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Bogleheads
Investing Advice Inspired by Jack Bogle
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| What's your net worth ? |
| 1.00 - 50,000.00 |
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5% |
[ 19 ] |
| 50,001.00 - 100,000.00 |
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5% |
[ 20 ] |
| 101,001.00 - 200,000.00 |
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8% |
[ 29 ] |
| 200.001.00 - 300,000.00 |
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6% |
[ 22 ] |
| 300,001.00 - 400,000.00 |
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6% |
[ 23 ] |
| 400,001.00 - 500,000.00 |
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2% |
[ 9 ] |
| 500,001.00 - 750,000.00 |
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6% |
[ 22 ] |
| 750,001.00 - 1,000,000.00 |
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8% |
[ 29 ] |
| 1.000,001.00 - 1,500,000.00 |
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16% |
[ 56 ] |
| 1.500,001.00 - 2,000,000.00 |
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9% |
[ 33 ] |
| 2.000,001.00 - 5,000,000.00 |
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17% |
[ 59 ] |
| ABOVE 5,000,000.00 |
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4% |
[ 16 ] |
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| Total Votes : 337 |
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| Author |
Message |
jdrmlr
Joined: 27 Oct 2008
Posts: 28
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 Posted: Mon Feb 08, 2010 11:44 am Post subject: What is your worth in stocks,bonds,cd,s,cash & real esta |
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| I thought it might be interesting to see what Boggelheads estimated net worth might be. Please include stocks, bonds, cds, cash and real estate. Also, if you dare, your age. |
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Bounca
Joined: 26 Feb 2007
Posts: 735
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| Posted: Mon Feb 08, 2010 11:53 am Post subject: |
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$256,440.74
According to my Bank of America net worth calculator that incorporates Zillow into house value.
We need a sister poll on how many kids everyone has. |
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chaz
Joined: 27 Feb 2007
Posts: 6639
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555
Joined: 24 Dec 2009
Posts: 449
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| Posted: Mon Feb 08, 2010 1:09 pm Post subject: . |
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.
Last edited by 555 on Fri Mar 26, 2010 1:31 am; edited 2 times in total |
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EmergDoc
Joined: 02 Mar 2007
Posts: 6068
Location: Greatest Snow On Earth
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| Posted: Mon Feb 08, 2010 1:18 pm Post subject: |
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Been done before
http://www.bogleheads.org/foru....+net+worth
_________________
1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course |
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Snowjob
Joined: 28 Jun 2009
Posts: 387
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| Posted: Mon Feb 08, 2010 1:58 pm Post subject: |
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Yah but having been reading this site for 3 years most everything that gets posted has been done before in some form or another.
I didnt participate in the last poll but it does feel good to have improved my net worth between then and now. Although that is easier for us young people with smaller bases.. |
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House Blend
Joined: 04 May 2007
Posts: 739
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| Posted: Mon Feb 08, 2010 3:33 pm Post subject: |
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Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
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bearwolf
Joined: 18 May 2008
Posts: 1037
Location: Oklahoma
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| Posted: Mon Feb 08, 2010 3:38 pm Post subject: |
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But not since 2007. Probably lots of new members since then. And it would be interesting to see the changes since then.
BearWolf |
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Sheepdog
Joined: 27 Feb 2007
Posts: 1581
Location: Indiana, retired 1998 age 65
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| Posted: Mon Feb 08, 2010 3:44 pm Post subject: |
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I did check my holdings anonymously, but I would never let my net worth be known on any website, or in person, for that matter. If can be dangerous.
_________________
I am not young enough to know everything..Oscar Wilde |
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livesoft
Joined: 01 Mar 2007
Posts: 12030
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| Posted: Mon Feb 08, 2010 4:46 pm Post subject: |
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| Sheepdog wrote: | | I did check my holdings anonymously, but I would never let my net worth be known on any website, or in person, for that matter. If can be dangerous. |
What about all those folks who are officers in publicly-traded companies? A friend of mine had about $4million in compensation in 2008 and it is all there on the corporate web site. |
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DartThrower
Joined: 11 Mar 2009
Posts: 483
Location: Philadelphia
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| Posted: Mon Feb 08, 2010 4:52 pm Post subject: |
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I was hoping to find a post explaining how you can take it with you.
