October 2010 Recap

Better late than never! Here's what October looked like in terms of expenses and income:
My income from salary and interest was about $8,512.
Expenses were as follows:

Taxes	$2,740
Clothing	$1,959
Housing	$1,716
Gym & Fitness	$1,339
Total Dining	$701
Home Insurance	$335
Misc	$207
Utilities	$199
Medical	$153
Travel	$76
Gifts Given	$74
Charity	$52
Education	$44
Subscriptions	$37
Entertainment	$24
Household	$13
Business expense	-$709

Clothing looks outrageously high because I ordered a few pairs of boots from Zappos that I ended up returning, with the credit showing up in November. Gym & Fitness is high because I renewed my gym membership for a full year. With several free months tacked on, I now won't need to pay for this again until sometime in 2012. Home insurance is another yearly bill that happened to come due this month. Business expense is a reimbursement of things I paid for over the course of several months.
The net effect of these odd expenses, plus routine things being slightly higher than usual, was that I saved no money this month! I was in the red by about $448.

As for my net worth:
It's approximately $458,780, up $10,718 / 2.39% from last month. One major change is that I moved some money from a savings account into my E*Trade investment account. You can see the higher credit card balance here too, which should correct itself next month (and of course, as always, I pay it in full every month anyway). I haven't made any more adjustments to my home equity, but I feel pretty good about where it's at based on some recent sales data I've seen in my neighborhood. Of course, there aren't tons of sales to base things on lately, so I continue to think of that number as being a rough ballpark estimate.

	Sept.	Oct.
Cash and Bank Accounts	$ 69,355	$ 45,665
Retirement Accounts	$ 272,805	$ 282,052
Stocks & Mutual Funds	$ 22,236	$ 49,780
Bonds	$ 5,091	$ 5,091
Credit Cards	$ (2,915)	$ (5,664)
Home Equity	$ 81,490	$ 81,856
TOTAL	$ 448,062	$ 458,780

So the good news is that I've surpassed my net worth goal for the end of the year already. In November, I'll also add $15,000 I inherited from Great Aunt Minnie, so I'm hoping that even if the market is down somewhat, I can still beat my net worth goal. Onward and upward!

David Cameron's "Big Society"

I found this New Yorker magazine article fascinating: "All Together Now!"
The topic is Britain's new conservative Prime Minister David Cameron, and his plan to solve the country's budget woes by having average people pitch in to help in small ways with things the government can no longer afford to do. Say the government can't afford to keep a playground well-maintained-- his concept is that local residents would get together in some sort of committee and assign each other tasks like raking, sweeping, painting, etc.

The article points out all sorts of weirdnesses to this-- why is a Conservative politician championing collective labor that sounds like it belongs in a Communist country? How does the Government expect to just totally back off from responsibility and not even provide any funds for getting these community schemes set up? Who's going to take charge of these local programs, and do people really want it to be the neighborhood busybody with too much time on his hands?

There's something to be said for the "niceness" of community participation but a lot of people just don't want to deal with the reality of it. As one man comments, more or less, he doesn't have time and prefers to pay other people to do this stuff-- the payments are called "taxes," and the "other people" are called "the Government."

But here's what didn't come up in the article that I'm curious about. Many of the the sorts of things the Government is looking to crowd-source are the kinds of programs that don't even get a lot of public funding in the US, like arts programs. Here, they get a lot of funding from rich people who want nothing more in return than social prestige and the satisfaction of doing something for others, and often, their name etched in stone on some building.

Why is David Cameron trying to get all the "little people" to volunteer to rake parks instead of getting a billionaire to pay the salaries of park-rakers in exchange for some warm fuzzy feelings and a bench with his name on it? Perhaps that sort of thing just doesn't play as well for P.R., especially in a country like the U.K., which has such long-standing class issues. Cameron is from the upper class himself, so I suppose he thinks he has to take this "we're all in it together" attitude rather than a top-down approach... but it doesn't sound very efficient to me.

It's not that I think the answer is for everyone to live off the charity of rich people whose whims dictate what services and enrichments the rest of us are allowed to enjoy. We'd probably end up with free eco-friendly dog-grooming salons on every corner (of terribly pot-holed roads) in some states, and free gun-shooting lessons for toddlers (but no public K-12 education) in others. As far as I'm concerned, taxes and government and elections are a pretty good way to provide the basic standard of living we've all come to expect as Americans living in the 21st century, with some private funding icing the cake. But I do wonder why the U.K. seems to have such a different approach to these things...

E*Trade Investment Gains

I did an interesting project the other day-- I went back through my E*Trade investment transactions to trace all the cash I put in and took out. This goes back to sometime in 2001 or even a bit earlier, I think, when I first deposited about $1,000 in order to start doing some investing outside of my 401k. Other than that, all my money had been in savings accounts and CDs up to that point.

When I totaled everything up, my net contributions to my E*Trade account were about $33,875. This was never done on a regular basis-- I'd sometimes put in a couple thousand dollars at a time, sometimes more. And there was a period in 2005 and 2006 where I cashed in some funds and took out money in order to pay the down-payment and closing costs on my condo.

As of the day I did this, the current value of my E*Trade account was $49,779. So my net investment gains were $15,904, or a total return of about 47%. It's interesting to compare this to how E*Trade shows my current portfolio gains as an increase of about $2,960 or 6.3%.

Obviously, two very different calculations are being done here. E*Trade considers every reinvested dividend as part of the cost basis the gain is calculated against, so as shares go up in price, those incremental purchases have gained less in relation to the current price. By either method, it's hard to really say how much my annual rate of return has been overall because I've bought and sold various funds at various times, and it's all a bit complicated, at least for someone like me whose math expertise hits a brick wall at a certain point!

Since I put money in and took it out over 10 years, I can't really compare my performance to an initial investment of $10,000 that was just put into a fund and left sitting there with all gains reinvested, which is the standard way funds are compared on E*Trade. But just to look at a few examples, the first of which seems to have the highest average annual return over the 10-year period of any mutual fund offered on E*Trade:

Symbol	$10k invested 10 years ago now worth	Avg. Annual 10 Year Return
INIVX	$134,996	27.46%
BGEIX	$89,987	22.91%
EITEX	$51,714	16.79%
DPCAX	$48,578	16.60%
AAFPX	$9,097	-0.99%

INIVX and BGEIX are gold/precious metals funds (that I really wish I'd invested in!), EITEX is an emerging markets fund, DPCAX is a China fund, and AAFPX is an S&P 500 index fund.


Anyway, to me, the bottom line is that I have $15,904 that I didn't have before, and that's quite a lot better than just looking at my current E*Trade balance. I've invested in a variety of stocks and mutual funds without any cohesive strategy other than to have a blend of aggressive and conservative investments and not put all my eggs in one basket. Given that we've been going through an extraordinary economic crisis, with the S&P 500 about 20% below where it was 10 years ago, and the Dow about flat over that period, I think I've done ok.