Last Week Stock Market Recap (September 11-15, 2017)

Last week, September 11-15, U.S. stocks reached new highs. The S&P 500 was up 1.6% and reached 2,500, which puts the S&P 500’s year-to-date earnings at 11.7%.

Last Week’s Stock and Bond Index Performance (September 11-15, 2017)

  • NASDAQ 1.4% (YTD 19.8%)
  • Dow Jones Industrial Average 2.2% (YTD 12.7%)
  • S&P 500 Index 1.6% (YTD 11.7%)
  • U.S. Aggregate Bond Index -0.5% (YTD 3.4%)

Last Week’s Retirement Portfolio Performance Report
(September 11-15, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost!) last week.

How Did My 401k Do Last Week?

Last week my retirement accounts matched the S&P 500 performance exactly; up 1.6% on the week ending Friday, September 15, 2017. This year, which is 260 days into 2017, my retirement portfolio is up 9.07%. So I am under-performing the “market”, e.g. the S&P 500 greatly (nearly 3%) as the S&P 500 is up 11.7% so far. On top of that, the Vanguard Target Retirement 2040 Fund is up 12.9% so far in 2017. This is my personal benchmark because I could invest all my retirement portfolio into one account or choose a number of index funds to diversify. I am doing the latter and this year I am losing to the 2040 Target Date Fund.

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. Through lots of reading and research on my part, I’ve found that a number of these assets classes “zig” when the market “zags”.

With that said, if I can beat the market I will absolutely take it (obviously)! Last year in 2016 my retirement portfolio returned 13.01% versus 9.54% from the S&P 500. In addition to the S&P 500, I like to measure my portfolio performance against Target Date Retirement Funds. I specifically like to use the Vanguard Target Retirement 2040 Fund (VFORX) because that is what I used to invest in before I went to all index funds. But if I can’t beat the Vanguard 2040 fund, then why not simply invest in it (one fund) versus the 10+ mutual funds I am in now? Well in 2016 the Vanguard 2040 fund was up only 8.73%. So it under performed the market (S&P 500) by nearly 1%, and I personally beat it by nearly 5%. So that tells me I am on the right track with my well diversified portfolio.




Millennial Personal Finance Blog

My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.

Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.




Cost of Raising a Child in 2017: 6-Month Old

How Much Does it Costs to Have a Baby?

My wife and I are first time parents and we are now 6-months into the “parenting” process. So we’ve made it halfway through year one…hooray us!

I made it a goal to track all of our child care expenses so I could truly report on the cost of raising a child. I invite all of my personal finance readers to follow along our journey as I diligently track all expenses involved in truly raising a child these days in middle class America.

Prior to us having a child I did some research and the consensus was that it costs roughly $14,000 per year to raise a child, which equates to roughly $240,000 (without college). Don’t get me started on how much college will cost for my child

So the consensus was from my research that it costs $14,000/annually to raise a child in 2017. Well, we are halfway through year one and we have spent just over $3,000 on our baby girl thus far. It is very early and she is still very young, but we are on pace to spend less than half of that $14k per year average. However, its obvious that what we spend in year one will (and should be) far less than what we’ll probably spend in, say, year 8 and/or 12 and beyond when expenses really rise to raise a child. But I like the pace we are on and currently setting.




How Much Does It Cost to Raise a Child?

We are six months in and thus far we have spent $3,093 on my daughter in total. We have lucked out and received a number of hand-me-down clothes and toys, as well as a ton of gifts and gift cards from our baby shower that are still holding us over.

Albeit, we’re about out of gift cards now. However, we are still going strong on the diapers we received via our baby shower diaper raffle. That was still a great idea, because I remember pre-child my biggest (expense) fear was the cost of diapers. I truly thought we were going to be spending like $100 to $200 a month on diapers. I was that naive to the costs of raising a child and how much diapers were.

Speaking of diapers, last month I wrote about how our baby girl was still in newborn diapers, which we were out of from our baby shower diaper raffle. Well, she has finally grown enough 6-months in to fit into the size 1 diapers that we have an abundance of. So we shouldn’t need to buy diapers for the next couple on months (at least).

