January 2008 Score Card — Part I: Net Worth

What used to make us, now broke us.

For a third time in a row, our paper fortune dropped after the broad market suffered deep decline in the first month of 2008. Our calculation showed that at the end of January 2008, our net worth, excluding house and vehicle related items, was at $551,521, down $56,600 from previous month. The loss of nearly 9.31% was actually the largest monthly loss since I started tracking our net worth in August 2006. Since reaching the peak at the end of last October, we saw our wealth on paper shrank by $107,983 in three months

Am I worried?

Not really! I am not the kind of person wake up in the middle of night worrying my portfolio. I did make some bad decisions on our investments and am usually not willing to take profits off the table when I should (a.k.a, being greedy), but in general, I feel the investment plan we have is solid, well-diversified. Despite the big loss recently, I have no plan to make any major changes, especially in our retirement savings.

Anyway, the breakdown of our net worth at the end of January is the following:

• Credit card balance: Our credit card balance went up quite a bit last month, mainly because of the holiday shoppings as well as some last minute donations I made at the end of 2007. On January 31st, the total credit card balance was $19,218, up $924, or 5.05%, from a month ago.
• Cash: Cash balance seems to be the only bright spot last month, gaining $2,258, or 3.55%, to a total of $65,960. This is a little surprise as I am not so sure where the gain came from because in January we started to make our 2008 Roth IRA contributions. The growth of our cash will slow from now as I began to contribute to 401(k) plan last month,.
• Taxable accounts: The biggest loss of the month, as previous two months, came from investments in our taxable accounts as all the Chinese stocks I bought dropped like a rock (check out the monthly Chinese ADRs update). The total loss last month was $45,973, which was a decline of more than 15% from December. At the end of January, we had $256,101 in various brokerage accounts.
• Retirement accounts: Money in our retirement accounts (401(k)s and IRAs) were mostly invested in low-cost index funds, therefore the performance in this category was much better than what happened in our taxable accounts. For the month, our retirement savings suffered a $11,820 loss
• 529 plans: January was marked as the first time that our daughters’ 529 plans returned negatively, despite the net $600 contribution. Comparing to December, the market value of the 529 accounts saw a drop of $278, which was about 2.18% less than previous month. On January 31st, the balance of 529 plans was $12,519.
• Bonds: Well, there’s no way we can lose money buying bonds (on face value of course). Last month, our bond value gained $138, or 1.02%, from interests and new purchase to reach a total of $13,084. Even though the return of this part is always positive, it’s still the least exciting category.

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