As for me, well, I have "enough".
_________________
The two most powerful warriors are patience and time.
— Leo Tolstoy |
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Ron
Joined: 23 Feb 2007
Posts: 3834
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| Posted: Mon Feb 08, 2010 5:49 pm Post subject: |
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| 555 wrote: | | You forgot an option. |
"Are you telling the truth?" 
(That, along with age)...
- Ron |
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bhzmark
Joined: 02 Feb 2009
Posts: 151
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| Posted: Mon Feb 08, 2010 9:01 pm Post subject: |
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| House Blend wrote: | | I don't consider personal (real) property as part of my net worth. . . . If I sell it, I'll need to either buy something else, or start paying rent. |
Equity in your home is just like any other asset. You could do a cash out refinance or HELOC and put the cash from equity in your investment acct. Or you could take cash in your investment accts and pay off your mortgage. Either transaction shows that equity in your home is substitute for cash in your investment acct.
The equity in your home might go up or down -- but that isn't different from the equity in your investment accts.
I don't understand not including your home equity in your net worth. |
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mptfan
Joined: 05 Mar 2007
Posts: 1890
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| Posted: Mon Feb 08, 2010 9:34 pm Post subject: |
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| bhzmark wrote: | | House Blend wrote: | | I don't consider personal (real) property as part of my net worth. . . . If I sell it, I'll need to either buy something else, or start paying rent. |
Equity in your home is just like any other asset. You could do a cash out refinance or HELOC and put the cash from equity in your investment acct. Or you could take cash in your investment accts and pay off your mortgage. Either transaction shows that equity in your home is substitute for cash in your investment acct.
The equity in your home might go up or down -- but that isn't different from the equity in your investment accts.
I don't understand not including your home equity in your net worth. |
Perhaps I can help you to understand some of the differences between home equity and savings accounts. First, most lenders will not allow you to refinance or give you a HELOC for more than 80% of the appraised value. So 20% of the value of your house typically cannot be accessed, whereas 100% of an investment savings account can be accessed. Second, if you do not have sufficient provable earned income to qualify for a loan, most lenders will not (at least anymore) loan you money, regardless of how much equity you have in your house. This is in contrast to a savings account which can be accessed at any time, regardless of your income. Third, if you spend all of your savings, and you do not replenish it, you will still have a place to live...but if you spend all of the HELOC or mortgage loan, and you don't pay it back, the lender can foreclose and you will have to move out, and your credit will be ruined in the process. |
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avalpert
Joined: 22 Mar 2008
Posts: 1767
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| Posted: Mon Feb 08, 2010 10:47 pm Post subject: |
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| mptfan wrote: |
Perhaps I can help you to understand some of the differences between home equity and savings accounts. First, most lenders will not allow you to refinance or give you a HELOC for more than 80% of the appraised value. So 20% of the value of your house typically cannot be accessed, whereas 100% of an investment savings account can be accessed. Second, if you do not have sufficient provable earned income to qualify for a loan, most lenders will not (at least anymore) loan you money, regardless of how much equity you have in your house. This is in contrast to a savings account which can be accessed at any time, regardless of your income. Third, if you spend all of your savings, and you do not replenish it, you will still have a place to live...but if you spend all of the HELOC or mortgage loan, and you don't pay it back, the lender can foreclose and you will have to move out, and your credit will be ruined in the process. |
The equity in your home may not be your most liquid asset - but it is still an asset. I have money in a TIAA Traditional Account that isn't very liquid - it would take me a long time to access 80% of it - it is still part of my networth and an important part of my portfolio.
I don't see home ownership as a great investment vehicle but to ignore a large asset that you own simply because it isn't as liquid as a savings account isn't a rational approach to personal finance. |
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market timer
Joined: 21 Aug 2007
Posts: 3076
Location: -$70K
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| Posted: Mon Feb 08, 2010 10:58 pm Post subject: |
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| House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
That's like saying I shouldn't include my $50K of stored peanut butter as an asset, because I'll have to eat it eventually or starve. |
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House Blend
Joined: 04 May 2007
Posts: 739
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| Posted: Mon Feb 08, 2010 11:00 pm Post subject: |
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| bhzmark wrote: | | House Blend wrote: | | I don't consider personal (real) property as part of my net worth. . . . If I sell it, I'll need to either buy something else, or start paying rent. |
Equity in your home is just like any other asset. You could do a cash out refinance or HELOC and put the cash from equity in your investment acct. Or you could take cash in your investment accts and pay off your mortgage. Either transaction shows that equity in your home is substitute for cash in your investment acct.
