Counting The Marbles

The personal finance blogging world is filled with three categories of people who put out good content:

Jim Rogers is clearly Category A, but does he even blog?

A)  People who are open about both their net worth and their identity.   They track their net worth vigorously and update frequently.   They also post their pictures and their family’s including their travelogues.   These blogs generally have a much higher readership, understandably, because this is about as transparent as you can get.  A reader sitting 10,000 miles away knows as much about you as a neighbor or a friend.   These bloggers provide an excitingly vicarious experience for readers.   This is liberating and also, bold in some ways.

Category B:  Either you see me or my numbers, but not both!

B) This category involves bloggers who make a very clear choice between net worth or identity.   Some believe it is better to be open about who you are but not how much you make or have.   This type of folks imply they are financially independent or retired early (FIRE) but don’t share numbers.  They focus more on life, travel and family experiences in their blog – plenty of pictures are included.  Readers know their names, places and even bond over shared experiences.   This is a friendly, socially-active group of PF bloggers.  They generally have a strong, loyal readership as well.

Another type within this category believes that in the world of personal finance, it is better to be open about net worth but guard their identity so that people who know them in real life don’t know their financial status.   This category of bloggers also have a strong readership base, because all FIRE enthusiasts want to learn real stories of people who have made it or are trying hard to get there.   So, the numbers make it real even if you don’t know the person behind the numbers well.

Category C:  Channel Yoda, but show neither the face nor numbers

C)  The third category includes bloggers like me who have chosen to mask both their identity and net worth data.   There aren’t many in this category but clearly, this group generally has less number of regular readers.   It is easy to understand why. 😉  

Besides, it is enormously difficult, as I have learned, to build readership growth when you are both anonymous and share no “credentials” on personal finance.   Ten Factorial Rocks has so far belonged in this category.  

Despite that, I am grateful for the unexpectedly high readership statistics this site has seen in the first year.

But no longer….

I have been talking to a good friend of mine, Brian, who is the CEO of a successful company.   Brian is a man I respect immensely, and he is also the guy who graciously wrote the foreword to my e-bookThe Four Secrets, which I offer to those people who consult with me.

Brian advised me that to build credibility as a personal finance “coach” in the online world, it is better to share net worth data instead of identity so that more people are inspired to follow the FI journey. He said it makes all my articles have more impact, knowing it is coming from a guy who’s been there and done that.  After thinking about it, I realized he is correct.   There are too many personal finance posts on the internet with too many claims and ‘how to’s by authors who have questionable credentials.   While the content itself is a good filter on quality, specific information on finances helps indeed.   

Importantly, if you want to grow your net worth or even aspire to get to a seven figure net worth someday, who do you want to take advice from?  From someone who has accumulated a sizable net worth after having traveled the path or from a ‘salesman’ in the garb of a financial planner?    

Besides, having chosen a net worth target as the site’s name, I realized this needs to happen anyway one day or another.

So, I have decided to share my financial data with you all, while continuing to remain “Mr. TFR”.

Here we go!   The TFR Net Worth Data:

There it is, the BIG reveal!  (click to enlarge)

Some explanations are in order:

