Taking Assessment of My Portfolio Returns, Part 3: Cash Accounts

In the 1st part of this series I determined that the total return for my net worth was a measly $2,094. In the 2nd part, I found my retirement accounts had a respectable return of $8,331 for the year.

Now I want to see what return I had on my cash investments. Basically I am accounting for all the available cash I held in checking, savings, and money market accounts in 2005. Since some accounts (such as my free checking account) yield nothing, while others such as Emigrant Direct yielded between 4.0-4.25% throughout the year, I am expecting only I small return on this money. After all the point of having this money in these accounts is not necessarily to yield the best return, but to maintain readily available cash, not to lose value, and earn a risk free return on my investment.

However, there is a little wrinkle when it comes to my cash return because I actually have a sizable amount of cash in these investments, but they are offset with almost matching liabilities such as 0% APR balances, rental deposits from the rental property, and estimated tax liability.

I have decided to look at both the "Total Cash" return and "Net Cash" return to get a better idea how this money performed. The bottom line is this money only represents a really small portion of my net worth once the liabilities are accounted for.

Here is a table of the current liabilities that offset much of my savings:

	12/31/2004	12/31/2005
0% APR balances	$ (18,465.00)	$(28,811.00)
Rental Deposits	$ -	$ (1,000.00)
Earmarked Tax Liability	$ -	$ (3,000.00)
Total	$ (18,465.00)	$(32,811.00)

The following table shows the total cash I had at on 12/31/2004 & 12/31/2005. It also includes a "Net Cash" line item which is the "Total Cash" minus the liabilities from above. Also note the "Net Cash" return is the same as the "Total Cash" since there were no carrying costs for any of the liabilities:

	12/31/2004	12/31/2005	Return	RoR
Total Cash	$ 18,541.87	$ 35,721.12	$ 778.06	4.20%
Net Cash	$ 76.87	$ 2,910.12	$ 778.06	1012.18%

I can't complain about the return on this money. My use of leverage has allowed me to earn a considerable amount in cash investments for 2005.

I'll be continuing this series by looking at my 2005 returns for my investment accounts, ESPP & stock options, and rental property.

Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7

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Comments (4)

DATE: 10:03 AM
2million - interesting posts. My stock portfolio declined by 1.2% in Feb after gaining 5.8% in Jan. Interesting to see how you did.financeguyhttp://finnews.blogspot.com

Posted by Anonymous | September 10, 2006 3:17 PM

DATE: 10:58 AM
A little confused. Maybe you could expound on your explanation. I am not sure where you are getting your return figure of $778.06?

Posted by Anonymous | September 10, 2006 3:17 PM

DATE: 1:14 PM
Sorry for the confusion. The $778.06 is the net interest return I received from the holdings in these accounts. It is mostly interest paid in my EmigrantDirect account, however, it does include some other accounts like my HSBC savings account and Etrade money market account.

Posted by 2million | September 10, 2006 3:17 PM

DATE: 4:33 PM
That is what I was thinking. Thank you for the clarification. Love your site.

Posted by Anonymous | September 10, 2006 3:17 PM