The equity in your home might go up or down -- but that isn't different from the equity in your investment accts.
I don't understand not including your home equity in your net worth. |
While some people (not me) view their home as an investment asset, I don't agree that it is an asset "like any other". Using a HELOC etc to invest in the marketplace is much costlier and riskier than investing a percentage of each paycheck.
Does that mean that everyone with a mortgage and sufficient liquid assets to pay off that mortgage is using leverage? I don't have a strong opinion on that point, but I do think that there is a subtle continuum between using a mortgage strictly as a means to purchase a home, and as a means to invest. |
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House Blend
Joined: 04 May 2007
Posts: 739
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| Posted: Mon Feb 08, 2010 11:04 pm Post subject: |
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| market timer wrote: | | House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
That's like saying I shouldn't include my $50K of stored peanut butter as an asset, because I'll have to eat it eventually or starve. |
No it isn't. It's more like saying I shouldn't include my $50K jar for storing peanut butter because I have to have some means of storing my peanut butter, the market for peanut butter jars is not liquid, and the only ones that are sufficient for my needs all cost similar amounts, or more. |
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market timer
Joined: 21 Aug 2007
Posts: 3076
Location: -$70K
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| Posted: Mon Feb 08, 2010 11:15 pm Post subject: |
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| House Blend wrote: | | market timer wrote: | | House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
That's like saying I shouldn't include my $50K of stored peanut butter as an asset, because I'll have to eat it eventually or starve. |
No it isn't. It's more like saying I shouldn't include my $50K jar for storing peanut butter because I have to have some means of storing my peanut butter, the market for peanut butter jars is not liquid, and the only ones that are sufficient for my needs all cost similar amounts, or more. |
I'll have to mull this over in the jacuzzi, which may in fact be a liability. |
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sscritic
Joined: 06 Sep 2007
Posts: 3694
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| Posted: Mon Feb 08, 2010 11:15 pm Post subject: |
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| House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
I sold my house and rent. How much should I deduct from my net worth for the rent I pay each month?
I don't think I should deduct any of my monthly expenses from my net worth, but it sounds like you think I should. I know I am putting a few words in your mouth, but you equated the equity in your home with the rent that I pay. You don't count the equity that you have so I don't think you want me to count the equity I used to have in my home.
In other words, I don't think selling my home changed my net worth. If you agree, then how do I count that $400,000 I have at Vanguard? |
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House Blend
Joined: 04 May 2007
Posts: 739
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| Posted: Mon Feb 08, 2010 11:44 pm Post subject: |
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| sscritic wrote: | | House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
I sold my house and rent. How much should I deduct from my net worth for the rent I pay each month?
I don't think I should deduct any of my monthly expenses from my net worth, but it sounds like you think I should. I know I am putting a few words in your mouth, but you equated the equity in your home with the rent that I pay. You don't count the equity that you have so I don't think you want me to count the equity I used to have in my home.
In other words, I don't think selling my home changed my net worth. If you agree, then how do I count that $400,000 I have at Vanguard? |
I guess we have to agree on what the words "net worth" mean.
I suppose the literal interpretation is the cash value of all assets minus liabilities.
Never mind the fact that one can only guess the value of a 1982 Ford Fiesta, or a 1967 Mickey Mantle baseball card, until after it is sold.
So to help you understand my original post, let me rephrase it as: "I don't consider net worth to be a useful number worth tracking. [My heirs might disagree.] What I do track is the total of my investment portfolio, and I don't regard equity in my home to be part of it."
