Portfolio Update – 2021

We trailed the S&P500 24.09% to 26.89% in 2021. Take our cash positions out, and the gap shrinks further. 2021 was an incredible year to be in the market.

Our net worth increased a whopping 42% (savings rate + market gains). Market returns exceeded our savings.

Our strategy is simple and has worked for us. We:

    1. Save one income. We’re a two income household.
    2. Maximize 401 K and Roth contributions
      1. 401K reduces taxable income and there’s a small company match
      2. We maxed our Roth contribution for 2022 last week. Before you think we make serious dough, realize that the fact we’re eligible for Roth contributions means we don’t. We used cash in our emergency funds. Waiting for the interest rates to rise would’ve been better, but we wanted to get this done.
    3. Our asset allocation sits aggressively at 90.5% stocks and 9.5% cash. Our stocks are 100% in index funds.
      • We park our emergency funds in VMRXX (Vanguards money market fund) and in  I Bonds, which yields 7.2%, adjusts for inflation, and is a no brainer.
      • While we’re not dividend investors, VTI has a 1.14% yield. We also have a very small position in VYM. Naturally, we track them ‘rudimentarily’ (this does not include dividends in our 401Ks).
      • Our daughter’s CO 529 plan is invested entirely VITSX (VTI’s institutional variant). We want to fund this aggressively initially to give it more compounding years.
    4. We track our expenses, but don’t budget. We spend where we must.
      • We spent $72,203 last year (inline with previous years), a steep $6,000 a month. We need to trim this down, somehow. Smarter folks manage this a lot better.
      • We completed some dental work (see “Misc” in the charts).
      • We are providing monthly allowance to two boys in India, both orphaned young. One wore a croc he’d found in the trash last winter. We’ll try to see them through college. This is not a cheap pledge, but it’s manageable given the dollar’s strength and India’s relatively low costs. Consider this investing in the karmic space. In fact, we want to add two girls to make this even.

5. We do not hustle, play credit cards, individual stocks, or crypto/nft/DeFi/blockchain (although I’m curious and open to ideas – here’s why, why and why).

Along with that,  I’ve been particularly curious about the Metaverse. Imagine grocery shopping on Walmart’s 3D produce aisle, entire social networks set up in 3D, sporting events, concerts, consulting experts – this could really stretch. Fortunately, VTI includes companies already dabbling into the space, including one that even changed it’s name to fit the bill, Meta.

Vanguard’s economic and market outlook for 2022 that came out in Dec states the following:

Given such projections and given that we are at a stage where we can explore a little, if only to learn, we will be a little fancy in 2022. We will:

    1. Increase our international position by buying more VXUS
    2. Get into REITS. I looked into Fundrise, but I like VNQ better for the convenience. In particular, I prefer the easy access to our funds with VNQ.
    3. Get a single family home. We’ve been looking for more then a year, but the markets swung unfavorably. Our small townhome is a room short. We need more runway. A new home will improve the quality of our lives.

I am excited about the future. The market may not yield the same returns. It might even revert to some lower mean. But we have been very fortunate with the gains we’ve had these last few years.

A few fundamentals will never change:

    1. We will remain unshakably VTSAX in the core.
    2. We will never stop investing in stocks.
    3. We will never sell. We never have.

We still need a lot more to be truly ‘FI’, but I am happy and content. What gives me joy is that we are on track, that we are taking the right steps. What gives me joy are my wonderful wife and daughter. I will continue to keep my feet on the ground.

To that end, to toil, prudence and humility,
A Happy, Safe and Active 2022 to all.

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