Although this is not even close to being our first move–not our first rodeo, in the colloquial–my wonderful wife and I are overwhelmed. One complication is the fact that because I refused to share the pre-purchase home inspection report with our insurance company, they are insisting that we do a quasi-inspection with an app used primarily for contractors. I just have a bad feeling about that process.
Even though the Federal Reserve and other central banks have hurt the value of our fixed-income investments by raising interest rates (higher yields mean lower bond prices), we are still doing very well in that investment class. Yes, I might break my arm patting myself on the back here.
Since January 1, 2009 our fixed-income investments have returned an average of 6.7% per year. Our brokerage company uses the Bloomberg US Aggregate Bond Index as its benchmark. In the same time period that index has had an average annual return of 2.5%.
Since 40% of our investment portfolio is in fixed income, it should be no surprise that our entire portfolio has exceeded its “expected” return (weighted by asset class allocation) by 170 basis points (1.7%) per year for the last 14 years. I had been reluctant to check this data and had not done so since before we moved to Arizona in 2020.
In case you’re interested, or even if you’re not, besides the 40 percent in fixed income our allocation just with our brokerage company and not counting other assets is 40 percent large cap equity, 5 percent small cap, 10 percent international and 5 percent cash. Again, we have cash and other assets outside our brokerage company. Small cap stocks are the only asset class where our investments have significantly under-performed their benchmark. By the way, our brokerage company makes all of this information available on its website; I didn’t really have to do more than a few calculations.
Since becoming totally debt-free more than five years ago, I have somewhat changed our main investment objective from maximizing total return given our risk tolerance to increasing the amount of income from our investment portfolio. That has changed some of my “rules” for buying bonds. In addition, our fixed income allocation has increased in that time and made our investment value especially vulnerable to the actions of central banks. However, we are still receiving a healthy amount of annual income.
Remember that, although the dividends paid to holders of common stock are usually relatively safe, any company can decrease or eliminate its dividend at any time. A bond is a contract that obligates the issuer to make payments of a known amount on a fixed schedule. In the event of a company bankruptcy, common stock holders are usually left with nothing while bond holders usually receive something.
OK, that’s enough on that topic. I guess I have to write the disclaimer that since my FINRA licenses expired years ago and since every person’s risk tolerance/objectives are not the same, all of this exposition is not intended as advice.
I have to show a couple of pictures from inside the Goose Bumps house.
Looking at the photos in the editor makes it apparent that they are a little tilted. Of course, I am very tilted.
The top photo shows what we call the “bedroom hallway” as three of the four bedrooms are located there. The door to the master bedroom is a few feet behind me. The bottom photo is the front door from inside. As best as I could measure, from where I stood to take the photo to the door into the laundry room (the open door at the end of the hallway), the distance is 50 feet (about 15 meters).
My wonderful wife would like just to twitch her nose and be done with all of the unpacking. I am not a fan of this part of the move, but it’s really the last part so I can see the light at the end of the tunnel and doubt it’s an oncoming train.
My posting schedule will probably remain erratic for awhile. We have a lot of vendor visits in the next week or so. Please bear with me and please don’t forget this blog. Many thanks.
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5 thoughts on “Sunday Update”
Good to hear you’re getting settled and slowly getting your possessions in order. IF I were to move again, still undecided, it WILL be my last move. Another reason to rethink moving has reared its ugly head, health issues. I have unfortunately had to spend quite a bit of time at my primary physician in the last 12 days, plus an initial visit with one specialist. Even worse, I have appointments with 3 MORE specialists. Seems like there are several issues that are showing up all at once, 2 perhaps 3 are related to each other. Based on what each of these specialists determine, will show what direction I will go. At least one of the problems IS hereditary, and the treatment is NOT pleasant, nor guaranteed.
At least my investments have done well over the years, so affording these specialists isn’t an issue. I have known folks for whom it IS an issue and some end up forgoing the treatment, only because they couldn’t afford it. Even with insurance the costs can be eye watering. My last hospitalization, and doctor visits when I wrecked High Times, resulted in “out of pocket” cost of right at $13K and that is with “good” insurance. The year before when I was hospitalized with the blood infection had “out of pocket” at just over $19K.
A fella could buy a pretty nice car with that kind of money.
Only hope for the best for you, DDM.
I will pray for you regarding your health issues. Stay safe and make wise decisions.
Love the front door. It will help you see the “creepy crawlies” before you exit. I’ll send you a picture of why you should look outside before you exit.
Thanks, Philip. It’s a real steel door, not a flimsy wood one.