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100% Cash - The Results from 12/31/06 & Plan
Old 08-25-2010, 02:45 PM   #1
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100% Cash - The Results from 12/31/06 & Plan

Net worth - excluding home, no pension, no SS - from 12/31/06 to est. 12/31/10 (assumes staying in 100% cash) - 4 years (1.36%). If it changes after all the trades are settled; I'll post that.

The plan is to see how the market unfolds from here. It there is a decline how that decline looks - steep and fast or a slow grind.

Main investments will be primarily High Yield Corp Bonds MF, Balanced MF and foreign currencies. Secondarily, Emerging Market MF, Emerging Market Bonds MF, US StockMF
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Old 08-26-2010, 10:23 AM   #2
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Old 08-26-2010, 10:39 AM   #3
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Originally Posted by dex View Post
Net worth - excluding home, no pension, no SS - from 12/31/06 to est. 12/31/10 (assumes staying in 100% cash) - 4 years (1.36%). If it changes after all the trades are settled; I'll post that.

The plan is to see how the market unfolds from here. It there is a decline how that decline looks - steep and fast or a slow grind.

Main investments will be primarily High Yield Corp Bonds MF, Balanced MF and foreign currencies. Secondarily, Emerging Market MF, Emerging Market Bonds MF, US StockMF
Dex, I may be dense but this is a bit opaque. How can you have results from an all cash position from 12/31/2006 to present, if you just went to all cash this week? If this is pro forma, what did you use for your assumed rates of return? Did you allocate tax on this?

Ha
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Old 08-26-2010, 10:44 AM   #4
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Dex, I may be dense but this is a bit opaque. How can you have results from an all cash position from 12/31/2006 to present, if you just went to all cash this week? If this is pro forma, what did you use for your assumed rates of return? Did you allocate tax on this?
Ha
All my spread sheets are linked together - checking, investments, cash flow etc.
I estimated my expenses to the end of the year and MM interest rates 0.1%

I didn't estimate taxes on that. I know it is wrong but, I use the cash method for taxes & credit cards (record when paid not incurred) - the only items I do that for - I do estimate them in my projections. They will show up in 2011.

Let me know if that doesn't answer your question.
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Old 08-26-2010, 10:45 AM   #5
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and MM interest rates 0.1%
Gotta love the Fed's war on savers...
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Old 08-26-2010, 11:18 AM   #6
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How can you have results from an all cash position from 12/31/2006 to present, if you just went to all cash this week?
Ha
I re read your post - from from 12/31/2006 to present is my net worth change, not cash position.
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Old 08-26-2010, 05:02 PM   #7
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Originally Posted by dex View Post
Net worth - excluding home, no pension, no SS - from 12/31/06 to est. 12/31/10 (assumes staying in 100% cash) - 4 years (1.36%). If it changes after all the trades are settled; I'll post that.

The plan is to see how the market unfolds from here. It there is a decline how that decline looks - steep and fast or a slow grind.

Main investments will be primarily High Yield Corp Bonds MF, Balanced MF and foreign currencies. Secondarily, Emerging Market MF, Emerging Market Bonds MF, US StockMF
FWIW my numbers:

Net worth - including home, no pension, no SS - from 01/01/07 to est. 12/31/10 (assumes staying in 100% stocks) - 4 years +7.5588% (Excel IRR function). If it changes by the end of the year I can post that.

The plan is to continue to remain 100% invested in low-cost broad-market mutual funds and DCA 100% into low-cost broad-market mutual funds as available cash exceeds my 5 month emergency fund regardless of what the market does: up, down, or sideways.

Main investments will be VTSMX, VFINX, VFIAX, FUSEX.

...

I am not sure the point of this thread -- your and my life situation are probably totally different, we calculate net worth differently, our plans are different, our investments are different, and neither of us has made any testable predictions.

All that being said, I decided to post anyway for my own amusement.

2Cor521
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Old 08-26-2010, 05:27 PM   #8
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Originally Posted by SecondCor521 View Post
FWIW my numbers:

Net worth - including home, no pension, no SS - from 01/01/07 to est. 12/31/10 (assumes staying in 100% stocks) - 4 years +7.5588% (Excel IRR function). If it changes by the end of the year I can post that.

