Happy New “One More” Year

2018 has been a very disappointing year for my portfolio. I assume that must have been true for a lot of folks like me going with passive index investing.

For me, the whole mess really started around February. I know that officially we entered bear territory around December, but as far as I’m concerned, my graphs are clear: it’s been terrible since February, and only my high savings rate allowed me to compensate for the otherwise massive loses in my eggs nest. I’m basically back where I was in January last year.

2018 was also a year when my wife and I started to disagree significantly on some financial goals. My proposal that kids should “fend for themselves” when it comes to university costs in the future was met with a scoff, and we certainly are not seeing eye to eye on the “need” to buy a car or a new sofa. I might have set an aggressive bar for our yearly expenses, and loosening a bit on some of these aspects could help my marriage.

In 2018, I’ve also realized that the closest I get to financial independence, the less interest I have in my side gig. Although it’s still bringing in some money, I now understand that I should not rely on it as part of my financial independence plan.

As a result of these multiple adjustments, in 2018, my “number” moved significantly higher.

This was not originally going to be a problem, since, financial independence or not, I have been chained to my desk “one more year” due to a stupid clause in the mortgage I took earlier on our yet-to-be-built house. Long story short, to secure the loan, I have to still be employed at least until mid-2019.

I thought this would bring me very close to full financial independence without needing my side gig at all, but then the last months of 2018 came and destroyed that.

Of course, I’m taking the “glass half full” approach here: for one, I’m now glad I did not pull the plug back in August as was initially my plan: The second half of 2018 would probably have been extremely stressful to me if I had left my job then. Right now, it’s just annoying as it seems to be pushing the date further for me.

Our house is planned to be built by the end of June, and at this point it would take significant market performance for me to reach my target by then. Not “never seen before” performance levels, but still in the double digits for 6 months (in addition to maintaining an insane savings rate), which, given the current expectations for 2019, doesn’t sound super likely.

2019 could even turn out to be a terrible year for my portfolio, which would definitely push me into the “one more year” territory once again. Glass half full approach here again: the Shiller CAPE would then probably be down to more reasonable numbers, which intuitively and historically means I would have better chances of not depleting my portfolio in the long run. In other words, I’d rather meet my target around a “bottom” of the market rather than at its high.

Unrelated to anything above, but a special shout-out to Ben at retirejapan.com (formerly retirejapan.info). I love the Monday read articles. Haven’t commented there in a while, but I still follow religiously!

Happy new “one more” year to everyone on the FI path, in Japan or anywhere else!

  1. RetireJapan
  2. Mr. Tako