Happy Holidays Everyone!
Year in review posts are one of my favorite posts to write because we tend to forget some of the things that happened in the first half of the year in favor of things that happened in the second half of the year. This type of cognitive bias is the reason why if you must slack off at work, you might as well do so from January – June and really shape up afterward. Almost every single company I know decides on bonuses and promotions in the second half.
I hope all of you have read 10 Helpful Financial Moves To Make Every Year, and checked off at least five of the ten items by now. I promise you that if you can go through all ten items, you’ll be ahead of 99% of the population when the chaos begins again.
Here’s a post about some things that went well, and some things that didn’t go so well this year. Surprisingly, it was pretty easy to find 10 of each.
THINGS THAT WENT WELL IN 2014
1) The bull market continued. The stock markets rose to record highs, rising by another 12% or so. With the S&P 500 over 2,080 and the Dow Jones Industrial Average breaking 18,000 for the first time ever, stock investors have been handsomely rewarded all year. We had a bit of a scare in October, but everything rebounded quickly. The biggest triumph is to just be in the game. Having the appropriate amount of net worth exposure in stocks and real estate plus a healthy habit of savings will take you far.
2) Found my view home in San Francisco. I never knew panoramic ocean view homes existed in San Francisco at an affordable price since everything is so expensive here already with the median home price at $1-1.1 million. Once I started exploring the western parts of San Francisco (7 mile by 7 mile radius), a whole new selection of desirable property opened up. Finding a home with a view has been on my bucket list for over 15 years. I found a pretty park view in 2003, but haven’t had one since I began renting the apartment out, until now. I’ve imagined my last days looking out at the ocean, sipping a glass of cabernet before slipping away forever.
3) Stayed the course with a new job. One of the hardest things I had to go through was deciding whether to come back to the work force after experiencing almost two years of freedom. I deliberated for months before I finally agreed upon a 25 hour a week consulting offer at a Silicon Valley financial tech firm. I’ve always wanted to experience what it would be like working for a startup since I spent my entire career working for two large banks with tens of thousands of employees. Consulting for one firm for a year is like working full-time for five years in my opinion. Admittedly, I often ask myself whether I should return to writing full-time on my own. It is fun working when you don’t need to work. But it is also harder to continue working if you don’t need the money to survive.
4) Saw Roger Federer at Wimbledon before he retires. Despite being a huge tennis fan who can watch tennis for 10 hours straight at the US Open, I never got to see Roger Federer or Rafael Nadal play live until Center Court this year at Wimbledon.The tickets cost $1,300 each, but it was absolutely worth it. I’ll write a post about my Wimbledon experience one day with more pictures. I also went to London to celebrate my good friend’s 50th birthday and hit with seven-time Grand Slam winner, Mats Wilander, for two hours. One of my sporting regrets was never watching Michael Jordan play during his prime. In five years when I return to London, it’s highly likely Roger will no longer be playing.
5) Online business continued to grow. Organic online traffic grew by 50% and revenue grew by 70% due to some operational leverage. Organic traffic growth is the best type of traffic besides the thousands of loyal readers who insightfully contribute to the discussion because it’s reoccurring and free. I had originally modeled a 20% decline in 2014 from 2013 because 2013 grew by even more than 60%. Eventually growth rates must normalize since trees don’t grow to the sky forever. I never missed a week of publishing at least three posts (180+ posts this year), so the consistency is paying off. Let’s see what Google has in store for the new year.
6) Diversified my investments. In 2H2014 I decided to invest a good chunk of change in a venture debt fund,which has a preferred return of 9% and a target return of 16%-30% per annum. I’m a huge fan of venture debt investing, which is kind of like P2P lending, just to high risk startups.
7) Reinvigorated a couple underperforming income streams. After doing a comprehensive analysis of my 2014-2015 passive income streams, I realized that my Lake Tahoe vacation property and P2P lending portfolio were sorely lacking. As a result, I’ve written a post about the Lake Tahoe vacation rental property to help market it online, and I’ve invested new money into my Prosper account to beef it up given it generates a respectable ~7.5% return with absolutely no effort after two years.
8) Built a client base of personal finance consulting clients. One of the most gratifying feelings is helping someone secure their finances on a one-to-one basis. I no longer advertise my services because I don’t have enough time to meet demand, but I am absolutely thrilled by one client who more than doubled her retirement fund this year. Meanwhile, another client was able to sort through the madness of leaving a job he hates for a new opportunity with the maximum amount of exit money possible. If online revenue nose dives for whatever reason, I plan on ramping up the personal finance consulting business.
9) Got bumped to a US Tennis Association 5.0 ranking from 4.5. This was one of my biggest shocks after going a mediocre 6-5 in 2014. We won the 4.5 City Championships again in 2014 and came close to winning Districts. In 2012 I went 12-0, followed by 9-3 in 2013. As you can see, I’m on the decline! But the USTA algorithm decided to bump an old man like me up to 5.0. I’m probably going to do terrible in 5.0, unless I get an amazing doubles partner because 5.0 players are almost all division I college players, most of whom are still in their 20s. But who knows! It’ll be a good challenge to try and play like I once did in high school. There are probably less than 5% of all USTA members who are 5.0 rated in the country.
10) Maintained a healthy relationship with all loved ones. I’ve been actively trying to be a better son, brother, partner and friend to all the people I care about the most by making physical visits, writing e-mails, and connecting over the phone. My family is dispersed throughout, and it sometimes makes connecting difficult. I still think I need to do a better job talking with my mom, but I’m pleased to realize we never had any arguments this year at the very least.
