How We’re Building On Our $500,000 Investment Portfolio
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Table of Contents
An Acid Savings Plan, Investment Strategies, and Emergency Contingencies
Everything and the kitchen sink goes when it comes to our investment strategy. With the goal of retiring early and starting later in life, my wife and I threading the needle to stay on top of our TNFG Investment Portfolio. See the Screenshot below.
Since a lot of people often wondered about what our positions are and our wealth velocity, we decided to share it in real-time quarterly via Google Sheets.
While this won’t be a deep dive into how I approach every investment decision, this will be a great spot-check in 2023.
We are still on track with the Net/Max Financial plan for couples.
This financial plan allowed us flexibility to travel and take care of emergencies without skimping on our savings rate. At our salary level, we are contributing the max in our employer contribution plans i.e. 401ks, as well as our ROTH IRAs, Health Savings Accounts (HSA), and after-tax portfolio.
With any luck, we will hit our 2023 annual contribution goal of $90,000. This brings our savings rate up to 37.5% annually with the hope of going for 40% starting in 2025.
The Goals and Our Long-Term Perspective
We are admittedly doing a lot but it didn’t start off that way (see below).
Our goal as of 2021 is to invest as much as $100,000 annually through all those means. The endpoint would be to retire at 55 (-ish) while establishing generational wealth for generations to come. Basically, we will be traveling more of the world by 2040.
All due to our mastery of investments not through savings.
Contrary to popular belief, Savings aren’t synonymous with Investments. The words are often used interchangeably but there is a massive difference. That difference is likely why our parents (and the majority of Americans) were never able to master wealth-building in their lifetime.
Additionally, we use the Acid Emergency Plan model.
We keep some liquid savings at our local bank no more than $2,500 per adult in the household. And when the time comes, $5,000 per kid. While it’s great to have the peace of mind of having 6-12 months of expenses in the bank savings account, however at a 0.01% rate of return, it’s rubbish. We rather stack our money in different areas earning more than 4.15% in high-interest or even dividends.
It’s all about short-term execution and long-term goals.
Keeping Investments Working to Generate More Money
The rest of our money is actively engaged.
We definitely recommend understanding that any asset growing at less than 2% is not growing at all due to inflation. There is always the inevitable question as to why is it possible. Or better yet, the exclamation, where can you even invest today for 8%?
In truth, I don’t have the answers to solve all of life’s questions in an instant. I merely found that if you stick to a better financial order of operation or the NetMax Budget ratio version 3 assumptions — It just works. It’s so effective that I was able to prove that this budgeting strategy can generate over $2.8 million for the median American household.
Additionally, it could add as much as $112,000 annually in retirement income.
60% of millennials earning over $100,000 say they’re living paycheck to paycheck. It doesn’t have to be that way but people are choosing to leverage their earnings in debt. Without a plan or parameters, of course, people will live “paycheck to stress.”
My household is merely choosing not to play by those rules. Instead, we created our own way out.
Table 1. Investment Tracking Through PersonalCapital.com
Although I’m happy that we have been able to outperform the S&P, it hasn’t been rosy. We will be simplifying our positions as we go. There is no point in carrying individual stocks if you don’t have an entry or exit strategy.
In most cases, we would have been better off, buying into the market through an ETF and riding the wave instead of guessing what’s next.
Table 2. Investments by Type
| Investment Vehicle | Investment Category | 2023 Annual Contribution Limits | Current Balance* | Estimated Annual Growth | |
| 401ks | Retirement | $22,500 x2 | $247,641 | +$20,000 | |
| 401k Matching | Matching | $11,500 | |||
| Traditional Individual Retirement Account | Retirement | ***$0.00 | $83,059 | +$1,500 | |
| **ROTH Individual Retirement Accounts | Retirement | $6,500 x2 | $87,329 | +$5,000 | |
| After-Tax Brokerage Account | Capital Gains | Min. $15,000 | $56,213 | +$3,000 | |
| Health Savings Account | Health/Retirement | $3,850 | $30,939 | +$2,500 | |
| Total | $505,181 | est. $32,000 |
We expect these assets to close at north of $600,000 at Year End (YE). With an average annual contribution of $90,000+, by early retirement, our portfolio will grow to a robust $4 million.
Table 3. Investments by Allocation
Our current allocation is very aggressive. Since our savings rate is so high and our cash flow management is still running at 80% efficiency, we can spare the risk but will shift after 2025. From that point, we will go for a 90/10 split in favor of equities to dividend income.
While this isn’t a move most people would consider but then again, we aren’t most people. We are currently underweight on Technology but we are making adjustments to purchase more throughout the year. You can skip all the over- and under- by investing in an ETF like $VOO.
Check out our list of EFTs, just in case you are new to the lingo.
Table 4. Target Investment Considerations Through 2025
Definitely shifting to pick up more international stocks in the primary 401k through the I Fund (Government 401k). It’s always a good either to consider rebalancing sometime in a year. My wife and I make that consideration toward YE.
Getting to this point wasn’t easy. We didn’t come from money nor did our folks know how to invest in the market. Truth be told, the market wasn’t this accessible until 2000. It’s a pivot and it is challenging. And yet, it’s something we had to get comfortable with.
Having a great financial strategy helps.
Waiting for the perfect moment to start your life, will only make the journey more taxing. While our parents didn’t get the same opportunities, we are charging forward to make the most of ours. And I know there is someone thinking what about the ROTH 401k? Well, it’s not that beneficial.
Check out the article, 92% Say the Roth Is Best—It’s Not. Derek Sall does an incredible job breaking down all the details, advantages, and disadvantages.
Bonus: Here’s what my household is working toward.
Closing out the year stronger
- Working on investing in the after-tax portfolio to hit the total of $300,000 in M1 Finance Brokerage focused on Dividend Income that generates at least $30,000 in passive Income for starters in 2030. Check out the portfolio in real-time. If you like the platform and want to start investing, I have the $10 for $10 referral if you need it – https://m1.finance/SYdqDJ2SyADC.
- Boosting back the EF savings with an additional $3,000. Keep tabs on your savings, cash flow, net worth, investments, retirement, and more for absolutely FREE with Personal Capital! Sign up with my link & get a $20 Amazon gift card. *Terms apply. https://pcap.rocks/lawrencegonz
- Getting back to shape – HIIT Mornings. Running, and biking just pushing out effort. I say it all the time but it’s still good. We did start HIIT workouts off of YouTube.
Disclosure: This post is brought to you by the Neighborhood Finance Guy. We highlight financial literacy information, resources, and more on your way to money management goals and personal wealth. Our goal is to help you make S.M.A.R.T.+E.R. decisions with our money. We do not give investment advice or encourage you to adopt a certain investment strategy. Your personal finance is up to you.
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