So, you sold your house for $400K, and now rent. If it were me, I would consider that $400K to (only now) be part of my investment portfolio, and would reassess my new cash flow needs (rent vs. property taxes etc). |
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joe8d
Joined: 20 Feb 2007
Posts: 1297
Location: Buffalo,NY
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| Posted: Tue Feb 09, 2010 12:51 am Post subject: |
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House Blend wrote:
| Quote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
House Blend,I agree with you.I never count condo or any personal possessions, even though they are all paid for, into net worth.
_________________
All the Best,
Joe |
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mptfan
Joined: 05 Mar 2007
Posts: 1890
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| Posted: Tue Feb 09, 2010 12:39 pm Post subject: |
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| avalpert wrote: | | mptfan wrote: |
Perhaps I can help you to understand some of the differences between home equity and savings accounts. First, most lenders will not allow you to refinance or give you a HELOC for more than 80% of the appraised value. So 20% of the value of your house typically cannot be accessed, whereas 100% of an investment savings account can be accessed. Second, if you do not have sufficient provable earned income to qualify for a loan, most lenders will not (at least anymore) loan you money, regardless of how much equity you have in your house. This is in contrast to a savings account which can be accessed at any time, regardless of your income. Third, if you spend all of your savings, and you do not replenish it, you will still have a place to live...but if you spend all of the HELOC or mortgage loan, and you don't pay it back, the lender can foreclose and you will have to move out, and your credit will be ruined in the process. |
The equity in your home may not be your most liquid asset - but it is still an asset. I have money in a TIAA Traditional Account that isn't very liquid - it would take me a long time to access 80% of it - it is still part of my networth and an important part of my portfolio.
I don't see home ownership as a great investment vehicle but to ignore a large asset that you own simply because it isn't as liquid as a savings account isn't a rational approach to personal finance. |
I did not suggest that home equity was not an asset, or that it should be ignored, or that it should be excluded from your net worth. |
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conundrum
Joined: 09 May 2009
Posts: 647
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| Posted: Tue Feb 09, 2010 2:09 pm Post subject: |
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We do not track our net worth but chose to track our liquid investable assets. Our withdrawal rate/ spending is based only on the value of our liquid portfolio so our net worth has no real significance for us.
Drum  |
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rrosenkoetter
Joined: 06 Jun 2008
Posts: 1534
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| Posted: Tue Feb 09, 2010 2:21 pm Post subject: |
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| House Blend wrote: | | sscritic wrote: | | House Blend wrote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
I sold my house and rent. How much should I deduct from my net worth for the rent I pay each month?
I don't think I should deduct any of my monthly expenses from my net worth, but it sounds like you think I should. I know I am putting a few words in your mouth, but you equated the equity in your home with the rent that I pay. You don't count the equity that you have so I don't think you want me to count the equity I used to have in my home.
In other words, I don't think selling my home changed my net worth. If you agree, then how do I count that $400,000 I have at Vanguard? |
I guess we have to agree on what the words "net worth" mean.
I suppose the literal interpretation is the cash value of all assets minus liabilities.
Never mind the fact that one can only guess the value of a 1982 Ford Fiesta, or a 1967 Mickey Mantle baseball card, until after it is sold.
So to help you understand my original post, let me rephrase it as: "I don't consider net worth to be a useful number worth tracking. [My heirs might disagree.] What I do track is the total of my investment portfolio, and I don't regard equity in my home to be part of it."
So, you sold your house for $400K, and now rent. If it were me, I would consider that $400K to (only now) be part of my investment portfolio, and would reassess my new cash flow needs (rent vs. property taxes etc). |
I also never consider my house equity as part of my "net worth"...
My goal is to get my net worth to a point where by cashing out 3% of it a year, I can pay my living expenses...
My house equity is useless for that calculation... I don't intend to downsize if I can help it...
If you sold your house and rent now, yes your net worth went up $400k... but your living expenses went up too... hopefully that $400k generates enough income all by itself to pay your increase in living expenses (3% of 400k is only $1000 a month - it would be a net loss for me if my rent was higher than that).
What I'm saying is, that equity in the house is a wash... If I access it, my living expenses go up, and the whole point of net worth is to have enough to pay living expenses someday...
