Year in Review of My 2023 Investments
About 3.5 years ago, I set a goal to reach $10 million by age 40. However, I set this goal when I lived in an expensive city in Silicon Valley, where median home prices exceeded $1 million. In the specific neighborhood I lived in within that city, homes were easily above the $2 million mark! Now that I live in a town with a lower cost of living in the Dallas metro, it would be tempting to lower that goal. However, I still believe reaching $10 million by 40 is attainable. To help accomplish this goal, I compare my investment performance to the S&P 500’s and Nasdaq’s at the end of every year. In this post, I will share my comparisons and see how my investments fared in 2023.
S&P 500 and Nasdaq Performance
Before I dive into my assessments, I first wanted to note what the S&P 500 and Nasdaq’s returns were for both 2022 and 2023:
S&P 500
2022: -19.44%
2023: +24.2%
If you invested $100,000 on the 1st trading day of 2022, it would have had an ending balance of $85,560. By the end of 2023, that initial investment would have grown to $100,055.
Nasdaq
2022: -33.1%
2023: +43.42%
If you invested $100,000 on the 1st trading day of 2022, it would have had an ending balance of $66,900. By the end of 2023, that initial investment would have decreased to $95,948.
Result
It’s interesting to see that despite the massive comeback for both indices in 2023, they more or less “just” erased the steep losses that were incurred in 2022.
Performance of My Investments in 2023
Across my various investment accounts, returns varied between 25.62 and 82.21%. Because the lowest return basically matched the S&P’s, I am delighted with the outcome. However, the outsized returns of 82.21% signal that I held a sizable allocation of very risky (but high potential) investments. Notably, I held individual stocks such as Nvidia and Amazon, with shares rising 346% and 77%, respectively. Additionally, several index funds like VGT (tech), VUG (growth), and SMH (semiconductors) soared 53%, 47%, and 74%, respectively.
To reduce my risk and volatility, I plan to trim individual stock positions and reallocate them into stabler investments like index funds (you can find my favorite ones in my old blog post). As I inch closer to age 40, I hope to shift most, if not all, my positions into index funds. This would reduce my involvement, improve stability, and increase diversification.
New Investments Made
In 2023, I invested approximately $220,000 through automatic investing. I plan to increase that amount to $260,000 this year, which works out to $5,000 weekly. Doing this alone will increase my net worth by about $1 million every 4 years! Of course, that $1 million should grow by hundreds of thousands over that time.
Additionally, we contributed $66,000 to my partner’s 401(k) last year. Specifically:
Employee: $57,366.83 (mix of pre- and post-tax dollars)
Employer: $8,633.17
This year, I will continue maxing out all retirement accounts that are available to me, including the Mega Backdoor Roth with $69,000 total contributions and two Roth IRAs via Backdoor Roth conversions with $7,000 each.
Final Assessment
All in all, while I saw impressive gains in 2023, I have to remember that I lost a good amount in 2022, roughly $1.7 million. In 2023, I saw my net worth jump back north of $2 million! Yes, I have some risky positions that did well, but the primary reason my net worth surpassed my previous all-time high was not because of any particular investment I made but because I kept investing. I didn’t panic or change my investing strategy when the stock market took a nosedive in 2022. Instead, I kept maxing out retirement accounts and auto-invested through the ups and downs. The strategy is simple and easy to implement, and I find it’s a formula everyone can follow.
If you haven’t already set some financial resolutions for 2024, I hope I’ve inspired you to set some! No matter how big or small the change, every step is another step towards financial freedom.
