by As we march towards our dream of homeownership, our Nuestra Casa Fund (NCF) faced an unexpected hurdle. After months of steady progress, recent bond fund losses have set us back by a few thousand dollars. But the question remains: Can we still reach our savings goal by August?
The NCF Update: A Reality Check
Our NCF goal is simple yet ambitious: save enough to fully fund our home purchase before retirement. We’ve been diligently tracking our progress against a benchmark, providing monthly updates to keep ourselves accountable.
For the first time in seven months, our target amount dipped below our benchmark. Two main factors contributed to this setback:
- We redirected some savings towards other financial goals (as planned).
- The bond market experienced losses (beyond our control).
While the negative returns were significant, we’re not losing sleep over it. Here’s why:
The Power of Perspective
Imagine if we had invested our house fund in stocks instead of bonds. The potential losses could have been far more substantial, especially given the recent market volatility. A 10-20% drop in value within a month? That could be a nightmare when you’re saving for a house!
In the grand scheme of things, these bond market losses are short-term setbacks. As we continue to invest new funds at higher yields, we expect to recover over time.
February-March NCF Update: The Numbers
Our goal remains unchanged: meet our savings target by August 2018. We’ve maintained our 80% bonds and 20% cash allocation, balancing inflation protection with risk management.
Let’s look at our progress since January 2017:
| NCF Monthly Progress Since 2017 | |||
| Month | Percent of Goal Met | Benchmark | Percent Increase Towards 100% |
| January 2017 | 23.9% | 23.9% | N/A |
| February | 25.1% | 26.5% | 1.2% |
| March | 28.5% | 29.2% | 3.4% |
| April | 28.8% | 31.8% | 0.3% |
| May | 30.2% | 34.5% | 1.4% |
| June | 39.1% | 37.1% | 8.9% |
| July | 46.1% | 39.8% | 7% |
| August | 49.1% | 42.4% | 3% |
| September (new target) | 78% | 77.2% | 28.9% |
| October | 80.5% | 79.3% | 2.5% |
| November | 82% | 81.4% | 1.5% |
| December | 85.1% | 83.6% | 3.1% |
| January 2018 | 84.9% | 85.7% | -.2% |
| February | 84.6% | 87.8% | -.4% |
Over the past two months, we’ve seen a slight decrease of 0.6% towards our 100% funding goal.
The Impact of Recent Market Trends
January hit us hard, with bond values decreasing significantly due to higher yields and rising interest rates. This downward trend began in September when we shifted funds from stocks and cash to bonds. However, we’re not panicking–our home purchase is still a few years away, giving us time to recover.
So far this year, we’ve contributed about $1,000 to the NCF. Our contributions have been smaller than usual as we prioritized front-loading our Roth accounts (which we’ve successfully maxed out for 2018!). Now, we can redirect our after-tax income back to the house fund.
The total return for January and February was -$2,306.38, with bond funds down by $3,101.89 and income returns of $795.51.
Silver Linings and Future Plans
These losses aren’t all bad news—they present potential tax-loss harvesting opportunities, which we’ll explore next month.
Remember, our home purchase isn’t planned until at least 2020. This buffer gives us time to recoup losses and adjust our strategy if needed. We could potentially postpone buying or sell some stock funds from our brokerage account if they outperform bonds.
Your Turn: What Are Your Financial Goals?
We’d love to hear about your personal finance goals for this month. Are you saving for a big purchase? Dealing with market fluctuations? Share your experiences in the comments below!
