Mpowered's conversion into a Boglehead

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Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Mpowered's conversion into a Boglehead

Post by mpowered » Tue Nov 18, 2014 8:16 pm

7/5/2016 Update:

Mid-Year update, including big raises and updated personal goals

Updated Assets:

Home worth roughly $1,500,000 with a loan balance of $1,050,000 (30 year amortization, 3.75% interest rate).
Checking/Savings Accounts: $180,000
Wife's 401k: $65,000 (100% in S&P 500 Index Fund)
My 401k: $30,000 (100% in S&P 500 Index Fund)
My IRA: $54,000 (100% in BABA) [Going nowhere quick]
529 Account: $12,400 (100% in S&P 500 Index Fund)
Taxable Account: $43,000 (100% S&P 500 Index Fund) [this is new, will likely not add to this and focus on paying off the home loan instead]
Private Equity: $583,000 [two of the assets in the PE fund have sold, resulting in an IRR of around 25% and equity multiple of 1.9. I have not calculated the increase into this number since the fund is so illquid. we rolled the proceeds into other real estate investments which proforma at 13% return, which I am calculating all under this private equity umbrella.]
Commercial Real Estate $510,000
No other debt

Updated Income/Expenses:

Personal Income: $250,000
Wife's income: $315,000
Year End Bonuses: $100,000
Investment Income: $37,000

Post Tax roughly $450,000

Annual Expenses are roughly $230,000

Updated personal goals:

Pay off our mortgage @ a rate of about $180,000 per year (up from $150,000).
End-goal remains the same, to get to $4MM in net worth. We may or may not downsize our home for retirement.

__________________________________

1/1/2016 Update:

It's been over a year so I wanted to provide an update, with a few changes including moving into a larger home...

Our combined income has increased a fair amount and is now $360,000 net of taxes.

Our annual expenses have swelled a little bit because of increased real estate taxes and mortgage payment to $210,000 per year.

Updated Assets:

Home worth roughly $1,500,000 with a loan balance of $1,150,000 (30 year amortization, 3.75% interest rate).
Checking/Savings Accounts: $180,000
Wife's 401k: $52,000 (100% in S&P 500 Index Fund)
My 401k: $17,500 (100% in S&P 500 Index Fund)
My IRA: $55,000 (100% in BABA)
529 Account: $10,600 (100% in S&P 500 Index Fund)
Private Equity: $583,000
Commercial Real Estate $510,000
No other debt

Updated personal goals:

Pay off our mortgage @ a rate of about $150,000 per year.
End-goal remains the same, to get to $4MM in net worth. We will likely downsize our home for retirement.

__________________________________


Hi everyone. Just wanted to introduce myself. I have been a long-time reader of the forum, recently registered and started posting. I want to track my progress here and have some personal accountability, so I am going to detail my progress and update this thread regularly on my journey into becoming a boglehead, fighting lifestyle creep, investing and so forth.

We are currently both 30 years old, with the following income/expenses:

Personal Income: $185,000
Wife's income: $230,000
Investment Income: $37,000

Annual expenses are roughly $120,000.

Current Assets:

Home worth roughly $600,000 with a loan balance of $348,000 (15 year amortization, 3.25% interest rate).
I'm just going to leave out cars since they depreciate so quickly.

Debt:

None (except for the home loan referenced above). My wife and I recently finished paying off our student loans, which leaves us pretty much debt free except for the home loan.

Current Investments:

Checking and Savings Accounts: $100,000.
Wife's 401k: $35,000 (100% in Vanguard S&P 500 Index Fund).
My IRA: None (all of it had been rolled into my IRA when I switched jobs earlier this year).
My IRA: $78,000 (100% in BABA stock) - On the day of the IPO, I decided to put all of my existing IRA into the BABA IPO. I saw this as a chance to get in on the ground floor of the Amazon of China and as a lottery ticket. From here on out, my 401k will be focused on a boglehead approved asset allocation, but I'm going to leave this as is.
Private Equity: $450,000 invested with a private equity fund, approx 50% held in cash, but subject to future calls.
Commercial Real Estate: $510,000 in a commercial shopping center (17% interest in a partnership with roughly $3,000,000 in equity). Also have smaller interests that I haven't listed here due to the lack of recent valuation.

