For those of us that strive to control our finances and get ahead in life, being able predict what a potential portfolio will be worth in the future is absolutely essential. If I save $100/month for the next 10 years, what will the value of my portfolio be? More importantly, what will my purchasing power be? What if I increase that $100 per month by 10% per year? What if I only make quarterly deposits to my account? These are all questions that effect real people every day.

The problem is that projecting an investment portfolio into the future requires many assumptions. The most important of which is the rate of return you expect to earn on your investments. The second most important is what the inflation rate will be during that same time frame. While most people track stock market returns like a hawk, they don’t look at the other side of the coin. If the stock market returned 10% in one year, that’s great right? But what if inflation was 12%? Congratulations, your purchasing power decreased by 2%. Dammit!!!

In searching for high quality investment calculators online, I found that the majority are just too simple. They either don’t allow you to input a recurring payment (such as monthly or quarterly), or they don’t take into account inflation, or they don’t allow you to differentiate what your returns would be between stocks and bonds, etc. Most of these online calculators just don’t have enough customization options to truly get a picture of what an individual’s future portfolio could look like. Therefore… they’re useless! Plain and simple! These calculators are about as good as a large pile of mierda.

So I wrote my own portfolio and retirement spreadsheet, and I made it customizable. Take a look at the input screen below. You’ll notice that it allows you to specify a payment frequency, as well as a growth rate. It will take into account your allocation between stocks and bonds, and the corresponding returns. It allows you to input an inflation rate. And best of all, it allows you to build up a projected portfolio value, and then analyze it using three different retirement approaches.

If you’ve read my previous post, you’ll probably be thinking, “here he goes… another stock market bear getting ready to spew bull market hate.” This time, however, I’m going to do my best to show the market in a neutral perspective. In fact, I’m a huge stock market bull…. from 50,000 ft.

Anyone can blindly stare at an S&P 500 chart and say that stock values are at absurdly high levels, therefore everyone should sell before it all comes crashing down. Historically, however, the stock market has always produced a positive annual return over the long run. Maybe those buy and hold preachers aren’t just blowing smoke, maybe they’re really on to something. After all, they have Warren Buffet on their side.

To get a better view of stock market performance over the long run, I like to use the annualized rolling average. The charts below show what your annual return would have been over various lengths of time, on a rolling basis. Meaning, if I purchased one share of the S&P 500 in 1900 (yes, I realize it didn’t exist then), what would it have been worth in 1905? How about 1901-1906, or 1902-1907. If you carry these calculations out all the way to current, you’ll have the 5 year rolling average of the market. Then do it again for 10, 20, and 30 years. That’s a whole lot of calculations.

Right now we’re in the 7th year of this unprecedented bull market, the 2nd longest in history. To make number one, it’ll have to surpass the 4,494 day bull market that ran from 1987 to 2000, and ended with the Dot-com bust. As I write this post, the market just posted a new all-time high.

So what is driving the market higher and higher?

If it was pure business fundamentals, like I mentioned in my last blog post, then companies should be doing extraordinarily well. Retailers should be announcing increasing same store sales and foot traffic. Manufacturing should be high with companies like Caterpillar building machinery like crazy to satisfy demand. Employment should be high, with the majority being in higher paying industries rather than retail or fast food. Essentially, the economy should be strong, GDP should be growing at a healthy pace, and major foreign markets should be equally positive, being that we’re part of a larger global economy. So what is reality? Unfortunately, very little of what I just described is actually happening. The economy doesn’t appear to be as strong as market prices would indicate.

Earnings Are Decreasing.

In general, company earnings have been decreasing for over a year. If we look at the S&P 500 Index as a whole, 12-month earnings peaked in Sept. 2014 at $106, and subsequently dropped almost 19% to $86 by Mar. 2016. Meanwhile, the market price increased by over 10% from Sept. 2014 to Aug. 2016.

Building lasting wealth absolutely requires some form of long term investment. For those of us not making $500,000 per year, we cannot just hoard our hard earned income and “save” ourselves to richness. For many, this investment vehicle is stocks and bonds, invested either directly or through retirement accounts such as an IRA or 401k.

Unfortunately, Wall Street as a whole has done everything possible to convince us that we’re not smart enough to control our own investment accounts. They stress that the only way to succeed in the stock market is to hire their “expert” money managers, who they say will have your best interests in mind when choosing investments, but more often than not put you in investment vehicles that either pay them high commissions, or end up under-performing the overall market year-after-year, or both (double whammy). Oh, and we get to pay this money manager a fee for losing our money.

Putting our entire retirement future in the hands of some “expert” stranger seems rather absurd, but millions do it every day. I’m truly discouraged by the fact that the majority of the population are exposed to the stock market in some fashion yet know very little about investing, what makes companies valuable, or the stock market in general.

