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  • Writer's picturethemoneyloaf

Net Worth Update: October 2021

I know it’s nearly the end of November, but I’m really excited to share my first net worth update!

In October 2021, our net worth increased by 1.03%, or $5,149. However, this is the most significant 1% so far because it finally pushed us over $500,000, which feel like a huge milestone!

Since this is the first monthly net worth update, I thought I’d go over how I group the categories.

1 - Cash - this is pretty straightforward, any cash we’re holding as well as cash that hasn’t been transferred into any investing accounts is accounted for here. Part of our emergency fund is also in this category.

2 - Bonds - also pretty straightforward, these are any bonds we may have purchased. The other part of our emergency fund is held here in a very flexible government bond that allows withdrawals at any time, with no penalty.

3 - Stocks - this is where things get complicated. We have an active portfolio and a passive portfolio. The passive portfolio only comprises ETFs, and we add to it by dollar cost averaging every month. The active portfolio contains individual stocks and my options portfolio. I treat the active portfolio as one aggregated amount, because the ratio of stocks to options may change, but it’s the overall portfolio value that matters to me.

The passive portfolio was really the star in October, which isn’t surprising given how the US stock market has been on a roll in 2021.

Compared to how we started the year, I’m also much happier with our asset allocation. 43% cash was just too much, and we shifted about half of that over to stocks.

I'm also pretty happy about the 1/3 vs 2/3 split between our passive ETF holdings and the rest of the portfolio, and will likely be maintaining this ratio for the next year or so.

A small note about options - it’s clear that the passive portfolio is outperforming the active one, so why bother with options? Aren’t they risky? The short answer is my main goal of options trading is to get better entry prices to stocks I want to hold long-term. More on this in a future post.

Of course, now that we’re so heavily weighted in equities, the market could take a dive any time and bring us back below $500,000. But that’s out of our control, so all we can do is stay the course and keep contributing to our accounts.

Thanks for reading my first update! These are very much a work in progress, feel free to send me an email with comments or feedback, I’ll do my best to incorporate them into November’s update.

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