The plan is to continue to remain 100% invested in low-cost broad-market mutual funds and DCA 100% into low-cost broad-market mutual funds as available cash exceeds my 5 month emergency fund regardless of what the market does: up, down, or sideways.

Main investments will be VTSMX, VFINX, VFIAX, FUSEX.

...

I am not sure the point of this thread
It is a follow up to the 'Going to 100% Cash' Thread.

Net worth excluding home (and mortgage) total assets - total liabilities. I keep it simple - I don't include most things such cars (but, you should include the car loan as a liability) or jewelery. Basically, if the residual value of a person's car (or the loan) is a large part of their net worth computations; they probably are a long way from ER.

If you, exclude your home and strip out all the money from your working income (and associated investments/re-investments) from 01/01/07 to est. 12/31/10 - what is the change in net worth?
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explain
Old 08-26-2010, 06:07 PM   #9
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explain

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Originally Posted by SecondCor521 View Post
FWIW my numbers:

Net worth - including home, no pension, no SS - from 01/01/07 to est. 12/31/10 (assumes staying in 100% stocks) - 4 years +7.5588% (Excel IRR function). If it changes by the end of the year I can post that.

The plan is to continue to remain 100% invested in low-cost broad-market mutual funds and DCA 100% into low-cost broad-market mutual funds as available cash exceeds my 5 month emergency fund regardless of what the market does: up, down, or sideways.

Main investments will be VTSMX, VFINX, VFIAX, FUSEX.

...

I am not sure the point of this thread -- your and my life situation are probably totally different, we calculate net worth differently, our plans are different, our investments are different, and neither of us has made any testable predictions.

All that being said, I decided to post anyway for my own amusement.

2Cor521
Maybe I am not understanding the thread ... but, if your net worth increased 7.5588% in the past 3 years and your main investments are: VTSMX, VFINX, VFIAX, FUSEX ... when I look up the 3 year return on all these investments they are about 8% negative. So, I assume it is saying that in spite of a major decline in all your main investments you still managed to increase your net worth via savings. Or am I totally missing the point?
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Old 08-26-2010, 08:55 PM   #10
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Quote:
Originally Posted by dex View Post
It is a follow up to the 'Going to 100% Cash' Thread.

Net worth excluding home (and mortgage) total assets - total liabilities. I keep it simple - I don't include most things such cars (but, you should include the car loan as a liability) or jewelery. Basically, if the residual value of a person's car (or the loan) is a large part of their net worth computations; they probably are a long way from ER.

If you, exclude your home and strip out all the money from your working income (and associated investments/re-investments) from 01/01/07 to est. 12/31/10 - what is the change in net worth?
I kinda thought so. My peripheral point is that your decision to go 100% cash (and my decision to remain 100% stocks and DCA into low-cost mutual funds, as I have since at least 1993) can't be separated from your life situation, your risk tolerance, your goals, etc. [I've been a little cranky this week because of work, so I apologize if that is coming through in my posts. It certainly isn't personal, dex.]

In my case I do include my home and my mortgage in my net worth calculations. I have a separate FIRE spreadsheet that assumes I pay off my mortgage at retirement and thus makes the appropriate adjustments to net worth and cash flow.

I also include my car at KBB value and household furnishings, although those two in total account for about 1.15% of my net worth. No car loan.

Stripping out my home, mortgage, investments, and reinvestments is more work than I care to do. Roughly speaking, I've increased my home value at the rate of 1% per quarter (semi-arbitrary based on long term historical average of inflation + 1%), my mortgage is a 15 year fixed at 4.625% that I've been paying regular payments, and I've been investing and reinvesting about 10-25% of my salary over that time.

I also have child support payments which are a large portion of my cash flow. Since I consider my future remaining child support payments to be a large negative NPV, every month when I knock one of those out, that negative NPV drops and my FIRE net worth goes up accordingly.

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Maybe I am not understanding the thread ... but, if your net worth increased 7.5588% in the past 3 years and your main investments are: VTSMX, VFINX, VFIAX, FUSEX ... when I look up the 3 year return on all these investments they are about 8% negative. So, I assume it is saying that in spite of a major decline in all your main investments you still managed to increase your net worth via savings. Or am I totally missing the point?
You are exactly correct. I owned a chunk of those funds at the beginning of 2007 and have been DCA'ing from my paycheck into them over the past 4 years. Since my AA is 100% stocks and I don't market time (by any definition of the word ;-) ) my total return very closely matches the historical performance of those funds (which obviously relatively closely track each other in the case of these particular 4 funds).