Baby Swim Lessons

Outside of paying for our nanny last month, our largest child care expense in August was swim lessons. We paid $256 for 18 lessons, which equates to just over $14 per lesson. Each lesson is only 20 minutes.

We knew we wanted to start our daughter early in swim lessons to get her used to the water and truly enjoy it. She was just over 5-months old when she took her first swim lesson, and she actually wasn’t even the youngest in her class.

Thus far she loves the water, loves her lessons, and her mom and I enjoy alternating each week as we get into the pool with her for swim class. Its indescribable how much fun it is watching your baby play in a pool and back-float as a 6-month old infant. Worth every penny for the lessons.

Child Care/Nanny

We use a part-time nanny to watch our daughter two days a week. We consider ourselves very lucky though, as we have a nanny who comes to our house twice a week, a nanny our daughter loves, who really doesn’t costs us that much.

My wife is off two days during the week and then a family member watches her another day, so we only need to “pay” for two days of child care. We are 4-months in to paying for a nanny/child care, and have spent a grand total of $1,840.

Cost to Raise a Child in 2017: 6-Month Old

  • 1st month = $414
  • 2nd month = $105
  • 3rd month = $545
  • 4th month = $643
  • 5th month = $520
  • 6th month = $866
  • Since inception (March, 2017) = $3,093

 

August 2017
Item Price
529 contribution $50
Child care $560
Swim lessons $256
Total $866




Personal Finance 101: Save for College

In this personal finance 101 series I want to focus on college savings for our children. I am a Millennial and our generation is drowning in student loan debt. The average college graduate is finishing school with nearly $38,000 in student loans. That is crazy and its taking most of us Millennials one to two decades to repay that.

Open a 529 for Your Child

I was lucky enough to become a dad for the first time this year in 2017, and I knew I wanted to get a 529 account up and running ASAP. I don’t use this personal finance blog to brag, but I would like to say that I am thrilled to state that I made my daughter’s first 529 account contribution when she was just 6 days old.

My goal for this post is to encourage all other Millennial parents out there to begin saving now for their child’s college education. Don’t let your child be in the same debt the rest of us Millennials are in. This is your chance to create a better future for your child…a future with way less student loan debt!

Cost of College in 2035?

College is expensive and that is not news to anyone. The problem is most college tuition rates have been increasing between 6-10% each year…way more than inflation. The cost of college is soaring out of control! I anticipate my baby girl to attend college around the year 2035 and the calculations I received off a few future college estimator calculators is utterly shocking.

I calculated the cost of attending two different in-state schools in my state; the first is my alma mater, which unfortunately is the most expensive state university in my state. And the second is a quality in-state university, a much smaller university, but one that is far cheaper, while still providing a quality education. I love my alma mater, but I am absolutely leaning towards the latter (cheaper) in-state university.




In-State Public College #1 (Alma Mater)

Tuition and fees alone I expect to cost approximately $170,000 in the year 2035, if I want my daughter to attend my alma mater. This cost is for four years of schooling.

If I want to cover all expenses, tuition, fees, room and board, I expect that to cost roughly $310,000 in the year 2035.

In-State Public College #2 (Smaller and Much Cheaper)

Tuition and fees alone I expect to cost approximately $92,000 in the year 2035, for my daughter to attend a smaller, in-state university (which I am 100% on board with…and I am encouraging this school actually). This cost is for four years of schooling.

If I want to cover all expenses, tuition, fees, room and board, I expect that to cost roughly $111,000 in the year 2035.

How Much to Save for Future College Expenses?

I don’t know if I can afford to pay for all of my daughter’s college education, but I am certainly going to save early and often so that I can help her (and my wife and I) to avoid as much student loan debt as possible.

If we simply save $50/month for the next 18 years, I estimate that we’ll have roughly $23,000 to put towards my daughters education. It’s not a lot, but that is 25% of school #2…which is better than nothing!