I'd much rather plan without considering my house equity... My goal is NOT to have to downsize to a crappy apartment in order to retire... |
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conundrum
Joined: 09 May 2009
Posts: 647
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| Posted: Tue Feb 09, 2010 3:01 pm Post subject: |
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rrosenkoetter
Our approach sounds very similar to yours. What we are interested in is the actual portfolio from which we can take withdrawals. Our home is a neutral asset as we need a place to live. Other things commonly put into net worth including cars, household items, etc. do not contribute to any income stream or total return that can be used for spending/withdrawals in retirement.
Drum |
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skow
Joined: 09 Mar 2007
Posts: 34
Location: Seattle, WA
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| Posted: Tue Feb 09, 2010 3:01 pm Post subject: |
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| Given that the median net worth of an American household is about $90k (from wikipedia), it would seem that the bogleheads are a very rich bunch. |
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celia
Joined: 09 Mar 2008
Posts: 876
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| Posted: Tue Feb 09, 2010 3:23 pm Post subject: |
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| 555 wrote: | | You forgot an option. |
Agree, where are the negative numbers? |
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matt
Joined: 04 Mar 2007
Posts: 1415
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| Posted: Tue Feb 09, 2010 3:28 pm Post subject: |
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House Blend wrote:
| Quote: | | I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. |
My stocks and bonds will pay me dividends in the future, but I don't add them to my net worth; I just use current prices. Why? Because the market has discounted that future income into today's price. Guess what? The market has also discounted all of the expenses of your house into it's price, too.
Home equity is part of net worth, but may or may not be part of liquid net worth. By excluding it, you are implying that a $300,000 house with a $250,000 loan is no different than a $300,000 with no debt. |
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avalpert
Joined: 22 Mar 2008
Posts: 1767
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| Posted: Tue Feb 09, 2010 4:15 pm Post subject: |
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| skow wrote: | | Given that the median net worth of an American household is about $90k (from wikipedia), it would seem that the bogleheads are a very rich bunch. |
Nah, as this poll shows I am clearly middle class... |
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avalpert
Joined: 22 Mar 2008
Posts: 1767
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| Posted: Tue Feb 09, 2010 4:20 pm Post subject: |
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| rrosenkoetter wrote: |
I also never consider my house equity as part of my "net worth"...
My goal is to get my net worth to a point where by cashing out 3% of it a year, I can pay my living expenses...
My house equity is useless for that calculation... I don't intend to downsize if I can help it...
If you sold your house and rent now, yes your net worth went up $400k... but your living expenses went up too... hopefully that $400k generates enough income all by itself to pay your increase in living expenses (3% of 400k is only $1000 a month - it would be a net loss for me if my rent was higher than that).
What I'm saying is, that equity in the house is a wash... If I access it, my living expenses go up, and the whole point of net worth is to have enough to pay living expenses someday...
I'd much rather plan without considering my house equity... My goal is NOT to have to downsize to a crappy apartment in order to retire... |
It seems you are just using the term 'net worth' differently than its technical definition. Nothing wrong with that if your use is what you find useful but using personal definitions in broader conversations is unlikely to be very fruitful. |
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venard5
Joined: 01 Jan 2008
Posts: 25
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| Posted: Tue Feb 09, 2010 5:41 pm Post subject: |
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I understand the concept of "net worth", but as a practical matter I fall into the group that excludes the value of my home, cars, etc. when I think of my "assets".
In fact, I usually think that my home and cars are like my children when they were younger; I have to feed them.
Bill |
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ruralavalon
Joined: 02 Feb 2008
Posts: 1004
Location: Illinois
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| Posted: Tue Feb 09, 2010 5:55 pm Post subject: |
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We track (1) net worth including illiquid assets like our home, and (2) investment assets.
Both are important numbers to know, they just have different importance and different uses.
_________________
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
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avalpert
Joined: 22 Mar 2008
Posts: 1767
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| Posted: Tue Feb 09, 2010 6:20 pm Post subject: |
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| venard5 wrote: | I understand the concept of "net worth", but as a practical matter I fall into the group that excludes the value of my home, cars, etc. when I think of my "assets".
In fact, I usually think that my home and cars are like my children when they were younger; I have to feed them.
