2007 Year End Review (II): Net Worth

This is the second part of my 2007 Year End Reviews. In the first part, I took a look at the financial moves we made last year. Now I want to see how what we did put where we are in the new year.

December 2007 update

Our net worth saw second consecutive monthly decline in December after a disappointing November. For the month, our net worth went from $614,716 a month early to $608,122, losing $6,594, or 0.88%. The absolute dollar amount is not that significant percentage wise, the trend, however, is what concerns me to a degree. For the past two months, our wealth on paper shrank by more than $51,000 after reaching the peak at the end of October.

The breakdown of what we have at the end of December is as follows:

• Credit card balance: The overall credit card balance was reduced by $1,073, or 5.54%, last month to a total of $18,294, of which $16,000 are from 0% APR balance transfer.
• Cash: Our cash in various bank accounts reduced by $1,945, or 2.96%, to $63,701 compared to the balance at the end of November.
• Taxable accounts: The loss in our taxable investment account contributed to most of the net worth decline in the past month as the stock markets continued to struggle. Our taxable investments dropped $6,069, or 1.97%, to $302,075.
• Retirement accounts: The overall market value of our retirement accounts was almost flat last month, losing $294, or about 0.13%, to a total of $234,895.
• 529 plans: Our daughters’ 529 plans continued to do well with another positive gain, though mostly due to the $600 net contribution. For the month, the overall market value added $507, or 4.18%, to $12,798.
• Bonds: The least exciting part of our investments gained $138, or 1.08%, to end 2007 at a total of $12,946, though $100 of the gain came from new I-bond purchase.

2007 summary

The past twelve months minus two were great, though the retreat of the overall stock market started in the summer. Nonetheless, 2007 still shaped up as a good year in growing our net worth. When 2006 began, we had $458,992 in the following categories:

• Credit card balance: -$11,661
• Cash: $36,484
• Taxable accounts: $218,348
• Retirement accounts: $186,819
• 529 plans: $5,738
• Bonds: $23,264

Looking at where we are right now, the biggest gain in the past year came from our taxable investments, which is more than 56% of the net increase of $149,129, or 32.49%, in 2007. During the same time, our retirement accounts added $48,076, with nearly 60% of that gain coming from our own contributions to the IRA and 401(k) accounts.

As for our taxable investments, we put about $10,500 new money into our mutual funds, mostly through automatic purchases every month. The total deposits to our brokerage accounts at Scottrade, Zecco, Firstrade, and Sharebuilder in 2007 was around $28,000. Going forward, I will try not to add too much new money into our brokerage accounts to buy stocks. Instead, using proceeds from selling old stocks to fund new purchases would be a better option, especially with commission-free brokers such as Zecco. Subtracting the total of $38,500 new money, the gain from price appreciation and distributions in 2007 was about $45,200. That’s equivalent to an annual gain of more than 20% from our taxable investments.

The net increase of the assets of 529 plans in 2007 was about $7,000, of which about $6,300 were from our own contributions. Since more of the investments in 529 plans are in balanced index funds, I don’t expect any extraordinary gains in this part. A steady growth is much more important.

Growth since 2003

We started to track our nest eggs since 2003, when we had $201,422 under our names. In the past five years, we have made steady progress in growing our wealth, thanks to the generally up markets which helped grow our assets significantly in the last two years.

In the next part of the Year End Reviews, I will update our asset allocations and summarize the returns of the stocks and mutual funds we invested in.

If you enjoyed reading this post, please consider subscribing to my full RSS feed (What's RSS feed?). Or you can also choose to have free daily updates delivered right to your inbox.

• Get the most out of your money with these online banks that pay top interest rates: EverBank: 4.75% APY, FNBO Direct: 3.50% APY, Washington Mutual: 3.75% APY.
• Feeling the pain at the pump? Find out how you can get up to 5% cash back with these gas rewards credit cards. It's the money you have to spend anyway. Why not get some back?