- posted 11 years ago
Hello Fellow financial planners & investors,
I have been a do-it-yourselfer, investing for 15 years, since I
started a job after completing an engineering PhD (I am in silicon
valley area, but I am not a comp science or electronics engineer).
Over the years, my wife and I have been aggressive savers, with a view
towards early retirement, and we think we have done well. Would
appreciate some critique and analysis, and discussions on potential
blind spots we may be missing.
Self age: 41; spouse: 35; two kids, 7 and 4.
GOAL: Retire by 45, definitely by 50.
Home: in SF Bay Area, bought 10 years back @ 360K; remodeled with
about 100K 1 year back. Presently valued at about 650K (after the fall
in prices; before was at about 800K).
Mortgage: 210K. 7-year fixed mortgage at 4.5%, will convert to ARM in
April 2011 (in 2.5 years)
HELOC: 45K, ARM, @ 4.25% presently (prime MINUS 1/8th or so)
Other debts: NONE (no other debts of any kind)
Income: Self 140K; wife: 60K (works only 60% of the time, to help with
children after school)
Retirement savings: $420K total.
Details: 400K in two 401Ks; 20K in IRAs (don't qualify for Roth).
Retirement funds are broadly diversified in S&P 500 index, Growth
index, and a bunch of other mutual funds. No single fund more than
10%; international about 25%; all stock funds. The total has been as
high as almost 500K, before the last 1-year's downturn.
Nonretirement savings: Total: 500K (details below)
DRIPS (XOM: 70%, PFE: 6%, BAC: 8%, LMT: 12%, IIBK: 4%): total: 200K
Mutual Funds: (Vanguard 500: 25%, Vanguard Growth: 25%, Wells Fargo
Enterprise: 50%) total: 250K
529 funds for children: (50% for each child, CA scholarshare mutual
funds): 40K total.
Life insurance: Self: 500K (self-pruchased, outside term) + 400K
(employer paid group term)
Spouse: 200K (self purchased term) + 250 (employer paid group term)
Disability: both have group disability for about 2/3rd of pay (self-
paid, but through work)
Been VERY LAZY about: wills, probate, estate planning
Expected inheritance: NONE form either side
Doomsday Retirement Plan: Have a large home, car, and 8 acres of
irrigated, agricultural land in an overseas location.
How we got here: Education put us in good jobs; we have always saved
45% to 55% of our earnings, first 5 years to accumulate down payment
and get in a home, and last 10 years to "fill the house" and build the
WILD CARD: I have employer stock (not options) worth 350K (pre cap-
gains tax). This is a private company stock, valued once a year in Oct
(i.e., price remains fixed for the year), encashable once a year over
a 2 months window; has a 3-year history of paying annual dividends at
about 2% of the stock value. The stock has grown 7-fold over the last
7 years, but the future growth is expected to be more modest, say 15%
-20% a year for next 2-3 years. What to do with it? Sell it, and pay
off the mortgage, and live "debt free" or let it grow...
I would like critique on all of the above, but particularly on the
wild card. It's becoming about 25% to 30% of my total investment (Excl
home equity), which seems too high a concentration. On the other hand,
it is immune from daily fluctuations of the market, since it is
private and valued just once a year. The company has been consistently
profitable last 10 years (and 16 of the 19 years of its existence).
Revenue growth about 20% per anum; operating margin 30% to 34%. Has 50%
+ market share in its domain; curr employees about 300, and rev about
M N Door
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