My net worth has also gone up somewhat as a result of mortgage payments and student loan payments reducing my liabilities, and the aforementioned arbitrary home value increases on the asset side.

I've also increased "my" net worth by adding to my kids' college accounts over time. (Those are similarly segregated in my FIRE spreadsheet.)

Finally, I doubt Vanguard provides 4-year figures, but I did try to pick a 4 year timeframe that matched dex's as closely as possible. Since I keep track of my net worth approximately at the end of every calendar year, the closest match I could get was 01/01/07-today. So Vanguard's 3-year timeframe you saw would probably exclude the early part of 2007. Not sure if that made much of a difference.

2Cor521
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Old 08-27-2010, 04:56 AM   #11
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That return is pretty good if the starting mark was beginning of 07 (around the peak just prior to meltdown).


If I took our valuation for that same period... our overall returns for that period would show a loss.

Although over the longer period, we have gains. (but not where they were back in 07). Most of the equity markets are still substantially off their high.
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Old 09-14-2010, 11:33 AM   #12
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So, how's the 100% cash doing for you so far Dex?
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Old 09-14-2010, 12:48 PM   #13
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FWIW I am still following my plan for the most part. I have recently made one minor change as a result of reevaluating my FIRE goals, and not based on anything the market is doing.

I am still 100% in those same mutual funds, DCA'ing 20% of my pay into my 401(k), and investing any excess cash above and beyond the 5 month emergency fund.

However, I have decided to switch to paying off my debt with those excess funds instead of investing it in my Roth and taxable accounts. The reasoning here is that this would reduce my monthly expenses more rapidly than my previous plan and allow me to get to ESR sooner, with the drawback of theoretically pushing out my full FI date a little. I am making a conscious decision to increase my peace of mind and reduce the pressure on myself to maintain a high income. Also, given that I am scheduled to reach full FI in about 3 or 4 years anyway due to a high savings/debt reduction rate, it really doesn't make much difference whether I pay down debt or invest in my Roth/taxable -- the compounding effect over a few years isn't really that big, and I can almost negate that small difference by watching my spending carefully.

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Old 09-14-2010, 05:14 PM   #14
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So, how's the 100% cash doing for you so far Dex?
Dunno about Dex, but my 60% equity portfolio is up 5% in Euros and 7% in USD since the OP, 3 weeks ago.
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Old 09-14-2010, 05:22 PM   #15
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TD Waterhouse now has a global trading platform. It includes Australia, Hong Kong, UK, the Eurozone. This should be fun!
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Old 09-14-2010, 06:02 PM   #16
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Hey, no piling on allowed. It's bad karma.
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Old 09-14-2010, 09:02 PM   #17
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Hey, no piling on allowed. It's bad karma.
LOL you are right about the karma, who knows what the market will do in the next 3 weeks. Hopefully long term we will be just fine.
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Old 09-14-2010, 10:31 PM   #18
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LOL you are right about the karma, who knows what the market will do in the next 3 weeks. Hopefully long term we will be just fine.
So you have decided that whatever risk there may be will be over in the next 3 weeks?

I am really glad to hear this. I have some liquidity hanging out and waiting for that all clear siren.

Ha
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Old 09-14-2010, 10:33 PM   #19
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Old 09-15-2010, 08:34 AM   #20
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Buffett Rules Out Double-Dip Recession Amid Growth

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“I am a huge bull on this country,” Buffett, Berkshire’s chief executive officer, said today in remarks to the Montana Economic Development Summit. “We will not have a double-dip recession at all. I see our businesses coming back almost across the board.”
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“I’ve seen sentiment turn sour in the last three months or so, generally in the media,” Buffett said. “I don’t see that in our businesses. I see we’re employing more people than a month ago, two months ago.”
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“It’s night and day from a year, year and a half ago,” Buffett said. “I know Wells Fargo, they would love to have $50 billion more of loans now. Go in and talk to the banker.”
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