FIFoldPath

Monthly Financial Snapshot: August 2022

So, once again, not many changes to report. The market went down quite a bit at the end of August, erasing all the gains it had made since last month. It's pretty frustrating to see the market staying nearly flat (or down) for a year, but it's also probably a good thing in the long term. The CAPE ratio for the US market in August 2021 reached a peak of 37.97 which is a valuation that hadn't been seen since the dot com bubble in the early 2000s. It has since declined to where we are now (just under 30), which is still fairly high compared to the past history, but objectively better than where we were a year ago. Yes, the market has dropped over 10%, but since shares are less expensive per unit of earnings, investors can expect better returns for shares purchased now than shares purchased a year ago. Price matters, so long-term investors shouldn't mind declining prices as much as our emotions sometimes tell us to.

On the other hand, the yen continues to drop in value, reaching 140 per USD which hasn't been seen since the Asian financial crisis of 1997-1998. Since the value decline began in early 2021, I haven't remitted any of my Japanese earnings back to the US to invest because I have been waiting for exchange rates to go back to a "normal" range (below 110 per USD). In the meantime, it forces me to accumulate cash in my bank account here (no interest!) because the US's tax and compliance policy it imposes on other countries and US persons living abroad all but prohibit me from invesing outside of the US. I'm fortunate to have a large amount of USD-denominated assets so that the yen's (and my salary's) fall in value is partly balanced by an increase of my purchasing power, but if prices in Japan start to rise without an increase in salary, it will be a bad situation in the long term. So far things haven't been too bad, but who knows what the future will bring?

Here's a summary of my financial position at this point:

Description 08/22
Total Expenses $2,240.56
Gross Income $4,090.88
Taxes $674.47
Net Income $3,416.41
Savings $1,175.85
Savings Rate 34.4%
Net Worth $403,620.94

Projected time to FI (assuming 6% growth and 4% withdrawal rate): 10 years, 6 months.

© FIFoldPath 2016-2022