2018 Q4 & Annual PoF Portfolio, Spending, and Blog Performance Update
Every three months, I publish an update to let you know how well my portfolio has done, how much we’ve spent as a family of four, and what’s going on with the blog. Some people like to know the blog stats. Weird, I know.
After three years of tracking our family’s expenses, I’ve learned something. We spend about as much as I thought we did. As the late Denny Green famously said, “they are who we thought they were!” That’s us.
Before I started blogging, I had a pretty good idea of what we were spending based on the credit card statements. It turns out I was right, and I have decided to stop tracking our spending down to the penny. I did so to prove to both me and you that we were actually financially independent, and now we know.
Yes, we are still FI after the recent downturn in the markets. I’ve argued that a bear market can’t really “unFI” you, but that’s a different post.
With the conundrum of expenses that can be attributed to the blog, expenses that can be attributed to our upcoming build (is that spending or building home equity?), I am no longer going to report the precise dollar amount. I’ll continue to watch it from a 37,000 foot view, which is good enough for me. I hope it’s good enough for you.
2018 Q4 & Annual PoF Portfolio, Spending, and Blog Performance Update
2018 PoF Portfolio
Using my universal portfolio tracking spreadsheet that I’ve made available for everyone, I’ve updated my portfolio as it stands in early 2019.
Rather than share the actual values, I’ve altered the dollar amounts to add up to a cool $1 Million dollars. The ratios are perfectly accurate, though.
The taxable portion makes up over 50%. Roth accounts are about 25%. I’ve got about 13% in two 401(k) accounts. The 457(b), which I’ll deplete over 5 to 10 years beginning in 2020 is just over 6%. The remainder is cash, brewery, and other investments like my HSA and crowdfunded real estate (which deserves its own line — next time).
With an average expense ratio of 0.068, this portfolio costs me $680 per million invested. Compare that to a 1% AUM fee of $10,000 per million invested, and I’m pretty happy to be a DIY investor.
If you opt not to DIY, please strongly consider a financial advisor who doesn’t charge huge fees or push suboptimal investment products on you. My recommended financial advisors are fidicuary, fee-only advisors with some of the lowest fees you’ll find.
I’ve intentionally strayed from my “desired” allocation as we prepare to build a home, allowing cash to pile up while our equity investments lag a bit. The spreadsheet shows the following, again with modified sums but accurate percentages.
By this time next year, we hope to have built a house, sold a house, and I should be in a position to rebalance the portfolio back to the desired allocation.
If you’d like a copy of the spreadsheet I created, enter your email below and I’ll send you a link. Well, not me personally… it’s an automated thing. Anyway, you will be subscribed to my email list at least momentarily but you can opt out at any time.
2018 Q4 PoF Portfolio Performance
Do we have to do this? Really?
It wasn’t pretty. To be honest, though, I knew with certainty that there would be a bear market at some point. I didn’t know when, of course, but I was secretly hoping it would happen before I retire rather than shortly thereafter. And it did happen, at least according to most definitions.
Sorry about that. I should be careful what I wish for!
How did my portfolio do in the fourth quarter of 2018? Quite poorly, and thanks for asking.
According to Personal Capital, my You Index, which I would call My Index, lost 10.97% while the S&P 500 lost 13.97%. My portfolio was down, but I beat “the market” as defined by 500 large cap US stocks by 3% last quarter.
It helps to be holding some cash (in the Vanguard Treasury Money Market Fund (VUSXX) earning 2.3% and state-income-tax free). The cash isn’t represented in my You Index, but the bonds are. The bond index fund I own eked out a slightly positive return of 0.87% last quarter.
On the other hand, a small value tilt did me no favors. The fund lost 17.4% in the fourth quarter of 2018.
The only individual stock I own, Berkshire Hathaway, only lost 4.6% and the REIT fund performed better than most stock funds, recording a 6.5% loss.
The volatility was impressive. Over the course of a couple months, I saw about 5 or 6 entire years worth of future spending disappear. The day after Christmas, I got a year back, and I’ve gotten a couple more years back since.
