Beginning in July, I committed to a goal of increasing my net worth by 46% this year. This goal is ambitious, but I think it should be achievable with some careful budgeting and a little bit of help from the markets. You can read about my progress in July here. Today I’ll share the progress I made in August.
Between August 1, 2015 and September 1, 2015, my overall net worth dropped by 5% (ouch!). My cash savings dropped by 3%, my non-retirement investments dropped by 4%, and my retirement investments dropped by 6%. As you can see from the chart below, this puts my cash position right in line with my goal, while leaving my non-retirement investments as the area needing the most growth.
Why did my net worth go down (again!)?
This is the second month I have been tracking my net worth and working towards an ambitious goal. It is also the second month that my net worth has gone down. What’s going on?! Well, this month, I mostly have the markets to thank. As I’m sure everyone is aware, the markets experienced something of a correction this month. As a result, all of my investments went down in value. Because I have held some of my investments for quite a long time, I’m still “above water” so to speak on certain investments (meaning their value today is greater than the amount I paid for them), but overall it is still not a pretty picture.
I’m trying to keep my head up and carry on with working towards my goal. I always try to focus on how I can be proactive and prevent disappointments from happening again in the future, but in this case there is nothing to be done. I know that I am better off investing than hoarding my cash (which carries a huge opportunity cost), and market corrections are just the price of playing the game. Also, to quote from myself last month: “While these market fluctuations impact my investments in the short term, I’m in it for the long haul and over time these fluctuations should even out. Of course I would like to see the markets go up instead of down, but there isn’t anything I can do about this and in the long term it won’t impact my investments whatsoever.”
I did do very well on my budget this month and came in under on nearly every category. (I had some cash balancing to do with BF after our European adventure, which is why my cash holdings went down despite my budgeting success.) This is great news and I am hopeful that I can continue this trend so that at the very least my cash position will continue to improve and I can put more money into investments in the next few months. This is perhaps the silver lining of a market correction: lower stock prices mean that I can buy in lower, which will benefit me in the long run!
How did August treat you? Did the markets hurt you as much as (or more than) they hurt me?