  • Net Worth considers the payments remaining (~$64K) on our future retirement home because it is a commitment that must be completed (it’s a nice 3-bedroom condominium in a large Asian city, which will be ready by middle of 2018).  It does not include the budget for Junior’s higher education or the major vacation line item as they are only a provision for now.   Until we retire, the new condo will be rented out, and I have put a conservative rental figure just to estimate potential passive income.
  • The provision of $200K for Junior’s higher education is purely a budgetary figure, so hopefully, it won’t cost that much!  The assets clearly earmarked on Junior’s name are at $68K (all in stock index funds) but we will supplement this with other assets for college. We didn’t want too much money sitting directly in Junior’s name, as that may disqualify him from some financial aid opportunities.
  • Stocks are primarily my dividend growth stock portfolio, a few index ETFs and about $100K worth of private/angel investments that I have taken at cost (to learn more, see here).   My stock portfolio is on track to generate passive income of about $47K for the year 2017, about 10% more than in 2016.  
  • Bonds are focused on emerging markets and other developed countries, and I have zero US bonds.   The interest rate is therefore a bit higher than equivalent tenure US bonds, but volatility is also higher with emerging market bonds.
  • Cash holdings (I include some short-term bonds here) are simply those waiting for investment opportunities, and to pay for the $64K in our future home’s outstanding balance.   I have chosen to buy the condo without taking any loan because it is a ‘pay-as-constructed’ deal spread over 4 years (common in Asia) so I could pay it off with job savings.  In case you are wondering why did I not take advantage of low mortgage interest rates, remember they only apply for properties in the U.S.   American banks don’t offer attractive interest rates for properties in Asia, and the banks in Asia charge high interest rates and bury you with paperwork before they process your mortgage application.   Once the condo is paid off, the cash holding will be kept at no more than 1-2 years of living expenses but even that I may reduce to zero when opportune times come in the market.  
  • Investment real estate refers to six small home sites in Asia (sorry, can’t get into more specific location), in ‘bite-size chunks’ if you will, that can be sold off individually to hedge currency risks in the future.  This is important as we plan to spend significant time there.   I have covered this idea in more detail here.  You may observe that this line item shows no change in value from a year ago.  That’s because it is hard to get frequent updates on value of investment land in Asia, but I am confident that my estimates are on the lower side by 10-20%.   
  • Total passive income from all the different asset types is estimated (from 2018 onwards) at $66K.  In the location of our choice in Asia, this will easily cover all our estimated living expenses and then some.  However, since we are planning long stays in both U.S. and Asia with significant travel in-between, we wish to have $100K in annual income, so currently my passive income covers only 2/3rds of our desired income.
  • The 2.6% that you see as my passive income ratio is a ‘blended average’ of all the passive income divided by all the financial and retirement home (imputed rent) assets.  I track this purely for informational purposes, and to check how much leeway I have in increasing my passive income.   For example, if I trade a zero-yielding but fast-appreciating asset (like Alibaba stock, held only for price appreciation) to a cash-flow generating asset (like a dividend stock).  
  • There is nothing special about the Sept. 2016 reference point in the table.   I just wanted to include a previous reference figure to show progress – I don’t calculate net worth frequently as many bloggers do.  I update barely every few months or so, though the figures change daily.   Clearly, the last one year has been good in the markets, so that combined with my savings, have delivered decent portfolio growth.
  • On the net worth front, we have crossed the $3 million milestone for the first time.  We are currently at 83% of our $10! goal.  Put another way, we are 17% short of the goal, so the grind continues….
  • In case you are wondering, we qualify as a prodigious accumulator of wealth (PAW) as per Prof. Stanley’s formula.  This indirectly means our current household income is much lower than what our net worth would predict.  This is a result of several factors, which probably deserves its own post.

Just your average millionaire.

In real life, I fit the basic profile of a typical interviewee in Prof. Stanley’s book “The Millionaire Next Door”.   I drive a 3 year old mid-level car, live in a spacious but not luxurious rented house, my son’s school is far from fancy and we eat out once a week in average but decent restaurants or take-out places.  

We keep an overall tab on our spending but don’t watch daily expenses like a hawk (that would be miserable for me).   Besides, it’s doing the big things right that matters.  All these assets have been built brick-by-brick, through years of diligent saving, sensible frugality and patient investing right through the dog years.  We have a maid to help us with some household chores and we also have a loaded cable package, so we are not exactly ‘frugal’ by some definition.  The purse strings have loosened a bit recently but it didn’t start out this way! 

I have never felt rich, may be because I had a different experience of the 1% growing up.  I remember all the ‘sacrifices’ it has taken to get here, but having seen middle class life in Asia and Africa, I realize the people who consider themselves middle class there may not agree with what is considered ‘middle class’ in North America or Western Europe.  

So, what are the ‘sacrifices’ I am talking about?

Buying only used, fuel-efficient cars (even after I entered management), living in modest rentals, buying the cheapest bulk laundry detergent, buying used toys, carrying leftovers for lunch or even extending into two more meals, bulk buying of on-sale beans and noodles, reusing grocery bags for garbage, buying clothes at Wal*Mart or K-Mart, picking up old TV and couch thrown on the curbside of mansions, rooming with three others to split rent (in grad school), re-purposing old, chipped furniture for new uses using Quikfix (old end-table becomes a new TV stand!) and…..

