September Wrap Up

leafIts my favorite time of the month! The time when I get to check in with our investments and see how much we’ve made over the month. It is the time when I also calculate all of our expenditures to see exactly where our money went so we can make any changes if needed.

The market has definitely slowed down, but I will leave it up to those who delight in analyzing market trends to explain why. The part that I care about is how it affected us. Over the course of September, our investments grew 1.39%. That is nothing to shake your hat at (is that really a saying? I feel like I’ve used it before but as I write it, it just looks ridiculous). To put it in perspective: if we were to always have that kind of growth, we’d be making 16.68% interest for the year. Considering our retirement calculations are based on making 7% per year, that kind of growth is amazingballs (wow – I am full of the totally dated sayings today. I can just feel Tiny Eivy rolling her eyes at me).

Unfortunately, not all of our accounts realized that kind of growth. Oh, this is going to hurt to talk about but I preach celebrating mistakes so here goes.

Before I knew anything about investing or savings or the difference between a 401k and a regular taxable investment account, I knew that I wanted to reach financial independence early. So, I did what everyone else does and met with a financial advisor. Now, I wasn’t totally clueless. I did my research on this woman and she was good. Not only did she know her stuff but she was kind and fun – the kind of person I wanted to hang out with and still do! I love this woman. Which is part of the problem.

Overall, it is almost impossible to beat simple passive investing in the total stock market through Vanguard. I’m going to say this one more time because it is super important: Overall, it is almost impossible to beat simple passive investing in the total stock market through Vanguard. My expense ratio for the total stock market is .05%. That is amazing. That is essentially the fee that I pay to Vanguard so that I can invest. Any financial advisor is going to have to charge quite a bit more than that. Usually in the realm of 2% which means that my investments with an advisor need to make 1.95% more than my investments in the total stock market just so that I could make the same return. On top of that challenge, studies have found that most investors (the financial advisors who create mutual funds and invest your money for you) fail to get a return higher than simply investing in the total stock market. Ouch.

Which brings me back to this amazing investment advisor who I have been working with for the past 5 years. Partly because she is my friend and partly because I was curious if all of these statistics were true, I’ve kept my initial investments with her. I started tracking the return I was getting on my investments in the total stock market vs her investments.

Over the course of 10 months, my return has beat her return every month. September was the most striking. While my investments returned 1.3%, hers returned -0.1%. Ack!

Now, believe me, I understand that the market is based on general trends and even looking at the data on a monthly basis is such a small slice of information that it is almost meaningless. But, ouch! I think I’m going to have to get my money out and invest it myself, but it is so hard for me to do this!

So, how did we do in September? We did alright. We had several large medical expenses – including a bill for a service that happened over a year ago. Gotta love that medical system! We also booked a trip to Disneyland which sounds much more extravagant than it actually was. A couple of times a year, Adam’s work (Disney) pays for his airfare and hotel to travel to Disneyland to talk about all that tech stuff he does here with the team there. Couple that with super cheap flights ($250 for BOTH Tiny Eivy and me to fly round trip) and free passes to the park (thank you Disney benefits), and you have a recipe for a super fun super frugal vacation.

We also didn’t have to pay a mortgage this month for the first time ever! Hooray! So, overall, we managed a savings rate of 70%. Not too shabby.

I’m really looking forward to seeing how we do next month. Our biggest spending category is always groceries. For the month of October we are trying something new: cook for a month. I went grocery shopping yesterday and spent about $100 on food which I then used to prepare 12 meals that we put in our freezer. I’m hoping that with leftovers and just buying veggies to go with the meals, our food budget will be drastically reduced. Although, we will be spending a week in Disneyland so who knows how it will all turn out. I’ll keep you posted.

How did you do in September?