Net Worth Update: July 2010 – Blind Optimism

Net Change: +$5,485.64

Net Cashflow: +$2,571.20

Investment Performance: +$2,914.44
2010 S&P Performance: +6.9%

Food Spend Monthly Improvement: $ (52.36)
Dining Out: $ (308.03)
Groceries: $ (217.55)

What a difference one month makes.  Now the market is my best friend.  ;)  My Net Worth Goal (+$25K this year) would be easy to reach if I had results like this every month.  This month’s investment performance wiped out most of my investment losses for the past two months.  Looking forward, however, I’m not sure this momentum can be maintained.

The tagline in my post title refers to the recent market performance in spite of the great deal of negative economic news and metrics.  These days, it’s difficult to decide who to trust when it comes to the financial markets, especially considering that the “experts” were the ones primarily responsible for driving us into the financial meltdown in the first place.  Even though I complain a great deal about the market’s performance in my Net Worth posts, my overall strategy does not waver.  Investing is about discipline, not timing.  I’ll continue to invest a small, but reasonable amount into the market in consistent time intervals.  Dollar cost averaging basically.  My 401K plan does this for me automatically.

This month was the first month in the past two where I didn’t have a big thousand-dollar expense to deal with.  Last month it was my Manhattan GMAT course.  Two months ago, I had to pay my car insurance.

My food expenses went up this month.  I’ve been patronizing the small restaurants in my neighborhood recently, as it gives me a new environment to study for the GMAT.  (Yes, I do indeed bring those red MGMAT books with me to restaurants, and I’m not ashamed of it)  This was probably the main contributing factor to the increase in this expense category.  Every day at work, I also go out and buy lunch.  My justification is that since I can afford it, why not?  But bringing my lunch into work at least once a week could definitely lower my spending in this area.

Getting back to my year end Net Worth Goal, I’ve calculated that if the market were to remain flat for the remainder of the year, I’d likely hit my goal without too much trouble.  If on the other hand, we find ourselves in a double dip recession, I’d fail miserably.  The key point here is that I really don’t have any control over whether I succeed or not.  I’m learning now from the goal setting process that the most obvious goals aren’t always the best ones.  Setting an annual Net Cashflow Goal probably would have made more sense.

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