I had a little bit of money invested back in 2000 and a low six-figure amount back in 2009. I handled those nasty drops without issue, but this was the first test I’ve had with a seven-figure portfolio.
Although the drop wasn’t (or isn’t to date) nearly as dramatic as the 40% to 50% drops in the first decade of the milliennium, but I feel like I’ve passed this test just fine. I pretty much just shrugged my shoulders, understanding this was not abnormal.
The only selling I did was matched with buying as part of some tax loss harvesting efforts. Since I’ve been hoarding cash this year, there wasn’t a lot of opportunity for me, but I did manage to take some paper losses that will become future tax deductions.
2018 PoF Portfolio Performance
When looking at the bigger picture, we can see that a decent chunk of the fourth quarter losses were taking back gains made over the course of the first 9 months of the year.
My portfolio dropped 7.5% on the year while the S&P 500 lost 6.2%.
The bright spot? Berkshire Hathaway, with a 3% gain on the year, moving into positive territory in the final week of the year.
Bonds didn’t fare so well in the increasing interest rate environment. The total bond fund dropped 2.8%. Bonds are poorly correlated with stock market returns, but not inversely correlated. They were not a safe haven in 2018.
International stocks were a real drag in 2018. My worst performer was the developed markets fund, losing 14.5%. Thanks, Europe.
It will be interesting to see what 2019 brings. After 6 trading days, we’re up about 3.5%. If this pace continues, I expect my portfolio to be up about 150% by New Year’s Eve. fatFIRE, here we come!
2018 Annual Spending
If you read the introduction, you’ll know that I don’t have exact figures to share.
We did have some big expenses this quarter, though. I spent around $2,500 on four flights to Costa Rica and Honduras — we’ll be going back to another medical mission in May.
And then there was the $28,000 I dropped on a 2017 Nissan Armada. The next big ticket purchase will probably be a travel trailer to pull behind the beast of a vehicle I now drive.
As of last quarter, we were on pace to spend about $66,000 this year. Two years ago we spent $62,000, last year we spent $61,000, but now we’re paying an extra $5,000 or so in property taxes this year.
The consistency was remarkable, but I blew it out of the water with the SUV. Since we tend to replace a vehicle every 5 or 6 years on average (driving two vehicles for 10 to 12 years), the cost should really be spread out over that timeframe.
I’ve maintained that we spend about $5,000 to $6,000 a month ($60,000 to $72,000 a year), and adding $5,000 to $6,000 a year for vehicle replacement to the prior years’ spending totals lands us squarely in that range.
This year, the grand total of our spending was just shy of $100,000 and next year we’ll be spending all kinds of money on building supplies and labor. Eventually, we should settle into a more predictable pattern, but I’m glad I’ve worked “one more year” several times before retiring in 2019.
2018 Annual Blog Performance
This blog is now a confident toddler, having celebrated its third birthday yesterday.
E-mail subscribers can skip to the end, as they’ve already seen this data and more. I also share site revenue data with subscribers and some details on how this site managed to clear a six-figure profit last year.
As you may know, I am donating half of my profits, and I plan to make a six-figure donation in 2019 as a result.
If you’d like to be included in the next quarterly newsletter to get all the juicy details, please subscribe in the box below. You’ll get some great bonuses, as well.
As of 01.09.2019, the site has 547 published posts and 47 pages. These have been visited by people in 215 countries. Still no visitors from Greenland, Svalbard, North Korea, Western Sahara, or the Republic of the Congo.
Please tell all of your friends in Greenland, Svalbard, North Korea, Western Sahara, and the Republic of the Congo about the site so we can fill in the rest of the world map!
Don’t worry about those other white spots between countries. I won’t get credit for visits from the Baltic, Black, or Caspian Seas.
As of yesterday, the site’s pages have been viewed 4,625,321 times, with more than half of those (2,637,402) coming in 2018. We’re off to a strong start in 2019 as people are attempting to fulfill their Financial New Years Resolutions.
How readers are following Physician on FIRE
- 6,338 regular e-mail subscribers & 925 weekly digest subscribers
- 1,652 Feedly subscribers
- 328 RSS Feedburner subscribers (who uses RSS these days?)
