Portfolio Review – March 2018 – The Half Million Dollar Portfolio

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The Half Million Dollar Portfolio?

Less than $500 separated me from 500k before the market volatility in February shaved 16k off my total. However, since then, the market has turned around. We’re now back to a positive return for the year and things are finally looking good for me to cross that threshold. I might now have a half million dollar portfolio!

The market turning positive is a welcome sign to many investors. It reminds me a bit of what happened in February of 2016. Volatility spiked due to fears around China, oil prices and uncertainty around rates. Just like last month, that caused stock prices to fall. In the case of 2016, those falling prices turned out to be amazing buying opportunities. The stock market never looked back from the lows of 2016 until it hit the recent speed bump. Whether that turns out to be the case here is still an unknown.

What’s interesting about these dips is how quickly they’ve corrected. We see a quick dip, it doesn’t last long and then it starts rising again. That’s great for people who like seeing their portfolio go up and up on paper. It’s not great for people looking to keep buying stocks at a good valuation as a long term hold. A rallying stock market usually means things are looking good and there are some good things happening here. The economy is strong and earnings are growing at the best clip since 2011.

What interests me is how the market and investors and I will react to a prolonged downturn. Quick bounces are easy to get used to as that has been the case for quite some time. Investors keep buying whenever they see a drop because they “know” it’ll recover pretty quickly. The question is what will happen that one time in the future where the recovery takes a few years. I’m not complaining about rising prices but as a long term investors I’m always looking forward.

It’s nice to see these rising totals each month but the cynical part of me knows that it can’t last. Since I’m in it for the long run, I’m not overly concerned nor am I making any specific moves. I’ll continue to stick with my asset allocation, contribute monthly and buy things that my asset allocation tells me to buy. If we see a recession, I’ll do the same. Until then, I’ll enjoy seeing the numbers grow on paper.

Market returns will very likely propel me beyond the new milestone but contributions play a big part as well. My bonus was paid out in February and my 401k contribution for that paycheck was bumped to 50% meaning a big boost in money flowing into the market for this month. Combine that inflow with rising stock prices and baby, you got a stew going. Let’s check if that stew bubbled up to 500k this month.

As a reminder, my portfolio was at $482,642.91 last month.

The Portfolio

half million dollar portfolio

My portfolio now sits at $512,884.55!

I am officially half a millionaire for the time being. That’s pretty awesome and speaks to the power of investing and letting your money grow with time! I’m only 33 so it’s kinda neat reaching that mark this early given that I’ve never been a super high earner and live in a HCOL area too.

When I first started tracking my portfolio in December 2015, the portfolio totaled up to $293k and now, 27 months later, it’s over 500k. Market returns and consistent contributions have led to that awesome growth. I plan to do a more in depth post about these numbers soon comparing things such as career earnings to my portfolio and looking at annual returns for my individual stock portfolio. That might be a cool view and give readers an idea of how I did it and how much it took to earn to get there. The next stop is a million dollars and while that’ll take some time, this is a good stop on the way there!

This month’s growth rate is crazy in itself and represent’s the biggest dollar total increase ever with a bump of $30,241 in one month! A 6.27% bump in one month is not one to complain about. That’s almost 1/3rd of my gross income gained in one month, thanks stock market!

My bonus was one of the driving factors of that as contributions made up slightly less than 1/3rd of that growth. The rest was market returns which were solid with the S&P shooting up 6.37% since the last update. My portfolio did a bit worse than that with a 4.6% return on the month.

Overall, my taxable accounts were up 4.6%. Tax advantaged accounts were up 6.6%.

Cash was up 10.1% and now makes up 7.7% of my overall portfolio. That’s still below my 10% max allowed by my investing plan. I didn’t sell anything but some of my 401k contributions went to cash to await investment.

My individual holdings helped drive solid returns for the month. Apple was up 11.8% and MSG finally moved towards fair value with a 15% bump for the month. My exposure to small and mid-caps also helped me stay close the market.

There were some misses as REITs continued to get beat up. My allocation to bonds and cash holdings also caused me to lag a hot market. REITs, small-caps and mid-caps were behind last month in my asset allocation. That means I was buying them at attractive prices after the volatility last month and seeking to fix that imbalance.

Let’s see how my asset allocation looks this month.

Asset Allocation

asset allocation

Bonds whipsawed last month becoming overweight after stocks fell. The opposite is true this month as stocks began to rise again and bonds remained static.

Most of my contributions went towards REITs, small-cap and mid-cap stocks and all those are back in line. The overall asset allocation seems to be in good shape with the biggest outlier being 0.16% away from target. Here’s a comparison of where I was last month and where I sit this month.

asset allocation comparison

My contributions helped turned all of the red assets into the blue. The small and mid-caps were aided by strong market beating performance in the month as well. US large caps which haven’t gotten many contributions in a while are back in the red. Bonds join them after strong stock returns push bonds below target again. International remains in a similar spot.

Next month’s strategy will be as follows;

  • Target contributions towards US large cap and US Bonds
  • Cash is at 7.7%. Utilize cash to purchase attractively valued securities if opportunities arise.

In hindsight, I should have pulled the trigger on a few buys in February. As an example, Google hit my price target of just under $1000 for a brief second. Most of the companies I wanted to buy were large caps and I was already overweight there so I didn’t make any moves. Google is up 16% since then so that was clearly a missed opportunity.