…pursuing hobbies that were free of cost, rare driving vacations in a packed compact car with friends to share costs, buying cheapest auto insurance and driving safely (despite the urge of my youth to floor the gas!) so that my premium stays cheap, and calling the once-a-week hogging at the local Pizza Hut a “luxury” and looking forward to it the whole week! Not to forget, sleeping on the floor, an old couch and then on a used mattress (in that order) in my 20’s until early 30’s before buying a new bed with a plush new mattress (I remember feeling decadent the first night I slept on it!).

What do you think about the journey and where we are at? Please share your views below.  I don’t intend to put out frequent net worth posts, but this gives you a good indication for where we are tracking versus the financial goal used as a namesake for this website.   Of course, this website is about much more than net worth and income tracking, and I will stay true to the Ten Factors.

Happy journey, my 10! friends.

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16 comments on “Counting The Marbles”

  1. By NWA-non

    We certainly belong to category B(2) – we bare our financial details but not our identity.

    Great work on the blog, and in life in general! I have a couple of questions, can I reach out to you through e-mail?

  2. By Smart Investor

    TFR, Stumbled upon your website and still soaking in all the fantastic information shared here on FIRE strategies. Thank you for sharing your journey and guiding the less informed among us.
    A few questions
    (1) Is the net-worth accumulated based on a single-income, dual income, 1.5 income etc.? Reason for asking is that inspite of being conservative spenders and a fairly high level of income for myself (spouse does not work), my figures are modest. of course, my equity exposure is nowhere close to the percentages you mention.

    (2) you mention real estate has a mobility impact on income, only good as a hedge on inflation etc. but what about tax savings? Are there other alternate tax saving strategies on primary income ?

    • By TFR

      Thank you Smart Investor. Appreciate your kind words. The net worth was largely built on single income, though my wife worked in a professional job for a few years till our child was born. That was more than 10 years ago, and the buoyant markets along with my regular investments delivered nearly a 50% increase in just over 3 years!

      I did not invest in global real estate as a tax savings vehicle – your 401(k), HSA etc are great vehicles for that. I look at it primarily as a way to hedge exchange rates and inflation in the location we want to retire. Working your career in one country and then retiring in another involves different kind of financial planning that financial advisors are often ill-equipped to advise on.

  3. By ZJ Thorne

    I am fascinated by your choice to have property in undisclosed Asian locations. I hope you have the sort of connections that prevents fearing a government reclaiming of “private” property. I was just talking to a US friend in Okinawa and her decision to forego purchasing real estate at the moment. At any point, the US military and attendant others can be told to leave without a right of return. That would scare me for a massive investment.

    It is definitely interesting to see your numbers. And to know that so many millionaires next door live in your stealth manner.
    ZJ Thorne recently posted…DIY Laundry DetergentMy Profile

    • By TFRadmin

      Thanks ZJ. I understand the risk you are referring but it ain’t a risk if you have permanent residency rights in the country you are looking to settle. Also helps if it is a democracy or has some form of elected government, with private property ownership rights. Without these “fundamental” factors in place, it isn’t wise to invest in real estate in that country. Your friend’s example of Okinawa is a clear no-no.

  4. By Jason@WinningPersonalFinance

    Congrats on the big reveal and very healthy net worth! I’m one of those bloggers who masks identity and net worth. Per your point, this probably holds back the growth of my blog but it is a strategic decision. I don’t want to have the conversation about financial independence with my employer so not going to publically reveal true identity. I have revealed my ID to friends and family so would prefer not to let it all out there. Keeping private should not impact the quality of info or value of my blog though. I’m providing advice and personal experiences that many can benefit from.

  5. By Mr. PIE

    Congrats on the milestone! Membership of the triple double comma club is rare, certainly in the blogosphere. I really enjoyed reading this.

