Sunday, January 1, 2012

2011 Year End Update - 2012 Here We Come

Another blessed year comes to a close and despite the rocky road, we are still gaining...slowly.

2011 brought a lot of hills and valleys and especially with the portfolio. I believe this is due to the insurance/investments in the precious metals.

Even though Gold is solid and remained in the 11year uptrend finishing up 10%, silver on the other hand started the year at $30.67oz and ran up to $48.70, only to finish down around 1% at $28.18. With that, we saw the net worth move  upwards fairly fast and downwardly fast.

One place I feel like we might have mismanaged was more in cash and less in stocks/brokerage account.

Lets break it down:

Cash & Savings: Looking back on this year, I have to say that I probably mismanaged this area a bit. I really wanted to to get to 50K in cash. The reason for this is that we are still trying to get our core position for our in PMs. Our goal in 2012 is to get 50k sitting in cash in this bucket.

Stocks/Brokerage: 2011 saw a payoff to some selling of a few of our stocks. Eldorado Gold Corp(EGO) $269.67 +53%,  Fronteer Gold(FRG) $517.38 +64%, Avalon Rare Metals(AVL) $886.82 +189%,  Quicksilver(ZQK) $20.73 +42%  Stocks sold for a loss - Proshares Ultra Silver(AGQ)  -$55.54 -19% Ultrashort S&P500 Proshares(SDS) -$139.46 -34%.

Overall, what we sold this year, we were up $1209.46 a gain of +59%.

Here are the gains/losses based of percentages this year. Currently down 8% for 2011, I try and keep a level head and not get to excited or depressed on prices, investing in commodities/energy you see wild swings in the market. We saw our uranium stock drop 50% after the Japan earthquake this year.

The list of stocks we currently own: (AAU)(AG) (AUY)(FSM)(LYSCF)(MRO)(PAAS)(SSRI)(SLW)(SVM)(EXC)(PWE)(PHYS)(DNN)(ZQK)(XOM)(CVX)(RGLD).

*As you can see we are heavy in commodities in my brokerage account. This is all based on my thought that over the next decade the best investments are going to actually be in hard assets and assets in the ground. My Roth/IRA/401k are in pretty common index funds and mutual funds so I figure I can go more risky with brokerage. I believe these will out perform equities in the next decade and if nothing else I feel more comfortable with my portfolio being diverse. I am bearish on the US Dollar and US Economy, I believe that 16 trillion dollar deficits are not going bode well for the USA.

Precious Metals: (Spot : Gold - $1531.00 / Silver - $28.18) (Gold/Silver Ratio: 54.32)(Dollar cost - 29.94)  Precious Metals took a huge dive going into the end of the year. Gold was still up 10% and Silver down 1%. We remained dollar cost averaging in the whole year. Every 2-4 weeks we would purchase regardless of the price. The dollar cost averaging has allowed us not to try and time the market but just purchase as we get paid. The downside to this is that we purchased at the very top at $49. Even though we have made purchases when it was under $30 as well.

As it stands right now, we have a core position, and will be making purchases on dips and occasional times just to pick up some here and there. We are about half way to where I think we should be and this will increase with our overall net worth and the economics of the world/US.

...we are currently investing mostly in silver which I plan to sell and purchase gold when the silver to gold ratio is 30/1 then 20/1 the finally 10/1 if it makes it that far which I do believe it will at least reach 16/1(its historic ratio). I plan on always owning silver and gold bullion to pass along to my kids/grandchildren. We own silver as an investment and we hold gold as an insurance policy on our investments. We currently prefer to keep a percentage of our wealth in PMs instead of federal reserve paper(dollar bills).

Retirement 401k: This will jump up an bit more as I haven't been counting my wife's retirement this year. I believe it should be around an extra 5k.

Retirement IRA's: This category didn't have a great year and we actually were negative...I have been sitting in cash in some of this and the emerging markets and total stock market funds along with the precious metals funds didn't seem to perform particularly well this past year. I am currently looking to use some of the cash on the sideline go to work in their dividend paying funds. Current funds we are in: (VDIGX, VWELX, VGSTX, VEIEX, VGPMX)

Real Estate: The plan remains to keep our money that we were going to put down as a down payment in the bank or investments. We will try and hedge our payments with trying to pay off the home in 10-15 yrs depending on what comes our way. This might change along the way depending on kids, economy, jobs and so forth.

Debts and Liabilities -
Credit Cards: We currently do not hold debt in this category and prey that we never have to. 

Car Loan:  First vehicle is paid off, it is currently 5 years old and is going to be the family car going forward since it is a SUV. After long debates and figuring out what is best for our family, we decided to purchase a new Prius. Our reasoning being that was that the second car was getting old and needed more and more service, but yet it still had good trade in value. Also with a kid on the way, a two door just wasn't going to cut in any longer. We travel to family and to the beach a lot and we just were not going to have the room to pull it off any longer. We decided on a gas efficient car since we travel to family and I travel to work everyday. We also believe that gas is not going be cheap(relatively) ever again.

Home Mortgage: Mostly paying interest on our home at the moment, so not much of a dent here.

Hard to believe 2011 came and went as fast has it has and that we are still doing such a great job with our finances. Even a small 6K jump in our net worth, which is a bit deceiving, since we went 22k into the vehicle debt. I feel like we are on the right path and we just need to keep doing what we are doing.

Headed into 2012, we now have a kid on the way now and the stakes are starting to get a bit more serious and real. We have decided to go back onto a budget and try and live off my salary only. Hopefully we can pull it off and save a lot over the next five months before the kid arrives.

We are starting to raise as much cash a possible and hopefully we will have close to a year worth of savings(salary) saved for when the kiddo comes. Well, guess this is it for 2011, welcome 2012!