As we take a reflective pause and peer into the intricate pages of 2022, our financial journey unfolds with a narrative that’s a tapestry of challenges, triumphs, and the ever-evolving road ahead. Join us on this introspective journey as we unravel the key highlights, sharing the lessons we’ve learned and the strategies that have shaped our path.
In the spirit of unwavering commitment to our financial independence, 2022 witnessed our family contributing a dedicated sum of $135,000. Each contribution, a deliberate stride towards fortifying the foundation of our financial future. The dedication to this journey, despite the headwinds that financial landscapes often bring, remained steadfast.
Lessons Learned – Facing a Bear Market in Our Initial Investment Journey:
“Success is not final, failure is not fatal: It is the courage to continue that counts.” – Winston Churchill
Closing the year with a portfolio of $479,117, reality nudged us against our initial estimation of $590,496. This journey, much akin to the ebb and flow of the market, presented its share of peaks and valleys. However, it’s in these fluctuations that we uncover valuable lessons, seizing opportunities for growth and resilience.
Dollar-cost averaging (DCA) was a key factor in our ability to navigate the challenging market conditions in 2022. By investing a fixed amount of money at regular intervals, we were able to buy more shares when prices were low and fewer shares when prices were high. This helped to reduce our average purchase price per share and mitigate the impact of the market downturn.
In addition to dollar-cost averaging, we also benefited from having a diversified portfolio and a long-term investment horizon. By investing in a variety of asset classes, we were able to reduce our overall risk. And by focusing on our long-term goals, we were able to remain disciplined and avoid making impulsive decisions during the market downturn.
While we are disappointed that we did not meet our initial goal of $590,496, we are proud of the progress we made in 2022. We learned valuable lessons about investing during a bear market, and we are confident that dollar-cost averaging, diversification, and a long-term investment horizon will continue to serve us well in the years to come.
We encourage other investors to consider dollar-cost averaging as a way to reduce risk and build wealth over time.
A standout achievement in 2022 was our dividend distribution, spiking to $9,924—a remarkable increase from the previous year. This surge is attributed to the strategic addition of a $2,200 dividend distribution from employer stocks, a move that adds diversity to our income streams. It’s crucial to note that these stocks aren’t factored into our portfolio, underlining the importance of a holistic financial strategy.
Diving into the composition of our portfolio, it stands at 34.74% dividend payable, including VOO and VT, 64.87% in stocks and index funds that redistribute dividends (though we are not directly receiving the payments), and a prudent 0.39% in cash. This delicate balancing act reflects our commitment to optimizing returns while maintaining a strategic allocation.
A pivotal moment in 2022 was the decision to contribute an additional $20,000 towards our mortgage. This strategic move allowed us to close the mortgage five years earlier, unlocking a financial opportunity. With this, our yearly contribution capacity increased from $70,000 to an impressive $90,000. This achievement not only reduces our financial burdens but also accelerates our journey toward financial independence.
With the evolution of our strategy and the resilience of our portfolio, our financial independence (FI) timeline has been recalibrated, moving our target year from 2036 to 2030. This acceleration is a testament to the adaptability of our financial plan and our commitment to our FI goals
As we conclude the chapter of 2022, our gaze is fixed on the future. The lessons learned, the challenges overcome, and the milestones achieved shape our trajectory. Join us as we continue to navigate the financial landscape, sharing insights, victories, and the occasional setback.