August 2007 Score Card — Part I: Net Worth

I just realized that I have been tracking the growth of our net worth for more than a year already. One year ago today, we had a total of $369,550 without including house and car related items. Here’s a picture of our net worth at the end of August 2006.

How are we doing one year later? From my own calculation, it’s quite good thanks to the strong showing of the equity markets, which performed better than what they appeared last month.

August was again a tough month for investors as credit crunch continued. However, all major US indexes posted gains for the month. The Dow added 146 points to 13,357, the S&P increased 28 points to 1,474, and the NASDAQ rose 50 points to 2,596. The strong performance in equity markets helped push our net worth to a new high. In fact, the gain in August was the largest so far this year. As of August 31, 2007, our net worth, excluding house and car related items, was $563,073, a net gain of $22,144 or 4.09%, as compared to a month early.

The breakdown of the month is as follows.

• Credit card balance: The overall credit card balance was reduced by $1,269, or 1.27%, in August to a total of $98.969. While the credit card balance seems at a dangerous level, there’s nothing alarming as all but about $3,000 are borrowed at 0% APY from three credit cards (check out my post on how to make money from credit card arbitrage). I deposited all the money in my FNBO Direct account which runs a promotion rate of 6.0% till the 28th of this month. Last month, the borrowed money earned me $485 in interests.
• Cash: We also managed to increase our cash in August by $2,179 to $136,427, a gain of 1.63%, because I received three pay checks instead of two in the month. Since I move to this new job, my payday does not coincide with wife’s anymore. So now we have a check every week, making the management of cash a little bit easier.
  
• Taxable accounts: Once again, our stock investments came out as the biggest contributors to our net worth growth in August. As of August 31, the total market value of our taxable accounts is $281,464. Comparing to a month early, the net increase was $13,577, or 5.07%. And once again, China Life (LFC) was the main driver for the growth as the stock gained more than $8 per share. There were, however, also disastrous as well. For example, Xinhua Finance Media (XFML) lost nearly $1.35/share and Nortel (NT) kept dropping like a rock, losing more than $4 in a month.
• Retirement accounts: Though I didn’t participate in any 401(k) plan right now, I did receive more than $1,300 of company match from previous employer. That helped add a total of $3,236, or 1.48%, to our retirement accounts last month, which had a market value of $218,443 on August 31, 2007. I can start to contribute to 401(k) next month.
• 529 plans: Our daughters 529 plans saw a huge jump in August as I opened a new 529 account for our second daughter and immediately contributed $1,500. Now, we invest $300 a month to each daughter’s 529 account. At the end of last month, we have $10,123 in 529 plans.
• Bonds: Nothing really happened in our bond investments except the $100 monthly purchase of I-bonds, which are valued at $12,346 at the end of August. When the month began, I thought 4-week T-bill was getting attractive as the rates bounced back from recent lows. But that didn’t last long and the rates tumbled again in the past couple of weeks. I am in no rush to get back to T-bills as I still have about a month to keep my money with FNBO. Hopefully, there will be other options available at that time.

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