Sunday, December 26, 2021

Portfolio Update and Housing Plans

It is the holiday season, and year end. I decided to write a portfolio update and what is happening from my side as I haven't been writing as much as I wanted to this year. I wish everyone a happy holidays and it is a time to appreciate what we have and celebrate.

In the last few months, as same as before, I have not purchased any new stock except for my dividend reinvestment. In December, I have turned dividend reinvestment off, and am now holding the cash. I have also sold some stock (temporarily) to raise cash for housing down payment. I do have to pay a capital gains tax on this, as many of these positions were held for years, over 95% of the proceeds sold are long term gains, so the tax rate will be 15%.

Currently, my cash position is a bit over $320,000 USD. I have sold a bit over $200,000 USD in stock and still own around $955K in stocks. I tried to sell positions that had lesser capital gains and still keep the positions that had huge capital gains to avoid taxes. A lot of this $200K had capital gains, in total there is around $27K of capital gains. I felt selling some overvalued stock to fund a house, at stock all time high levels, is not too bad of a decision; I still hold a lot of stock still so I am still in the market. My total asset position is still around $1.31M USD, so this cash position is around 25% of my portfolio now. I don't think it's a terrible idea to hold a lot of cash at market highs. 

At the moment, I have gotten Pre-Approval from lenders for a mortgage, but due to the limited inventory in winter it's likely that I will have wait until some time in Spring and Summer when I have a better chance to find a home to live in. I have currently sent offers on 3 homes but the seller did not take the offer. For me, I am in no rush to get a house and overpay to get in quicker, I will take my time to find something I like and of good value. My plans for a home are to own it for the long term, at least 20 years, and I believe with an average 3% appreciation rate per year, and a 20% down payment (5 to 1 leverage ratio), the returns on a home can also be decent low double digit percentage over 20 years.

The following are shares that were sold, some were partial positions sold, some had all positions sold.
- Dominion Energy
- AT&T 
- Colgate Palmolive
- 3M Company
- Kimberly Clark
- Johnson and Johnson
- General Dynamics
- General Mills
- Altria
- Philip Morris
- Honeywell
- Coca Cola
- Medtronic

Although right now the housing market is very heated, my rationale is most of my asset and net worth were in stocks, and stocks have also run up a lot, and I am looking to trade one over-valued asset to another over-valued asset to diversify. Both stocks and housing are over-valued, as are many other asset types. The low interest rate and large money supply have increased demand for all forms of assets. If I were holding cash for many years, I would feel worse if I were buying a house now as my effective buying power is less. But since I had most of my money in stocks over the years, I can now diversify my assets from all stocks to now some stock and some housing. The benefit also, is with housing, I can live inside it and also perform reductions in my taxes.