Q1 2019 Financial Scorecard: Back on Track!

When we last reported on our finances at the beginning of the year, the results were not good. The worst quarter for the stock market in almost seven years resulted in our net worth moving in the wrong direction for the first time since we started posting our Quarterly Financial Scorecards here at Retiring On My Terms.

Fast forward three months, however, and we seem to be back on track.

The S&P 500 Index returned more than 13% during Q1 2019 – it’s best quarter in nearly a decade! While the U.S. stock market is still a bit below the all-time high set last September, the strong returns so far this year have been great for the ROMT family. We made progress over the past quarter on all three of the metrics we are tracking on our path towards early retirement and financial independence – net worth, 529 account funding, and passive income.

I. Net Worth: 91.8% of Goal (+12.3% during Q1 19)

Our short-term net worth goal, set last October near the market highs, was to get to 90% of our target by the end of March. Back in January, I wrote that the stock market would need to climb by around 10% during Q1 19 for us to have any chance at achieving this goal. I was not optimistic this would happen.

But the best quarter for U.S. stocks since the economy was exiting the global financial crisis resulted in a big increase to our net worth. Our net worth rose by over 15% during Q1 19, pushing us 1230 basis points closer to our long-term goal than we were at the beginning of the quarter!

The robust stock market was the primary driver of our great results. I also received my annual bonus for 2018 and a small contribution from my employer to the modest pension plan I am now vested in. As a result, we’re now less than 10% away from the net worth we need to declare financial independence.

Since we achieved our interim net worth goal, we need a new one. Our new short-term net worth goal is to get to 95% of our long-term target by the end of this year. If we can do this, we should be on target to reach our ultimate net worth goal sometime next year!




II. 529 Account Funding: 59.3% of Goal (+10.1% during Q1 19)

Last quarter, both our 529 account funding and net worth moved in the wrong direction.

But, as with our net worth, the robust stock market boosted our 529 accounts in Q1 19. The value of our children’s educational accounts rose by 20% since the end of 2018, driven by strong returns as well as additional contributions. As a result, we’re 1010 basis points closer to our target funding level than we were just three months ago.

Thanks to great returns on our investments, we hit our short-term 529 funding goal early. We had hoped to reach a 55% funding level by mid-year, which we’ve now achieved.

Our new short-term 529 funding target is to get to 65% of our goal by the end of September. Our home state offers tax credits on a portion of our contributions, so we’re incentivized to fund these accounts. If the stock market continues to cooperate, I think we have a good chance of hitting this interim target.

III. Passive Income: 36.8% of Goal (+2.9% during Q1 19)

Our passive income target is our “stretch goal” as we pursue early retirement and financial independence. While it would be incredible to fund our lifestyle entirely via passive income, realistically there’s no way it will happen by our Target FIRE Date.

That said, we made good progress over the past three months. Our expected annualized passive income climbed by 8.4% during Q1 19, moving us 290 basis points closer to our admittedly ambitious goal. We’re now 36.8% of the way to our target, thanks to additional investments in dividend stocks, bonds, and a certificate of deposit.

We also achieved our short-term goal of getting to 35% passive income funding by the end of the quarter. Our new interim passive income goal is to get to 40% of our long-term target by the end of the third quarter.

IV. Target FIRE Date: Friday, July 2, 2021

As I write this, we’re a little more than two years away from our Target FIRE Date. The first quarter’s strong stock market has almost made me forget about the significant headwinds we faced towards the end of 2018! But I recognize our ultimate success remains very dependent on the vicissitudes of the markets.

I’ve long believed we could hit our net worth target in 2020, but stock market returns over the next several quarters will play a huge role in determining whether we get to that goal before our Target FIRE Date. If the S&P 500 drops materially over the remainder of 2019, achieving our net worth target a year early will be very difficult.

Our 529 goal remains possible, but unlikely. We’ll continue investing in the children’s educational accounts, which will help boost values over the coming years. But outstanding investment returns are imperative if we’re going to hit this target by mid-2021.

Passive income has always been our most ambitious goal. While there’s no way we’ll get to 100% funding of our anticipated lifestyle through passive income over the next nine quarters, we’re going to continue trying to increase that figure every day!

Thanks for reading. Hopefully we’ll continue making good progress over the remainder of the year!




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