Up until December 2011, I did not have a dime in my retirement savings.
I lived in France for years, where individual savings are not a national sport and where retirement remains largely a socialized endeavor and a corporate benefit.
I used my savings to come to the US and take care of my family for the 4 months it took me to find a job.
And I guess I felt
young and thought, wrongfully, that I could focus on retirement later….until a passionate conversation with a good friend woke me up. That day, I decided to take my financial future seriously and start saving as much as I could.
I started small, putting $300 on my 401(k) in January 2012. I increased my contributions as much as possible, cutting them occasionally when I needed cash and increasing them when it was possible. After 3 years, I now look back and am proud to have accumulated close to $68,000…
It is still below where I need to be and the road to financial independence is very long, but I came a long way and feel now that I am on the right track. I can see my assets grow regularly with my monthly contributions, with capital appreciation, dividends and my employer’s 401(k) match. It really adds up, quicker than you think and that is a good feeling to have!
In fact, it has been such a eye opening experience that I became quite passionate about it. With the zeal of new converts, I frequently talk about it and try to make sure that my relatives, friends and colleagues are financially aware and do enough to prepare their future.
I was inspired by Dividend Mantra and his wonderful blog and decided to follow his example and communicate about personal finance and my own experience. I believe It is a topic of great importance that should be taught very early in middle schools and high schools and I cannot understand how little visibility it gets in our education system. Millions of people would benefit from understanding its concepts and having a minimum layer of financial literacy. To start filling this void, I believe that financial bloggers can play a positive role spreading their passion and their knowledge and educating the people around them.
I am now an avid reader of excellent blogs like Dividend Mantra,
In full disclosure, here is where I stand in terms of retirement savings. My Portfolio Value stands at $67,800.
It increased by 72% year over year. I expect this fantastic growth rate to slowly decrease as my portfolio grows and converge towards 35-40% in 2015.
I have the $100,000 milestone in sight but I don’t expect to reach that before the first half of 2016, unless the market really cooperates with me, which I don’t really care about because the only thing that will matter will be my returns over the long term, over the next 2 decades…
They say that the 1st $100,000 is the toughest (“a bitch” according to some). I confirm that it is taking some time and efforts ;-)…But I believe it is worth it.
My latest transactions were the following:
I bought 14 FB (Facebook) shares at $75.98, which I am feeling very good about. Over the last 3 years, Facebook has generated by far my highest return (close to 200%). I believe that the company is still reasonably valued (at $150 per user) given the fantastic progress they made in monetizing their platform and managing successfully the shift to Mobile.
I also introduced two new ETFs in my portfolio: 6 shares of VOE (Vanguard Mid-Cap Value) at $91.55 and 6 shares of VBR (Vanguard Small-Cap Value) at $106.88. My goal with this was to rebalance my portfolio with more Small and Mid caps (while most of my holdings are very large caps) and more value stocks vs. Growth stocks (towards which I tend to lean). Both ETFs hold a 5* Morningstar rating. Their costs are ultra-low (no brokerage fee and a net expense of 0.09%. Their PE is around 16, which for smaller capitalizations is historically reasonable. They both generate dividends in the 1.7 to 1.8% range. My intention will be to add to these positions regularly in 2015.
Thanks for reading my blog and Happy Mardi Gras folks!