A Small Summary for 2020

A Small Summary for 2020

 

[1]. Give Thanks

Everyone in my family, extended family, and relatives in China is healthy. Thank God no one has got the virus.  Thank God, our rental properties have been doing relatively well.

 

[2].  2020 is the 9th year of investing for my wife and I.  In 2011, my daghter's sickness prompted me to start to lay a financial foundation for the family.

As of 12/31/2020, our humble wealth grew to $6.97 million. 

12/30/2019 was $5.5 million.

Wealth growth rate in 2020 = (6.97-5.5)/5.5 = 26%.

 

[3].  Mistake

In February 2020, I was negotiating to buy a townhouse as a rental property. We submitted the contract twice, and I was only $5000 away from grabbing that house, but I waked away.  Then Covid hit, and I thought that I did the right thing to have walked away, thinking that prices for townhouses would drop.  By May, I started looking again and the price had already jumped.  I lost a good deal.  It also shows how difficult it is to try to predict the market.

 

[4].  SP 500 Investing Using Lender’s Money

            From March through October, I used a line of credit, a HELOC and two cash-out refinances to borrow money and invest in SP 500.  About 30% increase in 2020, and the net profit (after deducting the interest payments) = $283,000.

 

[5].  Lost Opportunities

            In March, I contacted several lenders to get loans. One local bank’s VP knows me and she approved my loan, and we signed all the paperwork.  The VP submitted it to the board for approval. By then, Covid was surging, and the board got scared, and denied my loan application.  Another lender considered my loan application for several months and did nothing.  If I had gotten these loans, my SP 500 profit would have been higher.

 

[6].  My limitation

            Some people invested in individual stocks and made huge returns in 2020.  Some people did frequent trading and made a killing.  My limitation is that I cannot do these things.  My preference is to do passive investing and spend little time.  This personality limited my rate of return in 2020.

 

Wishing you a happy, healthy and prosperous 2021!

 

David Meng, author of book “$5 Million in 8 Years: Real Estate Investing on the Side”