WHAT DIDN’T GO TOO WELL IN 2014
1) Spent way outside my comfort zone. Due to the purchase of a fixer property in May, I spent above my normal comfort zone for four months in a row. Even though I set aside some money for the remodel, it still felt horrendous not saving given I’ve been saving at least 50% of my after tax income for 15 years. I discuss my thoughts in The Natural Savings / Spending Balance. At least I paid down about $190,000 of my rental property mortgage.
2) Started to get stressed again. One of the big benefits of leaving Corporate America is the large reduction in stress. My TMJ (jaw tightness) and chronic golfer’s elbow went away between 2012 and 2013. Even though I’m not trying to climb the corporate ladder at my consulting job, I wasn’t able to keep stress at bay due to deadlines, production demands, and personnel changes. I sensed multiple times my TMJ and golfer’s elbow come back as a result. Furthermore, I’ve begun snoring louder than normal. I’m so used to being a workaholic that I went way beyond my 25 hours a week contracting agreement for the entire year. I’ll write about this in a future post.
3) Got swindled, twice! The first swindle was buying a fake home theater system that turned out to be a cheap knockoff. The upside is that it works fine and the overall cost is about $700 less than what I would have spent for an alternative system. I just thought I was getting way more. I’m just amazed at how people can feel OK with themselves for trying to con other people. I was also cheated by another ~$2,000 from an electrician who overcharged me for his work. He dropped by before I went to work and said he’d be done in two hours. Nine hours later, he texted me saying he was still working. He charged me, and I later find out he did the work wrong. Sigh.
4) Received my first moving violation ticket in eight years. What a burn to get a speeding ticket going 35 mph on a three lane road in a 25 mph zone. At least I made the most of the experience by writing three posts helping other people out who might be wondering whether to go to court to fight, and how to minimize getting traffic tickets.
5) Didn’t travel as much. In 2010 and 2011 I traveled for six weeks each. In 2012 and 2013 I traveled for 8-9 weeks each. In 2014 I only traveled for three weeks due to my consulting gig. But I’ve realized that I’ve been an overachieving consulting dumb ass. I’m always responding to e-mails every single day and working way longer than my 25 hours a week mandate. I know a fellow consultant who gets paid an equal amount and hasn’t come to the office in five months! I plan to follow his lead in 2015 and align my work with the contract agreement.
6) Didn’t improve my writing skills. I have a fixed writing style that has not adapted over the years. There was no experimentation whatsoever probably because it’s difficult to write in a way that you’re not used to. I’m going to make it a point to write in a different way at least once a month next year while working on my podcast.
7) My business didn’t become a raging success. I have a very warped sense of reality because I expect to make more online than as a Director or VP working at a bulge bracket Wall Street firm. If I didn’t believe I could achieve this hurdle, I probably wouldn’t have engineered my layoff for another six years until I was 40. It took about two years to firmly make more than my last year’s total compensation in finance. But I’ve still got another 30%-50% to go to match my all-time high income figure.
8) Didn’t reach peak fitness. There’s a blue-sky scenario in my head that I’ll be able to drop down to 150 lbs, re-gain four-pack abs, and comfortably wear a 31-32 waist pair of jeans at 5′ 10″ tall while eating as much as I want! I feel like the donkey who expects to get rich without saving or investing any money at all. I just went to the doctor the other week as part of my 10 year end things to do, and I’m a somewhat doughy 166 lbs. The ideal body weight for a man my height with a medium frame is 151 – 163 lbs. Nobody is going to call me fat. As an athlete, it just doesn’t feel good carrying an extra 10 lbs on the court.
9) Found my first grey hair. Stress kills I tell yah! At the height of the home remodeling period, I was super stressed. There was work to be done at home and work to be done at my new consulting gig. But I think my consulting gig may have helped relieve a little stress because it forced me to get out of the house and think of something else. I was sitting in my favorite barber’s chair and there I found a short silver strand of hair protruding from my left side. It’s funny because I haven’t found another strand of hair since July. I guess 37 isn’t that young for finding my first grey hair. At what age did you first find yours?
10) Missed out on some massive investments. I’ve got ideas, but I either don’t successfully execute those ideas or I sell too soon. For example, I’ve been telling myself and readers for the past couple of years to join Uber and Airbnb if they are looking for an exciting job with massive equity upside. If I took my advice for Uber, my equity would have more than doubled in just one year. But, joining these high demand companies is easier said than done. Someone mentioned to me that because everybody wants to join Uber, they pay way below market e.g. $60,000 for a marketing manager. I also didn’t stick to a massive oversized position of Apple stock when it was at $500 pre-split. I felt it was too risky to have 60% of my speculative portfolio in Apple, so I cut the position to 20% and invested those proceeds in a stock that went down 25%. Sigh. Definitely don’t punt around with more than 10% of your investments. It’s very hard to outperform the market consistently.
Overall, I give 2014 a “B” letter grade. Whereas 2012 felt like a big step function since I left a long-time job to swim on my own, 2014 just felt like another average year. There was little excitement this year as I didn’t take ANY big risks. The adventure I often crave was missing.
Out of all the wins, getting bumped to 5.0 is what sticks out the most because it came in November (late bias) and it was totally unexpected. Out of all the misses, getting swindled is the most annoying because people continuously disappoint me due to the desire for money. I refuse to stop believing in people due to several bad apples. But I can see why people get more salty as they grow older.
Readers, please share with us some of your hits and misses for the year! I’ll be posting a neat infographic highlighting some of the top investments of the year, perhaps a recap of the best posts for 2015, and 2015 financial goals.