    A few questions and comments:

    1. Why take risk in EM bonds instead of all equities? EM bonds have had a history of being hammered in big market downswings, therefore wont smooth the ride like a traditional total US bond index fund such as VBTLX
    2. Have you considered any international equities exposure?
    3. I thougt 529 plans were shielded to large extent from FAFSA, compared to other assets. Why limit that account? Is it a 529 account or “other” account in Juniors name?
    4. If you can share, what percentage of your expenses (using the $66k figure) do you expect to spend on healthcare. Hot button topic right now. Just curious.

    Again, great read and you are well on the way to rocking that TF number.
    Mr. PIE recently posted…Taming the Sequence of Returns Beast in Early RetirementMy Profile

    • By TFRadmin

      Thanks PIE. Glad you enjoyed this article. Good questions! Replies follow:

      1. EM bonds have generally low correlation with US listed equities. And EM stocks and bonds have been hammered over last few years when dollar also reigned supreme against their currencies, so it is in some ways a tactical bet. With historically low interest yields in US, I am not sure now is the right time for VBTLX. Part of these bonds are invested in the market where we want to spend significant time, so it is a currency hedge as well.
      2. Yes, international equities are part of my stock portfolio, about 15% or so. But those international stocks also have a dividend tilt.
      3. Different states treat differently for 529 plans. For me, it’s the overall education budget that’s important – where the funds are coming from is less so.
      4. Healthcare cost depends on the location we stay. For US part of the year, it assumes 20%, and for the Asia part, under 5%. I was happy about Obamacare in the past but now it appears its days are numbered. Given the current healthcare environment, I am beginning to value our geographical mobility more than ever!

  6. By Mrs TRG

    I am in the same boat as those in #3. I’m not comfortable revealing too much to strangers and even certain family members. I prefer to show the how and why. I do understand that there is more weight if you have the stats to back you up. I am not sure how much readers would view my advice if I’m not a member of the millionaire next door–yet. From your articles, you give good advice and that’s even before I knew your stats. Now, your advice seems to have more weight since it is coming from someone who is walking the walk and not just talking the talk. Keep on writing! You’ve got a following.

  7. By Travel Travel & Retire

    woo hoo! i worried a lot about sharing information too but then I thought – if part of my mission is to make this money talk less taboo and show people how it is possible to achieve our financial goals with a plan, hard work and dedication then I have to…

    Showing your numbers is empowering to me. I love seeing how people achieve their goals and, your number is similar to mine (albeit mine will be lessened with inflation by the time I get there) so it is particularity fun to see!

    We took a different path and already took a few breaks from work and spend handsomely on travel yearly with the trade off of working a little longer. That said, now that we are serious about the final stretch without break I look at blogs like yours for motivation and ideas. Plus – we are going to Indonesia next year to check out yet another possible place to start our retirement one day :).

    You are so close!!

    • By TFRadmin

      Thanks TTR. There is no one right path to FI! Sounds like you’re enjoying your journey, that’s all that matters.

  8. By Jim Wang

    I applaud your decision to reveal your net worth but I don’t fully buy the argument that only those who are in good financial shape can credibly offer advice. It makes it difficult for someone new to get into that industry since by definition their numbers would be smaller since they’re younger. I suspect that’s not what you intended and I don’t mean to diminish your reveal, it’s just a slippery slope.

    On the flip side, your reveal does show that the typical Millionaire Next Door is alive and well driving a 3yo mid-level car and RENTING (gasp!) their home. 🙂
    Jim Wang recently posted…How to Build A Bank Account FirewallMy Profile

    • By TFRadmin

      Thanks for the kind words Jim. I certainly don’t mean to imply that there aren’t sound financial planners who are perhaps starting out (and hence aren’t anywhere near affluent) but even you must admit not all listeners get impressed. Recently, I attended two complimentary seminars on wealth management and was appalled at the elementary grasp of the issues the presenters had about what affluent people face. Two of my fellow participants walked out after directly confronting the presenter (asking directly “are you a millionaire yet?”) – and when he revealed that he was far from it, they walked out shouting at the organizer that their time was wasted. Obviously, I am way too nice a guy to do something like this so I sat through the whole thing but still came away unimpressed. If I was a financial planner or coach approaching a multimillionaire client or a serious aspirant, I would be lot more transparent about my own credentials to share with them in confidence.

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