Net Worth Review: March 2007

Every month, I give a bit of detail on how my net worth did the prior month. This post will detail how I did in March 2007.

In March 2007, the S&P 500 was up 1.00%. My net worth was flat ("up" exactly 0.00%) during the same time. My net worth is up 0.81% so far for the year and on track to be up 3.24% for the year if it keeps going at this rate. I know, it's not a stellar performance.

But my net worth took an unusual "hit" this month -- one that will be made up in the months to come. In March I made a major contribution to a charity by giving them some shares in a mutual fund. By doing this, I fulfilled a pledge I made to them as well as avoided some major capital gains taxes. This lump sum contribution was a drag on my net worth for this month, but will be made up over the next several months as I take money I would have given the charity and use it to replace the savings I gave in March. Better yet, I'll be able to invest the new savings into index funds to get my investment portfolio where I want it to be.

So, how much of a drag was this contribution to my net worth? Without the donation, my net worth would have been up 1.13% versus the prior month, up 1.94% for the year and on track for a gain of 7.78% for 2007. Still, it wouldn't be setting the world on fire, but 8% annual growth isn't bad -- and it's certainly much better than 3.24%! ;-)

Comments

[Teri]

Great tax planning!

I generally do not know that many people wealthy enough to do so (even a lot of my wealthier clients have most of their wealth tied up in retirement instead of investments) but in general a little known tip if you have more investments than you know what to do with. Or in your case giving you more opportunity to invest while not taking a capital gain hit. Well done.

[JP]

It doesn't take much wealth to utilize this strategy successfully. I like to spread out my donations, giving to a number of charities a little bit at a time. In the past, I would write a few donation checks whenever I had extra funds in my checking account. Now I donate appreciated stocks to a foundation just once or twice a year (daytonfoundation.org) and then periodically direct gifts to my selected charities. I now use the extra funds in my checking account to reinvest in the market. This accomplishes three tasks:
1. Avoidance of capital gains tax.
2. Provides more money for charitable donations.
3. Simplifies tax filing and record keeping - I keep only one receipt from the foundation rather than dozens from the individual charities.

I certainly don't classify myself as wealthy and the Dayton Foundation allows gifts as small as $15.