Goals

Managing $50,000 to $100,000 Net Worth Buckets

Gen Y Finance Guy Investing 16 Comments

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It wasn’t too long ago that I thought in terms of $1,000 to $10,000 buckets. As our income and net worth have grown, so too has my approach to thinking in terms of absolute dollar buckets. As we work our way towards a seven-figure net worth, I can’t help myself but think in terms of $50,000 to $100,000 buckets now.

I recently reported our net worth at $664,391, which is broken down into the following buckets (slightly different composition then my December financial report indicates since I have deployed some cash since then):

(1) Equity in our home at $180,409 ($450,000 Market Value – $269,591 Loan Outstanding)

(2) Company Stock $105,045 ($317,045 market value less zero-interest loan of $212,000)

(3) Cash at $103,081 (Cash minus outstanding credit card balance)

(4) Mr. GYFG 401K $82,762 (99% of this is sitting in money market)

(5) PeerStreet $82,539 ($72,539 in self-direct IRA and $10,000 in after-tax account)

(6) Life Settlements $30,000

(7) Mrs. GYFG IRA $22,687 (AT&T, SQ, and about $1,800 cash)

(8) Rich Uncles $25,000

(9) Health Savings Account $12,719 (All Cash)

(10) Other $20,149 (Cars $10,000, Gold $6,526, P2P $2,900, Money Owed to Me $723)

Given this net worth composition to start 2018, there are a few areas that I would like to focus on increasing to either $50,000 or $100,000. Based on my 2018 goals that I shared a few weeks back, I have to invest/save a minimum of $170,000 to meet my net worth goal of $825,000. Take note that I always set net worth goals that exclude any assumptions for market gains or declines and instead only count the contributions I will make from income earned in the GYFG household.

There are four buckets that I plan to focus on during the first half of the year:

Mr. GYFG 401K – The current balance of this is $82,762 and I would like to front-load this in Q1 to get it to $100K. I have changed my contribution percentage to ensure that this will happen in Q1. Most of this will be funded through my bonus that is paid in February.

PeerStreet – I have become very fond of the hard money lending space. The plan is to contribute about $17,500 in Q1 to bring the total invested through the PeerStreet platform to $100K.

Life Settlements – This is another new alternative asset class that has really intrigued me. I love the fact that this asset class has zero correlation to the financial markets. The plan is to contribute $20,000 to bring the total invested to $50,000 by the end of Q2.

Rich Uncles – This REIT pays a 7% monthly dividend and invests solely in commercial property. The leases are triple net (meaning the tenant pays for everything) and long-term (5-10 year lease terms) with Fortune 500 companies. All properties are purchased with at least 50% cash, which is a risk mitigant that I like very much. The plan is to invest an additional $25,000 in Q1 to bring the total to $50,000 by the end of Q2.

This equates to investing a total $91,000 by June of 2018 ($15,167/month on average).

The other variable that I try to manage is our home’s equity as a percentage of our total net worth. It currently clocks in at about 27.1% of our net worth and I would like to see this under 25% before the end of the year and our next lump sum payment, which is a part of our seven-year goal of paying off the mortgage early.

How do you manage your net worth buckets? What goals do you have for the first half of 2018? What are you most bullish about in 2018? What are you most bearish about in 2018? Any new alternative asset classes that have your attention?

– Gen Y Finance Guy



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Gen Y Finance Guy

Hey, I’m Dom - the man behind the cartoon. You’ll notice that I sign off as "Gen Y Finance Guy" on all my posts, due to the fact that I write this blog anonymously (at least for now). I like to think of myself as the Chief Freedom Officer here of my little corner of the internet. In the real world, I’m a 30-something C-Suite executive. I am trying to humanize finance by sharing my own journey to Financial Freedom. I believe in total honesty and transparency. That is why before I ever started blogging, I decided that I would share all of my own financial stats. I do this not to brag, but instead to inspire motivate, and also to hold myself accountable. My goal is to be a beacon of hope, motivation, and inspiration, for you, the reader, by living life by example and sharing it all here on the blog. My sincere hope is that you will be able to learn from me - both from my successes and my failures! Read More