In all honesty, I’m still a bit wary about the prices right now. It’s the reason my cash is the highest it’s been in a while although it’s still well below my 10% max. There’s still buys going in every month but I’m willing to sit on this cash for a while unless a good bargain catches my eye.

I know holding cash has held back my returns in the past two years but I’m a patient investor and willing to wait for better opportunities to invest it. Hopefully, they eventually arise. One of the reasons I built in a max 10% ceiling for cash in my investment plan is to make sure I’m not too patient and miss out on a market like we had the past few years. Cash is fine but having that cash in the market for the long run is usually best.

That’s it for this month’s update. The half million dollar portfolio is now a reality. I’m aware it may become the less than half million dollar portfolio again in the future. If that happens then I’ll just keep buying more until it hits 500k again. Let me know how your portfolio did last month.

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28 thoughts on “Portfolio Review – March 2018 – The Half Million Dollar Portfolio

  1. That is great that you cleared the 500k milestone. With that much invested I am sure you see the benefits of reinvested dividends.

    When you look at your allocation, do you only look at market cap or do you look at it by sector too ?

    1. Market cap alone and then it’s either index funds or individual holdings if I see anything I like. Lately it’s been mostly index funds. I don’t look at specific sectors although I do tend to focus on areas that I know relatively well like insurance or technology when looking at individual stocks.

  2. Woah, we’re half way there Woah, livin’ on a prayer. Sorry, I hear this song now that you passed the 500K mark. Congrats on such a great accomplishment!

  3. Congrats on the great progress! Overall, the allocation seems well thought out for your respective needs as well.

    We’re reconsidering our current bond allocation; I’d like to have some additional exposure shifted to equities or real estate, but we’ll likely stay the course.

    Congrats again on the nice accomplishment! – Mike

    1. Thanks Mike. I usually do a yearly review to see if I want to switch anything but I haven’t in a while. I figure I’ll stick with this asset allocation for at least the next year and see if I want to bump anything up or down myself. Good luck on setting up your asset allocation but if you have something that’s working already then maybe there’s no need for changes.

    1. Thanks man. I do think that keeping track via this blog and making sure I’m buying the right things helped me get there faster than I would have otherwise. The discipline you get from tracking every month is really helpful and enjoyable too!

  4. Congratulations on making it to a $0.5 mln portfolio time. Very pleased for you and good to see your disciplined approach to asset allocation and regular investing pay off. There seems to be a fair chance – depending on the timing of the next major bear market of course – that you’ll be a 1.0 millionaire by age 40!

    Good luck!

    1. I think I’m definitely on pace for 1M by 40 although it really depends on how the market does in that time frame. If we have a prolonged bear market, it might be a bit later but either way, I’ll keep pumping money in there to get to that number eventually.

  5. Congratulations on reaching your 500K milestone!

    I would say that at these high prices, 7.7% cash is not that bad. Making a hard limit in your strategy is very good though. I will think of doing that as well (probably lower than 10 for me though).

    Good luck reaching your next milestone!

    1. Thanks. I do like having a cash cushion max because it forces me to stay in the market through good or bad. Let’s say the market drops 50% tomorrow, I’ll have to use some of that cash to buy and that’ll be great for long term returns. At the same time, when I “think” it’s expensive, I have a upper bound on how much cash I can hold so I have to keep buying then too.

  6. Congrats mate! Achieving it at 33 is amazing. What percentage of your portfolio is unrealized gains? I love your portfolio. Although, I would probably limit my REITs to 5%.

    1. Thanks DG. It’s hard to tell what % is unrealized gains but most of my holdings are in tax-advantaged accounts so it doesn’t matter much. For my taxable portfolio where I trade my individual stocks, right now it’s about half unrealized gains.

  7. Congratulations on reaching 500K! It’s very inspiring to see that one can reach this milestone as such a young age.

    And I’m really looking forward to your in-depth post about your growth. Keep ut the good work and interesting posts 🙂

    1. Thanks TBP! It’s pretty awesome to see this number so early on and a lot of it has to do with the market we’ve been having. Not sure how long that can last but we’ll see!

  8. I’m with you on these dips Timeinthemarket – it’s nice to see the portfolio keep increasing, and having little dips as buying opportunities, but I really wish the market would easy up a little! I’d love a few more compelling opportunities to invest, and its hard to see any investments we make today producing spectacular returns in the long run.

    The downturn, when it eventually comes, will certainly be an interesting time. It’s never easy to navigate but I look forward to investing with more gusto during that period.

    Congrats on hitting the half-mil mark!

    Cheers, Frankie

    1. Thanks Frankie. There’s definitely a lack of great buying opportunities out there right now but I’ll keep buying monthly just in case earnings keep growing at an intense clip. I will definitely have some cash on the side in case some opportunities arise.

  9. I always thought I wanted to hit 1 million by age 40. Arbitrary, I know, but seems like a solid goal to me. You are well on your way to breeze by that milestone, congrats!

  10. Congratulations on reaching the $500k mark! We reached it in January of this year and were thrilled as well. Now we are setting our sights on the $1m mark. Do you use any tools to keep track of your net worth?

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