July 2007 Score Card — Part I: Net Worth

I am glad a tough month finally came to a close. Actually, July started quite nice, with the Dow hitting record high of 14,000 and S&P 500 crossing 1,550 for the first time. The first half of the month was very promising. Then things started to turn from bad to worse as credit worries weighed on stocks. For the month, the Dow lost 197 points, or 1.47%, S&P 500 skidded 48 points, or 3.19%, and NASDAQ dropped 57%, or 2.19%.

When I pulled all the numbers from our savings and investment accounts and put them together last night, it was a pleasant surprise that our net worth of July still came out positive, despite the huge market decline in the past 10 days. Without including house and car related items, our net worth in July grew $9,064, or 1.7%, to $540,929 compared to a month early.

For each category, the changes of the month are:

• Credit card balances: After I took another $49,000 from Chase early this month, our credit card balance bloomed to $100,238 on July 31st, an increase of $47,945 (91.74%) from last month. The overall number seems scary, but more than $97,000 is borrowed for free from three credit cards (Chase, Citibank, and Bank of America). Thus, nothing is really alarming here.
• Cash: The increase in credit card balance is reflected in the gain in our cash savings accounts, which grew from $78,095 on June 30th to $134,248 on July 31st. That’s an increase of more than 71%. So all the money I borrowed from credit card were not spent or invested. They are sitting in online savings accounts at FNBO and IGoBanking to earn 5.30+% return for me.
• Taxable accounts: The reason we could get a positive result for July is due to the appreciation of investments in our taxable accounts. For the month, our taxable investments added $15,684, or 6.22%, to $267,887 compared to a month early. Among the gains, $2,058 is from stock option with my previous employer. The rest then is entirely from the increase of the share price of China Life Insurance (LFC) which jumped $11 in July.
• Retirement accounts: We were not very lucky with our retirement accounts which are all invested in mutual funds. As the broad market declined, it’s almost a sure thing that these index funds suffered. At the end of July, our retirement investments lost $2,996, or $1.35%, to $218,443. The magnitude of losses is manageable. The fact that I didn’t contribute to 401(k) with my new employer also affected this part a little bit.
• 529 plans: Our daughter’s college savings accounts continued to do very well, adding $83 to $8,384. That’s good enough for a 1% gain, which entirely came from our $300 monthly contribution.
• Bonds: Last month, I emptied my Treasury Direct account as I totally stopped the 4-week T-bill purchase, though I continued to buy I-bonds. However, the interest rates of 4-week T-bills have recovered in recent weeks. The latest investment rate (APR) is at 5.16%. If the trend continues, I will have to give it another chance. On July 31st, we have $12,204 in bonds.

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