If we can increase that to $100/month, we could expect $45,000 by the year 2035.

And if I can double that to $200/month, we could expect $90,000, which would pay all tuition and fees for school #2.




Stock Market Recap (September 5-8, 2017)

Last week, September 5-8, was a shortened week due to the Labor Day holiday, but stocks were down significantly in those 4 days the market was open. Stocks were lower on the week as political headlines and concerns surrounding Hurricanes Harvey and Irma weighed on investors. The U.S. government debt situation recaptured some of the market spotlight last week as President Trump and Congressional leaders crafted a budget agreement that offered federal finances for hurricane relief and an extension of the government’s funding and debt ceiling.

The debt ceiling debate is not new and will continue to grab headlines given the budget disputes in Washington stemming from the GOP agenda that includes tax-reform and infrastructure-spending proposals. The total U.S. debt is nearly $20 trillion, a figure that on its own appears worrisome.

The U.S. economy continues to show signs of being long in the tooth, as even the Bureau of Labor Statistics has acknowledged that employment growth has been slowing. We have an economy and a bull market that are both long in the tooth heading into what is typically the most volatile time of the year, on top of unusually high domestic and geopolitical tensions.

Last Week’s Stock and Bond Index Performance (September 5-8, 2017)

  • NASDAQ -1.2% (YTD 18.2%)
  • Dow Jones Industrial Average -0.9% (YTD 10.3%)
  • S&P 500 Index -0.6% (YTD 9.9%)
  • U.S. Aggregate Bond Index 0.4% (YTD 3.9%)

Last Week’s Retirement Portfolio Performance Report
(September 5-8, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost!) last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. I currently invest 15% of my income into my company Roth 401(k), and that doesn’t include the company match I get. All accounts are held with Vanguard (so as you can see I primarily invest in Vanguard funds because of this).

  1. Vanguard REIT Index Fund (VGSLX) 0.7%
  2. Vanguard Total International Stock Index Fund (VTIAX) 0.7%
  3. Vanguard International Growth Fund (VWILX) 0.3%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. Through lots of reading and research on my part, I’ve found that a number of these assets classes “zig” when the market “zags”.

With that said, if I can beat the market I will absolutely take it (obviously)! Last year in 2016 my retirement portfolio returned 13.01% versus 9.54% from the S&P 500. In addition to the S&P 500, I like to measure my portfolio performance against Target Date Retirement Funds. I specifically like to use the Vanguard Target Retirement 2040 Fund (VFORX) because that is what I used to invest in before I went to all index funds. But if I can’t beat the Vanguard 2040 fund, then why not simply invest in it (one fund) versus the 10+ mutual funds I am in now? Well in 2016 the Vanguard 2040 fund was up only 8.73%. So it under performed the market (S&P 500) by nearly 1%, and I personally beat it by nearly 5%. So that tells me I am on the right track with my well diversified portfolio.




Millennial Personal Finance Blog

My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.

Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.




How to Become a Millionaire?

How Long Does It Take To Become A Millionaire?

If you are a Millennial you’re lucky because you have plenty of time to achieve millionaire status. Years ago I finally gave myself a raise by creating a monthly budget and diligently tracking each and every expense. I was able to pay off debt with ease and pay myself first, for both retirement (long-term) and emergencies (short-term). This is why I finally set my sights on becoming a millionaire. A Millennial Millionaire, to be exact.

First off, it takes a long time to become a millionaire (stating the obvious here). But I want to say this first and foremost because you don’t get rich quickly or overnight. It takes time. In order to become a millionaire you must save and invest carefully over many years…decades actually. If you’re a Millennial in your 20’s or 30’s, it will realistically take you until your late 40’s (best case) or well into your 50’s and 60’s. The more you save and the sooner you begin, the better your chances are overall.




How Much to Save Monthly to Become a Millionaire?

The below calculations are based on an 8% annual return. The stock market has historically returned 10% over the last 90+ years, but I chose to go a bit more conservative with my projections and rounded down versus up. Most of us Millennials will be heavy in stocks, but we won’t be 100% stocks the whole time so 10% is going to be tough to achieve for decades straight.

