July 2018 Net Worth Update

I guess it’s not really an update since it’s the first post.  It’s the “inaugural” net worth update.

Here’s how I allocate my assets:

After-tax Brokerage Accounts: $4,963,000*

IRAs, 401(k)s and Roth IRAs: $510,700

Home Equity: $436,500

Rental Home Equity: $281,600

Cash: $38,000

Beater Cars: $20,000

(Accrued Tax Liability: $150,000)

Annual Dividend Rate: $105,950

Total: $6,099,800

*net means assets in account less short stock or option positions.  So net value.

As you can pretty clearly see, I have most of our wealth allocated to stocks.  The stock allocation is even higher than it appears in these figures because there is some embedded leverage in the after-tax accounts.  I’ll explain that on a future post, but it’s not margin debt.

I hate having so much cash that isn’t working for me but I am trying to build up a cash position for 2019 taxes.  If it weren’t for that, I like to operate at less than $10,000 cash, or even negative cash if I can borrow from IB and lend to U-Haul and pocket a nice spread. 

Does my high allocation to stocks scare me?  Yes and no. I mean, there’s definitely some level of anxiety but I’ve run the numbers and feel confident that I can withstand any likely declines without having to sell anything.  And every day my positioning gets a little safer as I essentially sell market insurance over and over. You just have to be careful not to increase your downside exposure over time.  In other words, don’t be greedy.  As Buffett says, “it is insane to risk what you have and need in order to obtain what you don’t need.”

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