Personal Goals:

Our immediate and on-going goal is to put roughly $150,000 per year in a taxable account ($12,500 per month) and max out our 401Ks every year.
Our end-goal is to get to roughly $4,000,000 in net worth excluding our home, and to have a paid off mortgage, which would allow for our dream retirement @ $160,000 per year assuming a 4% draw.
Last edited by mpowered on Tue Jul 05, 2016 11:05 am, edited 2 times in total.

lhl12
Posts: 642
Joined: Mon May 27, 2013 8:24 am

Re: Mpowered's conversion into a Boglehead

Post by lhl12 » Tue Nov 18, 2014 9:12 pm

Welcome to the Forum
mpowered wrote: Private Equity: $450,000 invested with a private equity fund, approx 50% held in cash, but subject to future calls.
Please clarify:
1) What was the original commitment amount to the private equity fund?
2) Of that original commitment amount, how much has been called and how much is still unfunded?
3) What is the current market value of that portion of the commitment that has already been called?
4) What do you mean by "50% held in cash"?

Pizzasteve510
Posts: 635
Joined: Sun Jul 27, 2014 3:32 pm

Re: Mpowered's conversion into a Boglehead

Post by Pizzasteve510 » Tue Nov 18, 2014 9:47 pm

Not to speak for OP, but I think he means that the private equity fund has not deployed the cash into investments yet, but is 'committed' in that it is subject to use by companies they fund.

Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: Mpowered's conversion into a Boglehead

Post by mpowered » Tue Nov 18, 2014 10:35 pm

Yes. I have a total of $450,000 in outstanding PE commitments, around 50% of which is deployed, and 50% being held in cash which is subject to call.

Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: Mpowered's conversion into a Boglehead

Post by mpowered » Wed Nov 19, 2014 2:26 pm

lhl12 wrote:Welcome to the Forum
mpowered wrote: Private Equity: $450,000 invested with a private equity fund, approx 50% held in cash, but subject to future calls.
Please clarify:
1) What was the original commitment amount to the private equity fund?
2) Of that original commitment amount, how much has been called and how much is still unfunded?
3) What is the current market value of that portion of the commitment that has already been called?
4) What do you mean by "50% held in cash"?
Sorry, my answer was still unclear:

1) $450,000 original commitment
2) $225,000 has been called
3) We just funded the first call a few months ago, so lets just assume it hasnt changed in market value.
4) I mean that I have $225,000 in cash that is not otherwise accounted for above in cash in my bank account, being held (and not invested) as it is subject to capital calls.

Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: Mpowered's conversion into a Boglehead

Post by mpowered » Sat Jan 02, 2016 12:48 am

Updated on 1/1/2016

JDDS
Moderator
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Joined: Sun Mar 16, 2014 2:24 pm

Re: Mpowered's conversion into a Boglehead

Post by JDDS » Sat Jan 02, 2016 1:01 am

Glad to hear things are going well.
mpowered wrote: Our annual expenses have swelled a little bit because of increased real estate taxes and mortgage payment to $210,000 per year.
They're up 75%? There's obviously a big difference in housing costs: more expensive home, different loan term, etc.

How did you do with the goals you first wrote in 2014?

Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: Mpowered's conversion into a Boglehead

Post by mpowered » Sat Jan 02, 2016 1:09 am

JDDS wrote:Glad to hear things are going well.

They're up 75%? There's obviously a big difference in housing costs: more expensive home, different loan term, etc.

How did you do with the goals you first wrote in 2014?
We maxed our 401Ks, but everything else we had saved up went into the down payment/paying down the loan. We otherwise would have been on target though, took the loan from $1.20 MM to $1.15 in the one year we've owned the home.

They're up 75% because of multiple factors, including buying a new home, we also had a baby soon after.

Topic Author
mpowered
Posts: 51
Joined: Wed Nov 05, 2014 10:15 am

Re: Mpowered's conversion into a Boglehead

Post by mpowered » Tue Jul 05, 2016 11:06 am

Mid year update.

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