And the good news is, if you get 10% or 12% returns, you’ll become a millionaire sooner!

  • $200/month = 46 years to become a millionaire
  • $322/month = 40 years to become a millionaire
  • $484/month = 35 years to become a millionaire
  • $735/month = 30 years to become a millionaire
  • $1,140/month = 25 years to become a millionaire
  • $1,821/month = 20 years to become a millionaire
  • $3,070/month = 15 years to become a millionaire

This goes to show you that it is relatively easy to save and invest over time, and slowly become a millionaire. The trick is saving regularly and saving enough. In fact, I think you have to save so much that its borderline uncomfortable for you. Push yourself and save more and more each year. You’ll be surprised at how addicting it becomes.

Also, working for an employer who matches your 401(k) contributions is a huge bonus. It is absolutely something to consider when reviewing/considering your next job/employer.

A Millennial’s Path to Millionaire Status

Last week I wrote about my path to becoming a Millennial Millionaire. See how long I estimate it will take my wife and I to achieve millionaire status.

 




Stock Market Recap (August 28-September 1, 2017)

Stocks finished higher for the second week in a row. Aiding the 2-week rise is a rejuvenated focus on possible tax reform and better-than-expected manufacturing data, and the fact the U.S. economy added 156K jobs in the month of August, while the U.S. economy grew by 3.0%. Oddly enough, the devastation brought from Hurricane Harvey in the Houston, Texas area, and continued geopolitical tensions with North Korea and the hydrogen bomb they set-off, did not disrupt the stock market much.

Last Week’s Stock and Bond Index Performance (August 28-September 1, 2017)

  • NASDAQ 2.7% (YTD 19.5%)
  • Dow Jones Industrial Average 0.8% (YTD 11.3%)
  • S&P 500 Index 1.4% (YTD 10.6%)
  • U.S. Aggregate Bond Index 0.1% (YTD 3.5%)

Last Week’s Retirement Portfolio Performance Report
(August 28-September 1, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost!) last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. I currently invest 15% of my income into my company Roth 401(k), and that doesn’t include the company match I get. All accounts are held with Vanguard (so as you can see I primarily invest in Vanguard funds because of this).

  1. Vanguard Extended Market Index Fund (VEXAX) 2.3%
  2. DFA U.S. Small Cap Value Portfolio (DFSVX) 2.1%
  3. Vanguard Small Cap Value Index Fund (VSIAX) 1.9%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. Through lots of reading and research on my part, I’ve found that a number of these assets classes “zig” when the market “zags”.

With that said, if I can beat the market I will absolutely take it (obviously)! Last year in 2016 my retirement portfolio returned 13.01% versus 9.54% from the S&P 500. In addition to the S&P 500, I like to measure my portfolio performance against Target Date Retirement Funds. I specifically like to use the Vanguard Target Retirement 2040 Fund (VFORX) because that is what I used to invest in before I went to all index funds. But if I can’t beat the Vanguard 2040 fund, then why not simply invest in it (one fund) versus the 10+ mutual funds I am in now? Well in 2016 the Vanguard 2040 fund was up only 8.73%. So it under performed the market (S&P 500) by nearly 1%, and I personally beat it by nearly 5%. So that tells me I am on the right track with my well diversified portfolio.




Millennial Personal Finance Blog

My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.

Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.




One Millennial’s Path to Millionaire Status

I have been steadily investing for a decade now. It took me approximately 7 years to hit the six figure club ($100,000). I have three accounts that make up my retirement investments; my work 401(k), a Roth IRA and my wife’s Roth IRA. My wife is self-employed so that is her only source of retirement savings at this point.

The Power of Compounding Interest is Real (Powerful)

We are now less than two years away from hitting the quarter million dollar mark ($250,000). The power of compounding interest is real…and I love every minute of it. We are closing in huge milestone dollar amounts.

I estimate that we will have $500,000 in our collective retirement accounts in the next 5-6 years.

Millionaire by 45?

