[This is the fourth and final part of My 2015 Financial Year in Review. (Yes, it feels like it might have stretched into 2017.) You can read the previous versions there (or just go to , , and .]
At this point, you should have a good view into my financial year. I've given details about my stock investments, my real estate "empire", and my blogging/income. One pattern emerged as I was writing the articles... each area was greatly challenged in 2015. Fortunately, there were some good things that happened at the end that made it a positive year.
I wanted to start with our net worth. Some bloggers give out their net worth and blog anonymously so it doesn't really matter to them. Since some scummy people created hate sites about me because I expose their pyramid scheme fraud, I've decided it really isn't too important to give exact net worth numbers.
I do track our net worth fairly regularly (and it's very easy thanks to Personal Capital). Here's how it has grown the last few years:
- In 2013, it grew 21.8%
- In 2014, it grew 14.6%
- In 2015, it grew 10.6%
The problem with reporting percentages is that growth of 10% means a lot more if you have a million dollar net worth than it does if you have a $10,000 net worth. We're a lot closer to the former than the later.
If you read those previous reports you know about my terrible stock picking (Twitter and oil, you two seriously suck). You also know that my asset allocation which is heavy foreign stocks didn't help. You know how real estate didn't appreciate and instead cost us a good deal of cash in repairs.
I was shocked to read that we grew our net worth by 10.6%. It just didn't seem possible. I double and triple checked for errors.
There were two main reasons for why it happened:
1. We paid down a lot of debt. By having our real estate in 15-year mortgages we (with the help of our tenants) are paying off a lot of principle. It wasn't just real estate, but we paid off a lot of our cars that are on 1% interest rates over 5 years.
2. The purchase of our solar panels helped a little.
That second one requires a bit of a longer explanation. We got a $23,000 HELOC to finance them (we'll get a $7000 tax credit this year). It didn't seem right to add this to our debt, when we really purchased an asset of considerable value - estimated to be decades of free electricity. So for accounting purposes, I included the full price of the solar panels ($33,000 before state grants) and I will deprecate their value each month.
It was a financial decision more than typical home improvement, so I wanted to treat it as such.
Is that fair, readers? You tell me.
The other thing about our net worth is that it isn't very accessible. I already mentioned the real estate and if you read my last annual retirement income outlook you'll know that a vast portion of that net worth is in retirement accounts. I haven't done the calculation in awhile, but it's really hard to touch around 90% of our net worth. Some might want to be more liquid, but I think this prevents a lot of lifestyle inflation.
The biggest lesson I learned this year and the takeaway I want you to have is how powerful slow-and-steady real estate investing can be. It is a pain in the neck from time to time, but between the properties, it can be $40,000 in net worth each year by simply chugging along. It's great to have assets that aren't tied to the stock market and this past year was a great example of that.
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