Monday, December 13, 2010

Annual Summary and Forecast for 2011

The chart breaks down net worth into four components - net money saved in retirement and non-retirement accounts and the profits on both those categories of accounts. We have currently saved just over $A250,000 outside of retirement over our lifetime, but profits are negative and so we have less than that in those accounts. Profits on retirement accounts are currently positive so we have more in those accounts than we contributed to them.

We managed to save money in both types of accounts in 2010, even though for 9 months of the year only one of us had a regular job. I brought in some consulting money when I wasn't regularly employed but it was much much less than I would have in a regular job. The dip in the savings curve is due to the trip we made to Europe. The costs of the trip were easily funded by the refunds we got and the money I earned there. But we only got that money towards the end of the year. Retirement saving was $18k and non-retirement $19k.

Earnings on accounts were negative for the year in Australian Dollar terms. At this point we are down 3.12%. But in US Dollar terms we've gained 7.08%.

The forecast for next year looks pretty rosy as we both expect to be working full time. This might not work out exactly this way as big changes could happen... If we do, we are expecting to save more than $100k, about 1/3 of it in retirement accounts and 2/3 outside retirement. The profit curves imply a rate of return of 12.3% p.a., which of course, may or may not happen. It is based on bottom up modelling of returns on individual assets in a spreadsheet. Remember that we use some leverage in investing.

It will be interesting to see what next year will actually be like :) I don't think I did a forecast or goal setting exercise of any sort last year. There'll be some more annual report posts in the next few weeks probably.

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