What I Learned In 2018

December 26, 2018

Editor’s note: As 2018 draws to a close and we launch 2019, I’ve asked each of our bloggers to reflect on their own personal goals, plans or thoughts on the past or upcoming year. Our hope is that you not only draw inspiration from our sharing over the coming weeks, but also that we are all able to feel more connected through our shared human experience and recognize that no matter where we are on our personal financial wellness journeys, that we all have similar hopes, dreams and struggles. Happy holidays! Here’s what Erik has to say:

As we approach the end of the year, it’s a good time to review your progress toward your financial goals and begin thinking about your goals for the new year.

Tracking toward FIRE

In my case, my main goal is to save and invest for financial independence/early retirement (now popularly called “FIRE”). Despite spending more on dining out than I wanted to this year, I’m currently still on track to achieve my goal of having enough assets to cover my basic expenses in about 2-3 years.

Celebrating my anniversary as a real estate investor

The most significant update is that next year will be my 5 year anniversary as a real estate investor. In reviewing the performance of my rental properties, the bad news is that the cash flow has been less than I hoped for, mostly due to higher than expected vacancies and maintenance expenses. The good news is that the properties have appreciated a lot more than I thought they would, which has more than outweighed the lower cash flow.

One thing I learned about myself

One thing I learned is that your risk tolerance can vary based on the type of risk with different investments. For example, I’m much more comfortable with the ups and downs of the stock market than the uncertainty of maintenance expenses, perhaps because I’m simply more familiar with stocks. I also like knowing that I can easily and quickly access my stock investments by selling them at any time, while real estate takes much longer to sell and the final sales price can vary considerably from its estimated value.

For these reasons, I’m considering selling at least some of my rentals next year and reinvesting the proceeds in a more liquid and diversified investment portfolio of stocks and/or index funds. At the very least, I’m no longer planning to buy more properties, especially with today’s higher mortgage rates.

How about you? Are you still on track for your goals? What lessons have you learned? What changes, if any, do you plan to make to your finances for 2019? It’s the perfect time to review those things this week.