February 2005 Financial Status Update

Wow, I can’t believe it is February already! January was a blur, but here my current financial snapshot:


My assets grew only slightly, especially my retirement accounts. One big reason is a change in accounting methods for 401k reporting. I previously stated my entire balance including all unvested company matches, as this is what Yodlee shows. However, this is inaccurate since I am only partially vested in my company match, so I am correcting that now. On the good side, my debt did decrease by $848.

Other reasons for all this included the stale stock market this last month, some of my 0% credit card debt becoming due, and my $2115 of moving expenses incurred. After the dust settled, my net worth increased by $1097 since last month’s snapshot. My non-retirement funds now total $27,307, an increase of $1896. I am still a bit off pace of the $2555/month to reach my mid-term $100,000 goal. But the annual bonus comes this week, so here’s hoping!


  1. Jonathan-

    Great blog, and very impressive and logical thoughts given your relative newness to the topic!

    I work in finance, but in institutional research, so my knowledge of personal finance issues is slightly limited, but my grounding is pretty good. A couple of ideas/thoughts:

    1) My company has its 401ks with Fidelity. Fidelity has “asset allocation” funds which are indexed blends of stock and bond which have various “maturities.” That is, if you plan to retire in 2010, you have mostly a bond mix, and if you plan to retire in 2050, you have mostly a stock mix, and by 2045 the 2050-fund will look kind of like the 2010-fund looks today; they become more conservative over time. Sounds like an intriguing product and I would love to hear your thoughts on it.

    2) The academic and practitioner evidence suggests that, although indexing is better than most active investing strategies, there are a handful of “investment anomalies” that over the long haul produce above-market returns. Most importantly:
    a) small stocks beat large stocks
    b) cheap (high E/P) stocks beat expensive (low E/P) stocks
    and less importantly
    c) stocks with improving earnings estimates win
    d) stocks with strong balance sheets and high quality earnings win
    e) stocks with low levels of insider selling and short interest win
    f) stocks which have won over the last year, and lost over the last month, win

    (c) through (f) are hard to capture without incurring transaction costs. But (a) and (b) can be captured by overweighting small cap and value stocks even at the index fund level. One idea is to overweight (relative to most asset allocations) small and value stocks to take advantage of these established anomalies.

    3) Because I actively manage my equity portfolio to capture shorter-term effects like (c) through (f), I do more trading than a strategy like yours would do. As such I’ve used a service called folioFN (www.foliofn.com) which lets you do loads of trades per month at a flat annual fee. I really like it as a trading account for a small amount (a few K) of “play money” and recommend it for those who want to trade a bit.

    4) I agree with your thoughts on financial advisors. I’d also suggest that with a few hours’ commitment, many individuals and small businesses can come up with an asset allocation that makes sense and will beat what an FA will provide. The exceptions are FAs who provide more comprehensive services on tax management, real estate, insurance, and so on. I’m less qualified to judge those skills, though.


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