Comments 16

  1. GYFG, your bucket-game looks strong. As always, your clear reasoning and explanation is appreciated for your decision process. Some thoughts…

    1) Liking emphasis on contributions, rather than assumed gains/declines. Savings is truly the only thing within your control.
    2) Am a big fan of front-loading 401(k) contributions for the year. For me this did two things: hedge against an ‘event’ (i.e. layoff, health issue, maybe you will add a family member and take Mrs. GYFG out of the savings equation, etc.); and put the money/company-match to work asap, even if it is to pile up in cash because you can put it to work that much sooner.
    3) The bucket-plan you show looks like you have set it up so that you can spend minimal time ‘managing’. This is just great, as you have that time to spend on the other things in your life that you value.

    1. Post
      Author

      Hi JayCeezy!

      I agree that we should only focus on those things that are in our control, which is why I only focus on the savings/contributions piece of the formula.

      These buckets have been set up in a way so that it will take minimal mental bandwidth in 2018.

    2. I am going to piggy-back on JayCeezy’s comments because they were spot on.

      Quick question – why and for how long has the $82k in the 401k been sitting in a the money market? Is there a strategy to deploy this into market funds?

  2. I’m waiting for the day I think of my net worth in 1MM buckets. 😉

    For 2018, I’m aiming to hit the rough guidelines for financial “equilibrium” as outlined by Thomas J. Anderson’s book, The Value of Debt. That means holding off on paying down my 2xincome mortgage until my liquid assets equal the value of my mortgage. Right now, home equity is like 60% of my net worth, which feels very uncomfortable.

    I’m currently phasing out of P2P lending. If I were an accredited investor I’d dump the money into solar bonds. Since I’m not, though, the money is just going to index funds.

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      Author

      You and me both!

      I think it is smart to manage the amount of home equity that makes up your net worth, at least until you can fully pay it off. I will have to check out The Value of Debt book you mention.

      I’m with you on phasing out P2P. I have about 11 months remaining before my P2P accounts are closed out. I am holding these balances in cash, which is now less than $2,800.

      Cheers

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      Author
  3. I’m continuing to believe that 2018 will be a good year for the stock market. This is due to the new tax cuts for corporations which can result in increased revenues and business growth. Therefore I want to have my largest bucket similar to yours (in my 401k and spouses 401k). Following that, funds in brokerage account – maybe a small cap index fund since that may have the most potential for long-term growth 🙂

  4. I’m still not sure I understand the reasoning of trying to time the market given that it is almost nearly impossible to do so especially considering that 401k money won’t be utilized for a long time .

    1. Post
      Author

      Eric – It’s a character flaw of mine, thinking I can Time the market. I have a hard time with liquid investments.

      But the short story is that I don’t like current valuations and would rather sit on the sidelines waiting for a correction and miss out on any potential upside left in the market.

      I will either look like a genius or a fool…I don’t care either way. I’m acting on my own thesis.

      Dom

  5. You certainly have a lot of dry powder! I am quite the opposite..rather fully extended. It has been working for me thus far as I have seen my net worth sky rocket from Jan 1st $720k to Jan 24th $775k, quite awesome to see the net worth working immensely harder than me and my wife are

    It’s pretty important to think of net worth in buckets actually, as there are many goals to achieve that often require utilizing different resources. Right now I just have 2 buckets basically, my condo, and the market. Ultimately I imagine my stock market investments will make up 90-99% of my total net worth, as it is what I understand the best, it currently sits around 58%. I do not see a huge need to diversify away from this as my spending power will increase and decrease with the rest of the economy, AKA I won’t be falling terribly behind regardless of what happens. I do appreciate that finance is personal and there are endless ways to reach the ultimate end goal. I always say just stick with what you’re most comfortable with and won’t make any knee-jerk reactions.

    Best!
    Sean

  6. Did I read correctly that your Rich Uncle’s REIT is paying a 7% monthly dividend? So $1750 per month, $21k per year from a $25k investment? Am I missing something?

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      Author
  7. Pingback: The Easiest Side Hustle: Invest in Commercial Real Estate and Earn Passive Income Every Month (I've Invested $50,000) - Gen Y Finance Guy

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