Porto Update – Q1 ’20

We’re down 22%. That would’ve paid half our mortgage – fifteen years of payments.

But I’ve been surprisingly calm. I’ve inundated myself with the FI tenet of staying the course for so long that this has yet to unnerve us. I’m not sure it will. After all, what can anyone do? The only way to realize the loss is by selling, so we stay put.

Our plan was to nibble bits of VTI every time the market dropped ~1%. That happened so frequently earlier this year that by the time the big drops came, we ran out of what little cash we had set aside to do just that. We also want to be careful and build some more cash reserves at the same time.

More is at stake now – my wife and I had our first child, a daughter on 3/27. Our greatest gift to her will be to ensure she grows up in a happy environment. We hope she grows up curious, hard working and good. While we’ll always guide her, we hope she finds her own way. Over the last few days, I’ve felt like my days of carefree living are now over. That said, the need to improve is greater now than ever.

A colleague (and his wife) recently retired after 32 years at the company. Last year, when his father passed away, he told me, he began to question why he was still working. He’s a steady, good-old-fashioned sort of a guy. He could’ve retired a lot earlier.

I am very happy for him. He managed to somehow cling on to his job for 32 years. As much as I like him, and as much as he tried, a lot of what he did required post audits.

I’m not sure if he ever truly enjoyed his work. His greatest virtue was his old-fashioned-I-can-grind-through-32-years attitude. His actual parting words to me were, ” I’m happy I’m leaving on my own terms before anyone fired me”. There was a sense of relief in his voice, as though it’d been an ordeal. He managed to somehow weather and ride all the turmoils (at work and in the market) of the last 32 years and I can only imagine how well that has probably placed him (and his wife who’s worked equally long) today.

And early too – at 58. His wife and him are planning to do lots of RV’ing once this crisis is over. There was even a trip to Italy planned later in the year. I’m guessing that’s been pushed a year or two.

I’m not sure I’d like to work till 58. I love what I do, but things keep changing. People change. I’ll probably want to continue working after FI, but not if the nature of the work changes in ways that is not conducive to my intellectual growth. I do not want to be copy-pasting, or ensuring that lines on the charts are size 5 and green.

I want to create. I think that’s what gives people most fulfillment.

So after all the diversion, what’s changed for us this quarter? Our net worth fell by 22.12%. Our allocation remains aggressive at 86% stock. Our bond position has fallen to 4.3% of our net worth. This was due to us downsizing our Betterment portfolio (and moving them to Vanguard) which gave us all our bond exposure.

We hold 9.7% in VMMXX – this is our emergency fund.

Most of our taxable investments are in VTSAX/VTI. We have smaller positions in VYM and VGT. We are 100% invested in low cost index funds and ETFs. My wife’s 401k is with Fidelity so she has FXAIX. My 401K is with WellsFargo’s S&P 500 tracking index fund (no ticker symbol). We maxed our Roth IRAs when the market was on still on it’s way up, in January. We plan to max our 401Ks by year end.

My faith in the US economy remains strong. Businesses seek growth and our positions with the index funds ensure that we get a share of it, without really doing anything.

What I’m fearful for at the moment is what the Covid-19 might do to all our older parents. Other then being home bound, our lives have really not changed all that much. We can still shop, move about, and our day to day life remains unchanged. I’m incredibly grateful to all the brave people who make this possible. The same cannot be said of other countries. Things are dire in poorer countries, and they’re basically waiting for the more advanced countries to come up with a solution. And if that’s 18 months for the US, we can only hope that the fix does not take too long thereafter to reach them.

I have always believed that if we are able to invest (as we normally would) through one good recession (as in one really bad one), it would really boost our positions. For that to happen, we’ll need to ensure we hold on to our jobs. As such, our plan forward remains unchanged: nibble at VTI every time we get a paycheck – after a bit of it has already been channeled to our 401Ks.

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