Last week I experienced some crazy ass car trouble, all from a tire rotation. You see, I finally decided to rotate the tires on the beater Hyundai. Now this is my cheap to purchase, cheap to maintain, look dead sexy while driving car. Unfortunately, rather than rotating the tires every 5,000 miles or so, like the manual recommends, I let it go almost 15,000 miles. Yeah, I know. Let the flaming begin!

This past weekend I finally decided to get off my butt, go out into the sweltering summer heat of my garage, and do the dang rotation. Yes…because I’m too cheap to pay the $20 a local shop will charge. Well, that and I wanted to time myself and see if I could knock it out in under 30 minutes – mission accomplished by the way.  BOOYAAA!

Anyways, after 30 minutes of summer sweating glory, I completed the rotation and patted myself on the back, thinking “You just saved $20 Shaun… good damn job”. Meanwhile, the Mrs. decided to take the Hyundai to pick up my son. Upon returning she made a passing comment to me that the car didn’t feel or sound right while driving. I decided to take it for a spin.

Holy hell! She wasn’t kidding, something definitely wasn’t right. Every bump felt like a sledgehammer right in the culo. There was absolutely no give in the suspension. I’m pretty sure my spine compressed and I’m probably an inch shorter after that drive.

Hello all !! Before I start this blog post I want to point out that I’ve added a loan repayment tool in the Free Tools section of the site. This tool is different than many in that it’ll let you define a constant extra payment every month, or you can go to the amortization table and enter a single extra payment on any given month. I’ve gotten a lot of questions from people that revolved around, “how would a single $1,000 extra principal payment (tax refund) affect my loan in the long run?” This tool will tell you. For example, in the case of a $200,000 loan at 4%, an extra $1,000 in the first month would shorten the loan by 3 months and reduce total interest by almost $2,300. Feel free to check it out.

Now on to today’s topic. It’s been an extremely busy summer so far. With multiple travels for work, kids sporting schedules, and somehow fitting a family vacation into all of that, It's been very hard to maintain track of financial goals, make progress on investing studies, read (I try to read a book a month), or even write blog posts. Fortunately, I spent this last week in Lake Tahoe, getting a little rest from the working / responsibility world. This was our first trip to Tahoe and to say it was beautiful was an understatement.

The crisp cool air, blue water, and smells of pine made for the ultimate relaxing getaway. Spending this kind of quality time with the family is more than worth the expense, and it reminded me why I'm striving so hard, and am so motivated to reach financial independence.

We hiked to Eagle Lake, which was probably my favorite part of the trip. Although my knees felt like they were going to explode by the time we got back. Yes, apparently I've got the knees of an 80 year old. Look at that picture!

Howdy ho all you financial wizards. Tell me something... if someone offered you $500 free cash just to live your life, what would you say?

I’m guessing a typical response would be somewhere in the middle of these:

If the first quote sounds like something you’d say, that’s okay. Just take 2 seconds, delete the Nigerian spam emails, put on some shorts, and read on….

If you’re like my wife and I, sometimes you just like to get out and go on relaxing drive. Sometimes we’ll go into the mountains for a nice quiet scenic drive, other times we’ll just explore areas of our city we haven’t managed to get to. Occasionally, we’ll travel to the uppity areas and gawk at the mansions, with their well-manicured lawns just waiting for my dog to discover the holy grail of lawn pooping places.

As fun as it is to day dream about having a 10,000 sq ft. mansion that we’d get to spend hours vacuuming every week, for me, it’s all about the cars. Being a car guy, I never miss an opportunity to attend a car show. There’s nothing like drooling over a brand new Ferrari, Lamborghini, Dodge Viper, or my personal favorite the McLaren. Knowing that the chances of me ever personally owning one are about equivalent to that of me benching 400 lbs and looking like the Terminator, I love to get up close and personal to those beauties, even if it’s only for a brief moment. I had that opportunity to do just that this past week.

I recently traveled for work, from Los Angeles to Mississippi. The evening prior to my return was a beautiful gulf coast evening. The air was crisp and cool, the beach was almost empty, the sun reflected a deep red off the water, and as I strolled along I couldn’t help but envy how relaxing everything felt. It was a completely different feel from that of Los Angeles. There were no car horns, no road rage, no concrete highways 8 lanes wide, and best of all, no traffic. Oh, and this was a Thursday….

Hey all you financial fanatics!! By this point I hope you’ve read the first two parts of my little Getting Your Financial House in Order segment (Renegotiate/Cancel Everything and Budgeting). I hope you’re running a good and tight budget, scrutinizing all purchases, and learning to handle money like Yoda handles a light saber! Yeah…I just made a Star Wars reference. Don’t act like you don’t love it.

As you do start to build up savings, knowing what to do with the money is as important as initially saving it. For example,

• In the late 1990’s, you could have rushed out and invested in Beani Babies. That’s right!  Those plush little things were the biggest damn craze since sliced bread. What a debacle that was!
• Maybe you just love tigers and boxing. So why not follow in the footsteps of the Former Heavy Weight Ear Eating Champion Mike Tyson, and pick yourself up a few Bengal Tigers? That’s a great investment…..right?