My savings rate and expenses – May update

Health expenses are really easy to underestimate and I think that’s one of the biggest worries I’ll have whenever I actually make the decision to quit the work force.

It’s not just the insurance premiums that will be a bother but also the deductibles you have to meet before coverage kicks in. Both are sure to rise quite a bit by the time I’m ready to retire and losing those employer contributions towards my premiums will certainly send my healthcare related expenses soaring.

The problem with healthcare expenses is that they’re so difficult to predict. I can tell what my premiums will be for this year and I can tell what my maximum out of pocket expenses will be for the year but predicting actual costs which will likely fall between that premium only and premium + out of pocket max level is a total crap shoot.

I can’t even began to think about where to start figuring out what sort of premiums I’ll be looking at by the time I’m 40+ and whether or not I’ll even be able to get insurance at that point.

The timing of the payments is another question mark as well making it difficult to accurately budget for them on a month to month basis. I had some health care bills in May for doctor visits that happened months ago and my fiancee has some bills still coming in for an accident that happened ages ago.

I’m not sure exactly what I’m trying to say here besides healthcare kinda sucks and is the biggest question mark in early retirement for me.

My main annoyance with healthcare when you have a high deductible plan is that it’s really hard to gauge the actual costs of something when you visit a doctor or have some tests done especially since you often get billed multiple times for one visit. I’ve had situations where I’ve had a test done and gotten three bills for it, the test, the doctor who administered the test and then the reading of the test. I work in insurance and I’m still confused or annoyed by half the stuff that I see on my insurance bill.

I’m lucky enough to have the extra cash to cover my deductibles whenever I need to have something done or when I want to visit a doctor but I feel for those who are struggling to get by and can’t even afford to use their benefits because they have a massive deductible they have to hit.

I guess one positive thing from my perspective about having SOME expenses any given year is that it gives a more realistic picture of what my budget will actually be when I retire. I can easily see a 10k bump in yearly expenses after retirement for a single person if one doesn’t properly account for the premium and deductibles and has some new medical problems. Even now with my medical premiums being partially covered by my employer, I can still be dealing with a 5k bill for premiums and deductibles once the year is done.

The best I can do at this point is max out my HSA, take care of myself and get as prepared as I can be for whatever comes around when I’m ready to quit work. Hopefully my fiancee(wife at that point) will still want to work and I can jump on her insurance plan! It’s always better to get some form of subsidization than pay full boat.

If anything this year made me realize that I probably need to up my expected costs for healthcare quite a bit in my retirement plan.

If you read my last update, you know that April for me was a mediocre savings month as I had some travel costs for my awesome trip to Nasvhille and May is no different but it’s healthcare costs that are the culprit this month! It’s not a surprise as I knew they were coming having visited some doctors in the past few months but the surprise was the actual cost of the trips.

I hadn’t planned on all these medical expenses when I set my goals for the year so I’ll probably be lagging a bit in those areas but it is a good wake up call to have early in the retirement planning years versus realizing it much later when it’s harder to adjust for it.

Let’s take a look at the gross income breakdown for May. Continue reading “My savings rate and expenses – May update”

Amazon’s taking over the world and the much talked about death of retail

Amazon’s purchase of Whole Foods Market was the headline this Friday and it sent a whole sector of retail into a tailspin as the thought of competing with Amazon had investors worried about the future of the grocery space.

It’s true that Amazon and online shopping in general has had quite an effect on retail as can be seen by the many store closures in the past two years. Companies like Sears, Macy’s, J.C. Penney and many others are closing hundreds of stores this year and will likely continue to do so in the next few years.

There are two reasons for this destruction in retail. The main reason is that more and more shopping has moved online. The e-commerce share of the overall pie has more than doubled in the past decade.

Do note that the number represented in the graph below includes certain things normally not bought online like gas, cars and the number excluding those items is nearer to 15% and continuing to grow.

ecommerce, online sales,e-commerce

Amazon has been the main beneficiary of this movement as evidenced by their stock performance and brick & mortar retailers have struggled to keep up. They’ve only recently started to invest heavily in the online sector but the moat that Amazon has built in that area may be hard to beat this late in the game. In fact Amazon makes up nearly half of the overall e-commerce which is impressive considering the # of online retailers that are out there.  Continue reading “Amazon’s taking over the world and the much talked about death of retail”

Relationships, personal growth and marriage

Relationships, personal growth and marriage

One of my recent posts talked about my engagement and I’ve been thinking about what that means for the past couple of days. Those thoughts have centered around the impact a good relationship can have on your life.

It was only a few years ago that I was in my late 20s, discouraged from the dating rut I was in and expecting to be stuck in that loop of mediocre relationships for a while. There’s something to be said about feeling trapped and the stickiness it brings into the other aspects of your life. Often times when one thing isn’t going well, other things follow suit. In short, one thing failing can make your outlook on other parts of your life change as well. I wasn’t happy in my social/personal life, wasn’t happy with my career and wasn’t even happy with my living situation. I felt like I was failing in my relationships and by default I felt the same way in all other aspects of my life.

Then I met her and everything changed. People often say that their significant other makes them a better person and I never understood what they meant by that until I met and spent time with my now fiancee. She has a lot of great qualities and I immediately knew that there was something different about her when compared to other girls I’ve dated. Most of my prior relationships barely lasted a few months and I honestly expected this one to be the same but things progressed, they moved along and I realized that this was working; it was working pretty damn well.

