June 2018 NCF Update: Where Should We Invest Our Future Income Returns?

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income returns

We have a few months left to complete our goal. Are we going to be able to meet it by the deadline? Also should we continue to save the income returns in bonds and cash for this goal after we reach it? More questions arise as we get to the end of the road or the continuation of a beautiful journey. 😉


Welcome to the monthly update of our house fund goal aka Nuestra Casa Fund (NCF). Our goal is to save enough to fully fund our home purchase before we retire. We measure our progress by providing a monthly update against our benchmark.


Oh my, it feels like time is just flying by for us. We’re entering the summer months and we are a couple of months away from fulfilling our house savings goal. As you might already know, we’re not planning on buying a house as soon as we retire. We plan to travel a bit and then scout the area of Sarasota, FL, where we might buy, if we like the area well enough to settle there. This process might take anywhere from one to three years after we retire. There’s also no pressure to buy as our funds can at least keep up with inflation.

Beautiful events happening in our lives

So many beautiful things are happening in our lives now. We haven’t been blogging about it because we’re really living and enjoying this moment. You’ll hear more about it soon, but for now, know that 2018 is finally turning out to be a bright year in our personal lives.

Having your financial life in order is great, but that comes second to having the life that you want and with the people who you want to share it with. This is a beautiful chapter in our lives and the financial milestones that we’re reaching will help us live them with intention.

It’s not all about numbers, but the numbers are our friends

We talk about numbers a lot here, and it will be great when we finally get to see how all the savings for financial independence and the house become more than just account balances. A sum of it will be tangible assets that will enhance our lives.

We’re almost done saving for the house. Since our target amount will be met in a couple of months and we’re not buying soon, I was wondering: what should we do with the future income returns from the NCF?

I’m estimating that we’ll get around $450 in monthly income after we finish saving for this goal. Our NCF monthly estimated income is $418.92 as of 5-31-18. We calculate this amount by adding the estimated income that Vanguard provides for each fund in our monthly brokerage statement.

How the NCF Funds Are Invested (as of 5-31-18)
Type of FundAllocation PercentageAverage DurationRisk Potential
Money market20%46 days1
*Ultra-short-term bond3%1 year1
Short-term investment-grade bond39%2.6 years1
Intermediate term bond38%6.1 years2
*As of last month we started investing new money in the shortest term bond fund.

Some things to keep in mind are that we plan to leave the income invested in the house fund account and that we have flexibility with this income. We don’t have to cash it out to buy the house if we incur losses. What should we do? Let us know by voting below and share your thoughts in comments.

What should we do with the income returns from the NCF?
4 votes · 4 answers
Vote

Now, let’s see how we did last month on our house savings goal.

June NCF Update

We expect to meet our goal by August 2018. The allocation for our goal is 80% bonds and 20% cash. We decided on this allocation, so that our goal can keep up with inflation, without risk of major losses during a downturn. Our goal is to manage risk rather than seek huge returns.

Below are our results since we started tracking this goal.

  NCF Monthly Progress Since 2017
MonthPercent of Goal MetBenchmarkPercent Increase Towards 100%
January 201723.9%23.9%N/A
February25.1%26.5%1.2%
March28.5%29.2%3.4%
April28.8%31.8%0.3%
May30.2%34.5%1.4%
June39.1%37.1%8.9%
July46.1%39.8%7%
August49.1%42.4%3%
September (new target)78%77.2%28.9%
October80.5%79.3%2.5%
November82%81.4%1.5%
December85.1%83.6%3.1%
January 201884.9%85.7%-0.2%
February84.6%87.8%-0.4%
March85.9%89.9%1.5%
April86.2%92%0.3%
May88%94.2%1.8%

We made some progress in May, just as we expected. Nothing too crazy, percentage wise, but still advancing towards our goal. Don’t get me wrong, that’s a nice chunk of money we’ve saved. So, by no means am I trying to look down on it. The annual work bonuses that are coming up are looking really good, so we’re confident we can wrap up this goal on time.

NCF returns

The total return for the month was $897.89. The bond funds were up by $482.68 and we had income returns of $415.21. In the future, after we reach our goal, that $415.21 would be the amount that we’d re-invest in either the money market, bond fund or a new stock fund. Help us decide on this one by voting in the poll!

I’m really glad that we decided to blog about this goal. It’s nice to have this journal that we can always go back to, any time we want to see how we accomplished saving cash for our first home. Do you blog about your financial goals or track your progress somewhere?

What personal finance goals do you have for this month? 

Please like & share:
May 2018 NCF Update: Another Month in the Red?
July 2018 NCF Update: It's Amazing What You Can Accomplish With Discipline and Determination

Mr. Enchumbao

I work for a large investment management company helping people save for traditional retirement. During my spare time, I write about our FIRE journey here, at Enchumbao. My journey to FI began in 2012. I was in a lot of debt back then, but I turned things around and became debt free a few years later. My wife and I reached financial independence in 2017 and are preparing to retire soon.

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