I estimate that our million dollar day will be in roughly 10-12 years. That means my wife and I should be millionaires in our mid-40’s. That means we should have $2,000,000 in less than 20 years.




Multimillionaire by Late 50’s?

I believe we should be multimillionaires by our late 50’s, which means we would have more than $3,000,000 in retirement income. This is a long ways out and the markets are surely unpredictable, but without a plan and a goal, what do I have to aim for?

All of these assumptions are based off my current savings rate. I obviously plan to increase that each year, so in theory I should be able to hit my goals a bit sooner. But it is hard to anticipate future savings rate so I am going off what I know now…my currently retirement savings rate.

I strongly encourage all of my millennial readers to track their progress as well. Set little milestone victories for yourself as well. Try and hit $250,000 in X amount of years, then $500,000 in X amount years, and then finally $1,000,000 in X amount of years.




Stock Market Recap (August 21-25, 2017)

Last Week’s Stock and Bond Index Performance (August 21-25, 2017)

  • NASDAQ 0.8% (YTD 16.4%)
  • Dow Jones Industrial Average 0.6% (YTD 10.4%)
  • S&P 500 Index 0.7% (YTD 9.1%)
  • U.S. Aggregate Bond Index 0.2% (YTD 3.4%)

Last Week’s Retirement Portfolio Performance Report
(August 21-25, 2017)?

Below is a snapshot of my three biggest retirement portfolio mutual fund movers in terms of percentage gained (or lost!) last week.

The below mutual funds are held within my work 401(k) plan as well as two separate Roth IRA plans. I currently invest 15% of my income into my company Roth 401(k), and that doesn’t include the company match I get. All accounts are held with Vanguard (so as you can see I primarily invest in Vanguard funds because of this).

  1. Vanguard FTSE Emerging Markets ETF (VWO) 2.7%
  2. Vanguard REIT Index Fund (VGSLX) 1.9%
  3. DFA U.S. Small Cap Value Portfolio (DFSVX) 1.7%

Can I Beat the Stock Market?

I am actually not trying to “beat the market” with my retirement portfolio…I am trying to match it. I do have alternative indexes in my retirement portfolio to help possibly beat the market, e.g. Small Cap Value, REITs, International, and Emerging Markets. Through lots of reading and research on my part, I’ve found that a number of these assets classes “zig” when the market “zags”.

With that said, if I can beat the market I will absolutely take it (obviously)! Last year in 2016 my retirement portfolio returned 13.01% versus 9.54% from the S&P 500. In addition to the S&P 500, I like to measure my portfolio performance against Target Date Retirement Funds. I specifically like to use the Vanguard Target Retirement 2040 Fund (VFORX) because that is what I used to invest in before I went to all index funds. But if I can’t beat the Vanguard 2040 fund, then why not simply invest in it (one fund) versus the 10+ mutual funds I am in now? Well in 2016 the Vanguard 2040 fund was up only 8.73%. So it under performed the market (S&P 500) by nearly 1%, and I personally beat it by nearly 5%. So that tells me I am on the right track with my well diversified portfolio.




Millennial Personal Finance Blog

My goal with this Millennial personal finance blog is to show all Millennial’s that you have the power to take control of your personal finances through self-education and self-development on money and finances, and by striving to become financially literate. That is what I have been doing for years now, focusing on becoming an expert in financial literacy, so I can one day become financially independent. I’m trying to prove to Millennial’s that we can all do this and thrive with money. We Millennial’s have the greatest resource on our side to become financially independent and build wealth…time! Save, invest, and let compound interest do the rest.

Follow my blog as I highlight relevant personal finance and retirement topics pertaining to us Millennial’s. You can also join my journey as I track the true cost to raise a child these days. Most of my research shows that on average it costs $14,000 per year to raise a child, which equates to roughly $250,000 to raise a child from birth through high school (the cost of college is not included in this $250,000). I am trying to defy that price tag and show that a Millennial family can raise a child on well less than $250,000…or I will come to the sad realization that this number is dead on. Time will tell.