- 13,222 Twitter followers
- 2,802 Facebook Page followers / likes
- 842 Facebook Friends (under my FB pseudonym Milo Andersson) Friend me!
- 9,890 MDs & DOs in my Physicians on FIRE Facebook Group (so close to 10k!)
- 4,001 members in my fatFIRE Facebook Group
- 1,006 Instagram followers, which is amazing since it’s mostly curling pics lately. The video of my kids curling for the first time is pretty sweet, though.
If you’ve got any friends who may benefit from my content, please forward this e-mail on to them. The more people who hear the message of financial independence, the better.
- Vanguard Backdoor Roth 2019: a Step by Step Guide (143,162 views) (has been republished with annual updates x2)
- Is Having a Mortgage a Great Way to Force Savings? (52,876 views)
- How Much Does a Doctor Need to Retire (47,954 views)
- The PoF Portfolio (41,873 views)
- Tax Loss Harvesing with Vanguard: A Step by Step Guide (36,505 views)
Tax Reform! How Physicians and the Self-Employed are Affected dropped out of the top 5.
#2 is a Saturday Selection from PIMD that had amazing traffic over a few days, presumably thanks to Google’s content suggestion in new tabs in Chrome and on Android phones. I think physicians are searching online for how much they’ll need to retire, as #3 moved up from the #4 slot last quarter.
The Top 5 Posts of the Quarter:
- Vanguard Backdoor Roth 2019: a Step by Step Guide (41,452 views)
- Tax Loss Harvesing with Vanguard: A Step by Step Guide (22,981 views)
- How Much Does a Doctor Need to Retire (14,182 views)
- The Marginal Value of the Backdoor Roth. Is it Worth the Trouble? (10,927 views)
- Credit Cards for People Who Love Free Travel and Money (9,457 views)
Only #4 was a post written in the last quarter, and a couple others (#2 and #5) were revised and republished in the 4th quarter. #6 was another new post: Physician Retires Early and is Met With Scorn.
Where is my traffic coming from? Top 5 referring sites all-time:
- White Coat Investor (107,369 sessions)
- Twitter (81,959 sessions)
- Facebook & Facebook Mobile (69,092 sessions)
- Rockstar Finance (40,594 sessions)
- Reddit (17,675 sessions)
Top Referring Sites this Quarter:
- Facebook & Facebook Mobile (13,170 sessions)
- White Coat Investor (10,777 sessions)
- Twitter (8,762 sessions)
- Bogleheads (5,682 sessions)
- Doximity (2,074 sessions)
I send a lot of traffic to Bogleheads. I have learned so much from my peers on the forum.
- ESI Money (26,525 clicks)
- Passive Income MD (15,542 clicks)
- Bogleheads (13,265 clicks)
- Early Retirement Now (10,307 clicks)
- Nerd’s Eye View (kitces.com) (9,148 views)
Most clicked site this quarter:
- ESI Money (5,561 clicks)
- Passive Income MD (2,773 clicks)
- Bogleheads (1,915 clicks)
- Miss Bonnie MD (1,527 clicks)
- Nerd’s Eye View (kitces.com) (1,470 views)
In the coming months, I’ll be further elucidating the “marginal benefit” of the backdoor Roth with some projected numbers. I plan to review a couple FIRE books coming out from popular FIRE bloggers. I’m going to review the retention bonuses offered by credit card issuers as welcome bonuses are starting to become a bit more sparse. I’ll revisit stealth wealth and write about Disney World for the FIRE crowd.
In early March, I’ll be presenting as part of a Financial Independence online conference #FIsummit. I’m looking forward to connecting with folks around the world and will be joined by some great speakers and friends including people behind Choose FI, the FIRE Drill Podcast, Montana Money Adventures, The Thrifty Couple, and Mr. Money Mustache.
At $49 or $29 and 10% off with the code POF, you might want to consider signing up to pick up some knowledge and motivation from this talented cast of characters. And by using my discount code (POF), a portion of your purchase will help support our charitable mission.
I hope you have a great winter and if you live someplace cold like I do, you find a way to enjoy the outdoors and/or escape for a spell.
-Physician on FIRE