November 2007 Score Card — Part I: Net Worth

It’s that time again and what I am looking at is not pretty, as expected.

November turned out to be a very tough month for investors as both the S&P and the Dow had the biggest monthly decline in five years. Despite the second rate cut by the Fed in as many months, concerns over subprime mortgage related losses persisted and consumer confidence took a hit amid record oil price, slumping home value, and falling stocks. For the month, the Dow dropped 4.0% to 13,371.72, the S&P 500 lost 4.4% to 1,481.14, and the NASDAQ tumbled 7.0% to 2,660.96.

Our paper fortune also suffered a big loss last month from the stock markets, which literally knocked our net worth back to where it was at the end of September. Comparing to October, our net worth declined $44,787, or 6.79% to a total of $614,716, excluding house and automobile related items, the first month-to-month lose since I started tracking one and a half years ago.

At the end of November, our investable assets look like the following:

• Credit card balance: The credit card balance went from more than $94,000 at the end of October to $19, 367 last month as I paid off two 0% balance transfer offers (one from Bank of America and one from Chase). Among the total balance, more than $16,000 is from a Citi card 0% BT offer which will expire in February. Last month, our spending went up quite a bit after several big-ticket purchases though we didn’t buy anything on Black Friday.
• Cash: As our credit balance shrank, our cash balance went in the opposite direction as the equal amount was removed from our bank accounts to pay for the credit card dues. On November 30, out total cash balance is $65,646, down $71,483 (52.13%) from a month ago. I am thinking of getting another bank account (probably from AmTrust Direct) as both IGoBanking and FNBO Direct, the two that I am using, now lags in rates. The problem is current rates may not last as another rate reduction is increasingly likely in a week.
• Taxable accounts: Our taxable investment accounts received a one-two punch last month as Chinese stocks performed even worse than general markets. What used to be the engine of my net worth growth for months became a big drag in November. China Life (LFC) alone lost nearly $20 in a month, contributing more than half of the total loss in market value last month. As of November 30, our taxable accounts had $308,145, down $40,360 (11.58%) from $348,506 at the end of October.
• Retirement accounts: Since we use mostly diversified index funds in our retirement accounts, the drop in our 401(k)s and IRAs was rather moderate. At the end of November, our retirement accounts had a total of $235,193. Comparing to one month ago, the market value of our retirement accounts declined $7,943, or 3.27%, to $235,193.
• 529 plans: Well, the only bright spot on my spreadsheet is our daughters’ 529 plans. For the month, the change in 529 accounts came out a positive $183, or 1.52%, though we contributed $600. At the end of last month, we have a total of $12,291 in four 529 plan accounts.
• Bonds: Since all our bond holdings are currently in I-bonds, which we are still buying $100 every month, it’s not surprising that this category also saw positive growth in November. For the month our bond investments gained $179, or 1.42%, to a total of $12,807.

As 2007 enters its last month, I hope the stock markets can bring all investors some Christmas cheers in the end

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