February 2007 Score Card — Part I: Net Worth

I can’t believe we even manged to post a small gain for February, after the brutal Tuesday when we lost nearly $16,000 on paper. The gain, a mere $431.87, was largely due to the annual bonus my wife received this month. My decision to sell a mutual fund early this month also helped in reducing the losses, though that decision has nothing to do with Tuesday’s market plunge.

At the end of January, we had a total of $466,658 in our savings and investment (both tax-deferred and taxable) accounts. As of yesterday, February 28th, that number grew to $467,091 (excluding house and car related items), a gain of a negligible 0.1%, if we can call that a gain at all. The changes in February are in the following categories:

• Credit card balances: As all the holiday shopping bills were paid off last month, the total credit card balances shrank $1,937 in February to $10,277. But this number will soon bloom to balloon to close to $30,000 when the $18,500 0% balance transfer from Citi card comes in. Actually, balances from our daily spending are only a small portion of the overall credit balances (about $1,700 in February).
• Cash: We saw an increase of $3,904, or more than 10%, in our cash reserve in February. Part of the increase came from my wife’s annual bonus which was paid early this month. Also, I have only invested about $7,000 of the $8,100 proceeds received from selling CSVFX. The residuals also contributed to the increase of our cash, which is at $42,885. I don’t expect we will continue to hold so much cash. But where should I put them? In February, I transferred almost all our deposits from Emigrant and HSBC to IGoBanking for their higher yield.
• Taxable investments: China Life (LFC) continued to be the big story in our taxable investments. After losing about $13,000 in value in January, this stock’s continuous slide ate another $6,300 in February, with nearly $5,000 coming from yesterday’s 8.82% drop. Well, despite the decline in this year, LFC is till my best investment, adding nearly $40,000 to our nest eggs. Also in February, I sold one mutual fund (CSVFX) and used part of the proceeds to buy a Vanguard Small-Cap ETF (VBR). At the end of February, we had a total of $207,667 in our taxable accounts, down $9,957 or 4.58% from January.
• Retirement accounts: In last month, my scheduled IRA investment at Vanguard kicked in and I put $1,200 into my wife’s IRA account at Vanguard, where she has two Vanguard funds. Since her account is relatively small, I put all the $1,200 into one fund so the market value will have a chance to go above the $5,000 mark at the end of the year, avoiding the $10 account maintenance fee. For February, the value of our retirement accounts increased by $4,209 or 2.18% to $196,926, mainly because of the new contributions instead of appreciation.
• 529 plans: Our daughter’s college savings accounts went up $234 (about 3.84%) at the end of February to $6,345. If factoring in our own monthly contribution of $300, the market value actually dipped a little bit.
• Bonds: With current 4-week T-bill rate at 5.267% APR (5.40% APY or click here to see how it is calculated), 4-week T-bill could well be the best choice for short-term investment. We currently have $12,000 invested in 4-week T-bills and I am considering to increase the amount a little bit when the $18,500 arrives. I prefer T-bills over CD because the money is locked for only 4 weeks and interests earned are exempted form state income taxes. On February 28th, our bond investments added $122 ,or 0.52%, to $23,543.

Though we are currently experiencing a turbulent market, I am not going to make any changes to how I invest. If I am investing for the long-term, why should I care a short-term drop? Continue to do what I am doing now is a better strategy for me.

If you enjoyed reading this post, subscribe to the RSS feed or get it via email delivery.