One thing I paid zero attention to at the end of 2019 – when I had my heart attack – was how great the financial markets finished the year. Thank goodness the markets weren’t collapsing the way that they had at the end of 2018, or maybe I would have had a double heart attack!
Now that I’m back home and recovering, I thought I would take a look at where our savings and investments were sitting. I’m already up to about 50 minutes a day on the treadmill (at about 80% speed), so that gave me a good amount of time to dig into the year end numbers. Here are the key categories that I regularly track:
- MEGACORP STOCK: +35.4% – What a great bounce back for MegaCorp in 2019! After three years of watching my stock options shrivel in value (they are still down -8.5% since I early retired 4 years ago), now they are again moving in the right direction. The options I have represent less than a tenth of our retirement investments at this point, but the leveraged growth meant a lot in 2019.
- US STOCKS / S&P 500: +28.5% – The broader US stock market also bounced back in 2019. After dropping -6.6% in 2018 – and many predicting a likely recession – Wall Street shook off any worries and posted one of its best years in many years. The S&P 500 is now up a whopping 57.6% since I retired 4 years ago. The so-called ‘Trump Bump’ can’t last forever, but it’s been perfectly well timed with our first 4 years in FIRE.
- INTERNATIONAL STOCKS / EFAE: +17.8% – International stocks had a painful year in 2018 (-18.8%), but gained much of it back in 2019.
- BOND FUND / VMFX: +6.4% – Bonds really hadn’t moved too much for the first 3 years of our early retirement days, but in 2019, they suddenly jumped forward. This part of the portfolio is more about security than growth, but it’s nice to see it up a bit.
- REAL ESTATE +4.5% – We have some fixed real estate investments that grow 4.5% every year. They are very secure investments and a good place for us to park wealth. The 18.0% growth they represent over 4 years of FIRE actually make them our 2nd best performing category over that time.
- CASH – Our cash balances ballooned a bit this year as we liquidated some of those MegaCorp options at a nice summertime price. We’re carrying about 3.5 years spending right now, which I’m sure our financial advisor will suggest is a bit high. That’s said, the stock market seems to be at a relatively high valuation right now, so I’m OK having a little extra cash on hand.
In conclusion, It’s been a great year. We’re slightly ahead of where I thought we would be after 4 years of early retirement, which feels great.
The great 2019 results just shows how unpredictable investment returns can be. One year ago – no one was predicting this. The over/under bet I made last New Years was for 2% growth.
Here’s hoping that 2020 brings continued economic growth. In my mind, corporate profits need to grow into the fantastic multiple that the market is sitting at right now.
Any predictions for 2020 investment returns?
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