Currency fluctuation and our portfolios

 

On June 20, the US dollar dropped 2 cents relative to the Canadian dollar.

Somewhat fewer than 50% of Monday Morning Millionaire Program members are Americans, somewhat fewer than 50% are Canadians and the rest are from other English-speaking countries.  The millions of Americans and Canadians visiting each other’s countries each year have a long accepted the currency difference. ($US1.00 roughly equals $CAD1.30.)

A two cent daily move, that is, a 2% move up or down, is meaningless when buying a hamburger or gasoline or going to a show. We tend to ignore it. But it is a $50,000 gain or loss in one day in the portfolios of many Monday Morning Millionaire Program members. That is hard to ignore.

Let us look at the math.

On June 3, 2019, our blog Enough! How much is enough?  referred to a CNN article titled Is $2 million enough to feel wealthy?  That article mentioned an interesting survey by Charles Schwab which showed that a net worth of $2.27 million would allow most people to feel wealthy.

Consider the following:

  1. Members of the Monday Morning Millionaire Program have an annual income of about $100,000 on the average. (Most are dentists, veterinarians and optometrists. Their average incomes are easy to find on the Internet.)
  2. The six habits promoted by the Monday Morning Millionaire Program promise that members will be able to maintain their career income level into retirement without encroaching on the principal.
  3. A 4% rate of withdrawal is widely considered by experts as a safe way to do so.
  4. The portfolio(s) size which would allow a 4% withdrawal rate to generate $100,000 without encroaching on the principal is $2.5 million. (4/100 x $2,500,000 = $100,000)

Monday Morning Millionaire Program members either are already there or are well on the way to getting there.

2% of $2,500,000 is $50,000!

The bottom line here is that investors need to consider percentages as well as cash amounts when reviewing investing activities.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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