That internal belief of being stuck in all aspects of my life made no sense to me anymore. I was in my late 20s and living a life I didn’t want to live because I told myself that was the norm. I was depressed, anxious, bored and unhappy.

It took one great person, one good relationship to make me realize that didn’t have to be the case and get my life moving again. If I could succeed in a relationship, I could succeed in other areas of my life as well. That was a pretty key realization in my life that drove me forward in search of bigger and better things. I was no longer stuck in my default loop of mediocre relationships so why should I be stuck in other parts of my life?

I moved to a nicer place; closer to work and amenities which led to a higher quality of life. I never hated my job but found it rather unfulfilling so I took a closer look at my career and pushed myself forward into a different career path; one that I enjoy and one that offers more potential for earnings, personal growth and impact. I began this blog as a way to track my financial progress and push myself forward on my personal projects and through all that I became a better boyfriend to my girlfriend as well. She was the one that brought forth this whole cathartic realization me. Meeting her was the start of a whole new part of my life and now here we are ready to start yet another journey.

Marriage! That’s our dog and bunny up there announcing our upcoming nuptials. I’m excited to continue growing as a person and seeing where the journey takes me from here.  Continue reading “Relationships, personal growth and marriage”

My portfolio – June update

The market continued its upward ascent this month and the S&P 500 was up 1.35% since the last portfolio update which can only mean good things for the portfolio.

Q1 earnings season is in the books and the results were quite excellent with the S&P 500 showing 13.9% earnings growth y/y, the highest since Q3 2011. It’s true that a good portion of that was driven by the energy sector which had a pretty easy comparable but even exclusive of that, the growth rate was a solid 9.7%.

According to factset, the expected growth rate for Q2 is 6.6%(down from 8.7% as of March 31 mostly driven by downward revisions in energy) and that bodes well for the stock market. It is good news to finally see growth after a few years of flat earnings. The P/E ratios right now still make the market seem expensive but it sounds like the E part of that equation is finally expanding as well which means good things for investors if it can continue.

Last month’s update showed another 10k+ increase in portfolio size and means that 4 out of the last 6 months have been 10k+ bumps! That’s just amazing to see and shows the impact growth can have on your portfolio once you reach a certain dollar amount.

What’s driving this performance considering my income, not to mention my contributions are way less than 10k per month. It’s the continued growth of the market and some excellent performance from some of my individual stocks.

UNH, one of my biggest holdings continued to rocket this month and was up another 4.22% and is now up over 13% YTD. That combined with a 20% dividend bump this month makes me a happy investor. Apple, another on of my holdings didn’t necessarily kill it this month but is up nearly 30% YTD as well. International shares have been strong performers lately after a few years of middling results that trailed the US markets. One of my main international funds is up 18% YTD and was up over 3% this month.

These are all results that are beating the S&P 500 and have helped my portfolio grow quite a bit over the past year. The constant contributions also certainly help but portfolio growth has been more than 2/3rds of appreciation in these months.

I’m a firm believer in asset allocation and shrewd stock picking being a big part of solid long term results and I’m glad to see the fruits of my labor here. International is a perfect example of having an allocation and sticking to it despite middling results in that area. I kept contributing to my international holdings despite results that lagged the US stocks and am now rewarded with excellent price appreciation as the market finally catches up to the thesis that those stocks and countries were undervalued in relation to their domestic comparable.

Now I’m at a point where other asset classes are below target and am buying those as those are likely undervalued now(or the others are overvalued) against their historical norms. Last month, I was short on bonds and REITs and that will likely be the case again this month due to the strong performance in both the domestic and international markets.

Let’s take a look at my portfolio today and which assets are lagging behind.  Continue reading “My portfolio – June update”

Life!

It’s rather interesting how quickly your life plans can change and I came to realize that in a big way this weekend.

My girlfriend and I went for a walk and took the long way to the grocery store afterwards to enjoy some of the views of our beautiful state and also to get a gym(Pokemon Go – we’re nerds).

On the way there, my girlfriend noticed an open house sign on a cute little road in a nice neighborhood and we decided to stop by to take a look.

We had talked about home ownership in the past and I’ve talked about it being in my future on this blog as well but I always thought that future was pretty far off. I love the comfort and low stress of apartment living. My apartment is in a nice area in an excellent town that’s about halfway between each of our places of employment so the convenience is there as well. It’s expensive but brand new and efficient and safe and I was expecting to stay there for at least another year. My lease is up in September and the plan so far was to renew.

We’re super picky and both assumed it’d take us forever to find a house when we seriously start looking and do note that we weren’t even looking at this point.

The little blue house with the open house sign was just something to do to kill time on a Sunday afternoon. We’re both big fans of the HGTV home shows(even if they’re staged) and enjoy looking at open houses from time to time to get an idea of what’s out there on the market for when we actually start looking and that’s why we stopped and decided to take a gander.

We pulled over, I checked Zillow to see if the open house was still in progress as it was later in the afternoon and there were no cars in front and saw that we still had about 10 minutes left before it was all done.

The area is cute, one we drive by quite a bit although it’s in a town I hadn’t really considered too seriously as a potential area for purchase due to the high taxes and generally high prices. Still, it was worth looking and this house fit our budget even if the taxes were a bit higher in this town than the surrounding areas. Plus, we weren’t seriously considering being home owners at the time anyway so what did it matter?

We walked into the house, met the nice listing agent and pretty much fell in love with the place.

Continue reading “Life!”