My daily personal finance routine continues to include net worth tracking. Call me obsessive but is there a better overall indicator of financial progress toward retirement? Not that I am aware of but I am certainly open to being educated by a reader on this. The results during the first quarter are positive but no doubt less than mediocre compared to many of you. The results are about what I anticipated.
My equity holdings represent approximately 25% of my retirement nest egg. The rest of it is in cash equivalents and inflation-protected investments. These include I-bonds and Treasury Inflation Protected Securities (TIPS) owned as individual bonds and in a mutual fund. Overall, bonds have not done well recently. Nor have commodities and I own a chunk of commodity-based mutual funds.
While I have rebalanced, I still believe that we will experience inflationary pressures before I retire. Therefore, I am not yet keen to completely divest from that category.
My 401(k) account has experienced a 1.6% personal rate of return YTD. Again, that is poor compared to the equity markets but I am not bothered by it. If others are doing better by taking on more equity risk, good for them. I am willing to trade potential gains for safety. With my present holdings, I can complete my plan for a reasonable and safe retirement income when the time comes.
If I miss out on some opportunities, so be it. I remind myself that many retirement income strategies (e.g., the “4% rule”) assume that the retiree is taking a reasonable amount of risk in the equity markets to boost overall returns, out of necessity. I don’t need those returns.
My net worth numbers would be somewhat better if I had not spent a good bit of cash this first quarter on more remodeling projects. I will continue with these projects until my Tennessee house is ready to sell and to prepare my Kentucky house for the long term.
I have no idea what percentage of my fellow baby boomers use net worth monitoring as a retirement planning tool. I’m considering putting together a simple net worth tracking tool (similar to what I use myself) and making it available to other baby boomers as a free or inexpensive download. Do you think there would be interest in that?
How is your net worth progressing?