What is your Cash Worth?

So the month of June and July has not been kind to me in the slightest. Not in terms of the financial side of things but all the other aspects of life. If I were to be FI, there would probably be a lot less of these mental shenanigans.

It feels like I’m rowing solo across the Atlantic. The planning is done, the course is set and all I gotta do is row.

Behind me are hundreds of miles of flat, grey ocean. There’s nothing on the horizon. In front of me, are thousands of miles of flat, grey ocean. There’s nothing on the horizon.

It’s hard to tell I’m moving at all.

An ancient mariner would pass the time by juggling mortal danger and hallucinations. A modern mariner has the same options as well as their GPS tracker and calls from home.

All four are needed to keep the rowboat on an even keel.

– Financial independence – adrift in the vastness by Monevator

So your portfolio in stocks can go up and down. You can’t predict it. Everyone says the economy will be bad bad bad post-Brexit. Maybe it is bad, but my portfolio is about 8% up from beginning of April. Amateur financiers, economists should probably not even try to explain the phenomenon. I mean even if the experts can explain it retrospectively, it is probably just academic speak anyway. And with so many experts all around, it is difficult to recognize the truth from all the ‘noise’.

Now what can steady the ship as it sails along to shores of the promised land is your Steady Cash Savings! Hence I introduce the measuring your Cash Worth!

I like to keep things simple and easy so this is how I do it.

At the beginning of the month, I review all my accounts (current, savings, bonds, credit) and record the value of each account on a spreadsheet. I add all the sums together with abit of help from Excel’s excellent in-build functions and get a total sum. I then compare this month to month to see what’s the increase of my Cash Worth.

This is what it looks like on a chart since Nov 14 till now.

Cash Worth

I shall try to aim to keep 1 years worth of living expenses as buffer rather than fixing on a fixed percentage of my entire net worth. I think it is an interesting choice to make in designing your whole portfolio, and it needs to weigh in your risk profile as well.

  • How well can you take being out of job? (Let’s face it there’s no guarantees!)
  • How long do you expect to be not working?
  • How much interest can your cash be generating in a simple current,savings accounts strategy?
  • How safe is your cash in the above mentioned accounts?
  • What is the alternative? More Stocks/Shares/Bonds/Property? What is the outlook like?
  • Savings for short term big events? Weddings/Mortgage/Holidays

So many ideas and more questions to answer. (I think I am thinking like a Independant Financial Advisor now!)

I hope the steady stream of inflow is a constant, or even an exponential growth chart as I try to avoid lifestyle inflation as much as possible with hopefully income growth! This constant is so much more soothing than the volatility of  stocks and should be thought of as the fertilizer to the FIREplant. The regular drip feeding to my FIREplant portfolio is proudly starting to show signs of its first fruits last month of 1% dividends in the last quarter!

Let’s get the snowball rolling! 😀