
And thus, my net worth goal for the year remains to hit zero by the end of it:
The smart thing to do after any bad month would be to figure out how to prevent future bad months.
I hold a very aggressive mix of securities that are 90 percent stocks and 10 percent fixed income and I’m supremely diversified by owning index funds that cover the whole of the U.S. market and some of the bigger markets around the world. The price for this diversification is next to nothing the Fidelity, Vanguard, and TSP mutual funds I hold have expense ratios around one-tenth of 1 percent.
Moreover, while totally unwelcome, big hits to my portfolio aren’t at all unexpected. Investing for the long term by having an aggressive but age-appropriate allocation means I’ll have some down months — and likely even some down years — but should still come out on top when I’m of retirement age.
All of this is to say that although I’ll still take a renewed look at my retirement portfolio this month — it would be silly not to — I don’t think it necessarily needs much fixing or that last month’s bloodbath is even indicative of a problem.
I’m sure if I repeat that enough times I’ll start to feel OK about all that notional money that flew out the window in August :/