I’ve done quite a bit of reflecting this past year (Reflecting on spending money, Reflecting on selling our rental house, Reflecting on how these economic good times won’t last forever, Reflecting on being a Dad round 2, to name a few) and I’d like to wrap the year up with a final reflections post on how I think the year went for me. I’d love to share some highs and some lows from our personal finance adventures this year and talk a little on how things have went!

High: Grow net worth by 25%

One of the personal finance new year’s resolutions I laid out in early 2021 was to grow my net worth by 25%. At the time this seemed like quite a lofty goal but we ended up achieving it but quite a lot (closer to 40%). I think Mrs. Money and I exceeding this goal is a combination of 3 things. Firstly, we have good practices in place that are slowly paying off more and more. We each are saving approximately 15% for retirement, I’m contributing 15% to my employer’s stock, we’re paying down our mortgage each month, and saving a little extra here and there when we can. As our income typically grows each year thanks to small but appreciated annual raises at work, the percentages stay the same but the dollar amounts increase which really helps grow our overall net worth.

The second reason I think we exceeded our goal was our commitment to investing more. As I wrote in the article “Why I’m fixated on 8%”, I became much more focused this year on making my money work harder for me. I realized that basically I’m losing money earning a few pennies in my savings accounts while I could be earning much more (albeit taking on more risk) in the stock market and I shifted probably what was a 50-50 split of saving/investing to more of a 80-20 split of investing to savings.

The third reason I think we exceeded our goal is not a great one but it’s due to inflation. A little bit of inflation is good for a healthy growing economy but too much (in my opinion like we’re seeing now) can stall or slow growth and have negative effects on the economy. Just reflect in your own life if things are costing more than they used to – even earlier this year. I’ve definitely noticed it with gas, groceries and pretty much any service I’m purchasing. The flip side of inflation is that stocks and investments are also inflating, i.e. going up in price. So I suppose if there is going to be inflation, I am thankful to be invested out of cash (which loses value) and into investments, which will rise with the overall inflationary trend.

Exceeding this goal was definitely a high point for me and I’m glad our hard work with a little luck is paying off!

In another post I did over the summer, I laid out what was on my mind financially for 2021. Here are the 3 things I laid out which I worked on and definitely are some highs for Mrs. Money and I!

High: Getting a lay of the land

The YoungMoneyFinance family of 4 now have had a lot of changes over the past year or two. Our family doubled in size from 2 to 4, we bought, sold, bought, sold our primary residences and rental house. We’ve changed jobs, gotten life insurance, bought Bitcoin and maintained side hustles! It was all really good things but it just felt like we were a bit all over the place.

Over the summer and early fall, I took the time to try to get our stuff better organized and to get a better grasp on our overall financial health. Earlier this year I actually met with a financial advisor to get a quick 2^nd set of eyes on everything and that helped boost my confidence. I made some changes to our saving and investing strategy and also updated our Wills and my ‘master cheat cheet’, i.e. how Mrs. Money or the executor of our Will could access in case of my (or Mrs. Money’s) untimely demise. Overall this was a high for me being able get my financial house better in order which allowed me to better focus on growth moving forward!

High: Maximize tax benefits

While getting my financial house in order and getting a better ‘lay of the land’, I realized that I was not being as effective as I could when it came to tax strategies. There are several tax favored accounts that I was not fully taking advantage of. One big one was my 401(k) retirement account through work. You can contribute $19,500 each year to your work-sponsored retirement account and I was not fully maximizing this benefit. The reason I shifted strategies was because I realized that the reason I wasn’t maxing it out was because I was focused on other lower-priority things like my savings account. Going back to the “focusing on 8%”, I’ve recommitted to having my money work hard for me and so that means saving less and investing more. With investing more, I decided I might as well do so in a way that would save me on taxes in the long run!

While I didn’t make this change until later in the year (low), I’m glad that I did and am making it happen moving forward (high)!

High: Slow and steady growth

This is a mantra that I’ve adopted and am really thankful I did. I detailed my thoughts more in a lengthier post, but I would find myself getting anxious, worrying more than I should, and getting outside of my comfort zone to chase riskier investments. Whether it was Dogecoin, or meme stocks like Gamestop, I found myself getting caught up in the excitement and FOMO (fear of missing out) kicking in this ended up distracting me from my plan of playing it safer. I ended up admitting to myself that this strategy was not for me and that I should focus less on chasing quick returns and instead focus on my strategy of slow and steady growth.

High: Selling Our First House

Over the summer we ended up selling the first house we purchased and lived in, that we also turned into a rental for 2.5 years. It was quite a roller coaster going from homeowner to landlord to selling the house. Looking back it all worked out super well, and I pat my younger self for making the decision to buy that house years ago. We got a bit lucky buying into an area that had a high price appreciation, but we were also smart, methodical and strategic throughout the entire process. We sought good advice and counsel from friends or colleagues with experience and leaned in to taking appropriate risk throughout the process. It was of course a bit scary buying a house, signing that loan note for the next 30 years, putting it for rent, repairing damage, paying taxes and putting it on the market but I’m glad we did all those things and am thankful for how it turned out!

Low: Not investing more

One low or area for improvement for next year is around us not investing more. As mentioned previously, we did end up shifting our extra money each month more into investing and less saving but I wish I did that earlier and wish I did more of it. A large chunk of the proceeds from the sale of our investment strategy is currently sitting in a high-yield savings account that is paying 0.4%. With inflation at 6% this year, I’m very aware that I’m essentially losing money each month it sits there. I found myself falling back into the fear of losing money on investments and so that kept me from investing more. I’ve slowly been buying into the market (which is wise to dollar cost average my investments, i.e. buy a little each week) but it was at such a slow pace that I’m worried I was falling behind. I’ve really tried to focus on growth all throughout my portfolio and sticking to my strategy of investing!

High/Low: Buying bitcoin but getting a tax headache

I hope you’re not sick of me talking about bitcoin but it’s been a wild ride for me this year. After turning my nose up at it for 8 years (I first learned about it in 2013 and actually wrote about it then), I changed my tune and bought some in January of 2021. I’ve bought a little here and there throughout the year and as of right now my return is 6%. (it’s been as low as negative and as high as 40%). 6% is certainly a good return until you consider that my favorite index fund ($VTI) grew 25% this year. VTI is a lot safer than bitcoin!

While on paternity leave with SegundoMoneyFinance, I went pretty deep into cryptotwitter and crypto itself. I ended up staking some crypto, chasing yields to earn 5% on my bitcoin, and even buying a gaming PC to mine a cryptocurrency.

I’m not bummed I got into crypto, in fact I’m quite glad, and I haven’t lost money on it so that’s good. However, I’m now running into a new headache around filing taxes. Cyrpto losses and gains are reportable and I now have 168 transactions that I need to report on! I’m going to have to end up paying for a crypto tax filing software on top of my regular tax filing software!

Summary

2021 has been another good year and I’m glad Mrs. Money and I a) stuck to the basics of saving and investing, b) took appropriate risks to grow our money and c) tried out a few new things (like crypto)!