Financial Update: August 2018

Another month is in the bag and we’re slowly creeping into fall, which is my favorite time of the year. It means breaking out the sweaters, enjoying the wonderful colors, and most importantly, football and hockey season are underway.

Without further ado, let’s see how we progressed with our retirement and house savings goals in August:

Investment Update

Trending higher!

August was another fairly good month for my investments, despite some volatile movements in my international and emerging markets holdings. This will likely be the case for the foreseeable future, as emerging markets in particular tend to be boom and bust, and there is a lot of concern with Turkey and Argentina’s currency value declines, along with trade-war concerns impacting China’s growth.

Ben Carlson, of the “A Wealth of Common Sense” blog, had a fantastic post showing the incredible variation of returns in emerging market funds historically, and how they tend to perform after a “bear market” drop of 20%.

Since, at 31 years old, I still have a number of years to go until retirement, I want to ride out these swoons in the emerging markets, in order to take advantage of the violent moves higher at some point in the future (or at least, that’s the plan!).

As you can see from the chart, my investment totals increased by $735 month-over-month. A bit under half of that gain could be attributed to my payroll contributions to my 401(k), while the rest of the gains came from Ms. Market. My U.S. holdings did all the heavy lifting in August. The S&P 500 logged a healthy 3% gain for the month, while developed international markets dropped just under 2%. Emerging markets were the biggest disappointment, closing down over 4% for the month.

With the relative strength of the U.S. market relative to emerging markets (and to a lesser extent, the developed international market), my target asset allocation has drifted more towards U.S. stocks (from 50% allocation to around 53% at the end of August).

I have my 401(k) set to re-balance my asset allocation in March 2019 back to my desired 50/25/25 split (US, Developed International, Emerging), but in the meantime, the allocation drift should protect me somewhat if emerging markets see continued volatility, and in theory will allow me to purchase cheap emerging market shares with my U.S. gains in March when the portfolio re-balances.

We are now creeping up to 2.82% of our $1,800,000 retirement funds goal.

House Fund Update

Solid month!

As expected, August was a robust month in terms of adding to our house fund. We added $1,841 to our balances for the month, which was greatly helped out by the third paycheck I received for this month (I am paid bi-weekly, and you receive an extra paycheck two months out of the year when paid in this fashion).

That now puts us at 35.97% of our $40,000 savings goal. With Mariya starting work next week with the new school year, the hope is that we will be adding large chunks to savings from September through June 2019.

That places us well on track to put our current home on the market and allow us the summer months to shop for a new, more spacious home for us and our fat cat, Arya.

Sassy-pants Arya, shown above.

Discover did increase the APY on our balances from 1.75% to 1.80% (woohoo five basis points!), which was an unexpected surprise. The Federal Reserve will likely raise interest rates another 0.25% in September, which should eventually bring up our APY to at least 2.00% by October (and slightly higher beyond — Discover seems a bit slow to match Goldman Sach’s Marcus APY).

I will definitely take it — just a few more rate hikes and interest rates will match inflation!

I hope August was a wonderful month for you and your loved ones. Hopefully September brings us some cooler weather, and plenty of Detroit Lions victories (not holding my breath for the latter!).


If you enjoyed reading this, please feel free to read my other personal finance and investing related musings.