Saturday, February 15, 2014

How I Got to Where I am Today....A History of Building My Asset Base

Last week I introduced myself, wrote about my high level goals and some things I would write about here. This week, I am going to give an overview of my assets and how those have grown since I started my journey in 2001.

In 2001, I graduated from a well respected engineering school and joined a large corporation. My starting salary was average for someone in my field of engineering with a Bachelors degree. To my benefit, I grew up understanding that you lived within or below your means. My parents instilled this value early and they set a good example by living their financial lives within their means. While in college, I worked with the corporation that I would eventually join full-time. During that time, I had the opportunity to learn further about personal finance and for the first time investing from a very wise retired engineer. I rented a room from this retired engineer and he took special effort to mentor me in some very basic concepts of personal finance and investing that I have carried on to this day. He also shared with me the details of his assets, investment choices, lessons learned and how his investments had grown over time. Seeing this first hand from an engineer just like me provided more lessons than any book, article or investment newsletter I have read since. The most important thing I learned was to start doing SOMETHING. Start contributing to a 401(k), an IRA, invest in a few individual stocks. Whatever it is just get started. So I did just that - I got started and early compared to many.

Before graduating college, I opened an IRA that I partially funded. I had one small brokerage account with Vanguard in which I purchased two individual stocks -- CNET and NTAP. You might be able to tell from the stock choices and the timing this was during the 'tech bubble'. I watched in awe as these two positions grew well beyond my expectation and then I watched paralyzed as they shrank even more quickly than the original growth trajectory. So that was my start.

Upon graduating, I was able to better fund my IRA account. I also contributed to my company sponsored 401(k). By my second full year after graduation, I was fully funding both an IRA account and a 401(k) account. Both of these account were held through Vanguard and my investments were simple and automatic. My IRA was, and still is, invested in the Vanguard S&P 500 Index fund. My 401(k)is invested almost equally in 3 parts; S&P 500 Index Fund, an aggressive growth index fund and my Company's stock. I have not changed that investment mix in more than 10 years. It is simple and automatic and it has provided me with a strong asset base.

In late 2003, the sting of my original venture into individual stocks was wearing off so I opened a low cost brokerage account with TD Ameritrade. I began funding this account with a modest amount of money into a money market fund (about $250/month). Obviously the sting from the tech bubble was still lingering since I could not pull the trigger on my first individual stock choice so some dollars started accumulating in the money market. Then in 2008 when market took a massive plunge there was no holding back. Some investment opportunities that I had my eye on now looked extremely inexpensive. So I took the plunge and made my first significant investments in individual stocks. I bought up Fossil ($FOSL), General Electric ($GE), Lufkin Industries ($LUFK), MSC Industrial Direct ($MSM), National Instruments ($NATI), Under Armour ($UA), Otter Tail ($OTTR), and Wachoivia ($WB). I purchased those companies first between October and December 2008. That broke the ice on my individual stock portfolio investments.

My career had been advancing well along this same time so I found my self with additional disposable income. So about this same time, I began investing into a normal taxable Vanguard account. I poured as much into a Target Date Retirement Fund and an International Index Stock Fund. Both low cost funds that allowed me to automatically pour extra dollars in without much day-to-day management on my part. I also began investing after tax dollars to my 401(k) account to the maximum extent allowable by law.

I chugged along with automatic monthly investments into tax protected retirement accounts, taxable mutual funds, and the brokerage account. I continued to build my individual stock holdings adding investments in companies such as American Oriental Engineering ($AOB), Atheros Communications ($ATHR), IMS Health ($RX), Logitech ($LOGI), Exelon ($EXC), Infinera ($INFN), Rackspace Hosting ($RAX), Seaspan ($SSW), Synaptics ($SYNA), France Telecom ($FTE), Qlik Technologies ($QLIK), Tibco Software ($TIBX), Veolia Environment ($VE), 3D Systems ($DDD) and Nunance Communications ($NUAN). As you can tell by scanning this list, I have had some big winners, some big losers and some that fall in between. Overall, my performance on individual stocks as been better than the borader market indexes.

In 2011, my wife and I had the opportunity to move for our jobs. This presented another opportunity - rental real estate. We chose to keep our home and turn it into a rental real estate investment. By this time our investment portfolio was growing quite large and we saw this as a perfect opportunity to diversify our investment holdings to something outside of the whims of the stock market. I had also become more and more interested in how to grow our passive income stream. This presented the perfect opportunity to achieve both. We put that house on the rental market and quickly found our first (and still the same) tenants.

About the same time our first child came along and I have since opened a 529 College Savings account for which I invest a modest amount each month into a target date fund.

Whew! There it is. A short history of how my wife and I got to where we are today. I think it is important to know a little of that history as I start to describe investments and choices going forward with you.

Now, what does all of this look like in numbers year to year. Take a look at my Net Worth Page for more details.  Here is the summary graphic:



10 comments:

  1. At first I thought a $100 million goal was pretty ridiculous. But looking at your progress so far, it is clear you know what you are doing! Great job building up your net worth so far and good luck reaching that huge goal!

    Is there a particular reason you have a goal for $100 million? Why not $10 or $20 million? I applaud you for going after such a huge goal but just curious how you came upon that number as your target.

    Good luck and great start to your blog!

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    Replies
    1. Dan,
      Thanks for the note. I have gotten a few questions on the $100MM target. I will address that in my next post. Short answer - it is somewhat arbitrary. A ambitious goal but not something that is totally out of reach. I will into more detail I the next post. Thanks again for the comments and I hope that you continue to follow my blog. This is a first for me so I am really interested to see how any folks might be interested in my journey.

      Delete
  2. Dan,
    Thanks for the note. I have gotten a few questions on the $100MM target. I will address that in my next post. Short answer - it is somewhat arbitrary. A ambitious goal but not something that is totally out of reach. I will into more detail I the next post. Thanks again for the comments and I hope that you continue to follow my blog. This is a first for me so I am really interested to see how any folks might be interested in my journey.

    ReplyDelete
  3. Wow, what an incredible journey so far! $100 million should be more than enough to get you where you want to be. Pretty amazing to see how nicely the overall rebound from 2008 till present has effected your overall networth.

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    1. writing2reality,
      Thanks for stopping by and taking the time to comment. I hope you will follow along on my journey and provide your insight on my plans and performance. I was at the right time in my career and life to go all-in during the financial crisis and that made the rebound even more exciting for me. Thanks again for stopping in and hope to see more comments from you in the future!

      Delete
  4. writing2reality,
    Thanks for stopping by and taking the time to comment. I hope you will follow along on my journey and provide your insight on my plans and performance. I was at the right time in my career and life to go all-in during the financial crisis and that made the rebound even more exciting for me. Thanks again for stopping in and hope to see more comments from you in the future!

    ReplyDelete
  5. As a young engineer who stumbled into investing just this year I am very interested in following your progress and learning from your journey. Thank you for starting up a blog and best of luck to you in reaching your goals.

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    Replies
    1. Dividend assume,
      Thanks for stopping by and taking the time to post a message. I am also an engineer so I am sure we will have some things in common and you will relate to my analytical side. I have learned a lot in the last 13 years of investing and hope we can learn something from each other. Thanks for joining in my journey.

      Delete
    2. Sorry. Autocorrect beat me again. Meant to say "Dividendasaur" and not Dividend assume.

      Delete
  6. You have done such a good job, I also invested heavy during 08-09, but with much less. The best thing that I have learned over that period is not to Listen to the talking heads on TV and learn to to analyze investments keep the cost low, trade less frequently, and consistently invest automatically.

    Regards,
    Joe

    ReplyDelete