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OUR ANNUAL INTEREST and dividend income in 2024 will exceed my inflation-adjusted pay as a mailroom boy in 1961. Of course, back then, I earned a bit over minimum wage. It’s been a long journey.
Below are the daily net portfolio gains and losses for the third and fourth weeks of last month. These figures reflect our cash account, index and actively managed stock funds, corporate and municipal bond funds, two utility stocks and two variable annuities. The two annuities date from my 40s, when I was more vulnerable to sales pitches.
March’s third week: Monday +$8,661, Tuesday +$7,373, Wednesday +$10,850, Thursday +$2,796, Friday +$9,161. Overall, we were up $38,841 for the week.
March’s fourth week: Monday -$2,440, Tuesday -$2,777, Wednesday +$17,514, Thursday -$477. On Friday, the markets were closed. For the week, we ended up $11,820.
During the first week, every day was positive. Still, we didn’t do nearly as well as the S&P 500, but we shouldn’t expect to, given our investment mix. Interestingly, the majority of the gain on the Friday was from our two individual stocks.
I didn’t do as well the second week. On the Monday, our two individual stocks again gained, limiting our portfolio’s loss. Is this the power of diversification?
What does it all mean? Not much. You shouldn’t read too much into a portfolio’s daily performance, but it’s fun to see how far out of sync you may be with the markets.
In the first quarter, our total portfolio—including reinvestment of dividends and interest—increased 15%, while the S&P 500’s total return was almost 11%. Don’t get me wrong, no bragging here. I have no grand strategy. I didn’t do anything to earn that money.
Instead, the magic of the markets did all the work. Passive investing, they call it. In my case, it’s more like unconscious investing. I don’t analyze each piece of the pie. I just want the pie to grow.
Perhaps we did do something to earn this money or, at least, to amass our portfolio. The less visible part of the story is 62 years of investing, reinvesting and compounding interest. I can trace it all to 1961’s payroll deductions of $25 a month to buy savings bonds and $5 a week for the employee stock purchase plan.
From the first day I started investing, I sought to become a millionaire. It seemed to be the traditional goal. Adjusted for inflation, I haven’t come close. Yes, I know accumulating money isn’t what life is all about. Instead, for me, the quest is the thing. If I knew how to use a spreadsheet, I’d generate a graph showing a steady increase in our net worth over many decades. I suspect the great majority of HumbleDollar readers could do the same.
I’m content to think of myself as an example of what’s possible with steady saving and investing over many years. If I can do it, just about anyone with patience can.
While I feel optimistic about our portfolio at the moment, I’ve been around long enough to know this is a rollercoaster and the next downward part of the ride is always coming. I just hope it’s a kiddie ride and diversification does its job.
Yes. I noticed my income portfolio fluctuates daily as much as my latest cruise. So I just looked at the cruise cost as just a down day in the market. 🙂
I am not usually obsessive about tracking progress. I sometimes use Quicken to graph investment values over time. Most frequently it is to monitor status since I retired, or started withdrawing from my IRA, or some other milestone date. Other times I check spending in certain categories year over year to see how (and how much) a particular spending category changes over time. The advantage is I have Quicken data that I’ve accumulated over decades. The disadvantage is the same thing – I have data accumulated over decades.
For example: I’m getting ready to review the cost of auto maintenance for my 2011 Subaru Forester. Two months ago I had a 120K mile maintenance done. Absolutely routine, expected, and planned. This week I paid for clutch, pressure plate, and release bearing replacement. It has been a great car for 13 years, but the sudden failure of the clutch release bearing in heavy traffic caused more than a few scary moments for my wife and me earlier this week. Unexpected, unplanned, and expensive. It may be time to consider the peace of mind that comes with a newer car and a warranty.
In my experience compound interest and opportunity cost are difficult concepts to understand conceptually. Somehow I understood the importance of saving and investing but it wasn’t until at age 66 in which I had my first $1m year that I really understood how powerful it is.
That was a eureka moment for me (visualize jumping out of the bath and running down the street – or not). Wow compound interest is more powerful than you can imagine which should motivate. I have universally failed to communicate this power. It generally requires delayed gratification and working longer which does not appeal to most people.
I hear slight variations of the same story over and over again on HD.
Thanks for sharing. It helps keep me on track.