Bill |
Yeah, but unlike the children I can sell my house and cars for cash |
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vfxdrummer
Joined: 18 Jan 2010
Posts: 28
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| Posted: Tue Feb 09, 2010 6:32 pm Post subject: |
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| You guys are loaded! |
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avalpert
Joined: 22 Mar 2008
Posts: 1767
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| Posted: Tue Feb 09, 2010 6:34 pm Post subject: |
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| vfxdrummer wrote: | | You guys are loaded! |
Typically not until 1pm |
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Boris
Joined: 27 Feb 2007
Posts: 529
Location: CT
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| Posted: Tue Feb 09, 2010 6:44 pm Post subject: |
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| skow wrote: | | Given that the median net worth of an American household is about $90k (from wikipedia), it would seem that the bogleheads are a very rich bunch. |
There should be a 'median' age to go along with that net worth... or brackets of ages. Same with the forum.
_________________
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing."
- John C. Bogle quoting Shakespeare |
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sscritic
Joined: 06 Sep 2007
Posts: 3694
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| Posted: Tue Feb 09, 2010 6:57 pm Post subject: |
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| rrosenkoetter wrote: |
If you sold your house and rent now, yes your net worth went up $400k... but your living expenses went up too... hopefully that $400k generates enough income all by itself to pay your increase in living expenses (3% of 400k is only $1000 a month - it would be a net loss for me if my rent was higher than that). |
House value $800,000. Mortgage $400,000. Taxes 2%, upkeep 1%. Interest rate 5%. Annual cost of house = $16,000 + $8,000 + $20,000 = $44,000 or $3,667 a month.
Sell house (thereby eliminating taxes, upkeep, and mortgage) and earn 3% on equity of $400,000 or $1,000 a month.
By selling the house and investing, you net $4,667 a month minus the cost of the rental. You really can't find a decent place where you live for $4,667 a month? What do $800,000 homes rent for? A price to annual rent ratio of 16 implies a monthly rent of $4,167. (If your area still has ratios around 20, the rent would be $3,333 a month).
I believe that more expensive homes have a higher ratio (e.g., a $400,000 home will rent for more than half of what a $800,000 home would rent for), so the higher ratios might be applicable here. |
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stevewolfe
Joined: 10 Oct 2008
Posts: 344
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| Posted: Tue Feb 09, 2010 7:30 pm Post subject: |
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When we owed money on our home, we included the debt in our net worth calculation. Now that we have paid off the home we also include the asset in our net worth calculations.
However, we also have a second line in the spreadsheet that shows net worth minus the home. It's not that big of a deal - |
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LH
Joined: 14 Mar 2007
Posts: 2477
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| Posted: Tue Feb 09, 2010 7:36 pm Post subject: |
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| joe8d wrote: | House Blend wrote:
| Quote: | Doesn't change my answer, but I don't consider personal (real) property as part of my net worth. It is primarily a liability (property tax, insurance, maintenance), not an asset. If I sell it, I'll need to either buy something else, or start paying rent. I suppose homelessness by choice is a third option.
Investment property would be a different story. |
House Blend,I agree with you.I never count condo or any personal possessions, even though they are all paid for, into net worth. |
If the condo is fully paid for, yet not part of your net worth, let me know when you move, I will sell it for you, and keep the "nonexistant" proceeds : ) |
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traineeinvestor
Joined: 26 Nov 2008
Posts: 280
Location: Hong Kong
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| Posted: Tue Feb 09, 2010 8:33 pm Post subject: |
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I'm always amazed at claims that home equity is not part of net worth.
It is an asset and it has value. The fact that it may not be liquid, may not be cash flow generating (although savings on rent net of expenses could be viewed as a form of cahs flow) and may (or may not) be viewed as an investment do not detract from the fact that it is an asset and has value.
If you do not want to take it into consideration when planning for retirement fine (and I can understand why people would not want to do that), but what is then being measured is a sub-set of net worth (not the whole).
To use a simplistic example, if person A has investable assets of $500K and rents while perspn B also has investable assets of $500K and also owns his/her home outright, excluding B's home equity would result in A and B having the same net worth which is clearly absurd.
On a slightly different point, net worth comparisons are not that meaningful without taking into account factors such as age, expenditure, the present value of SS, annuities and other income streams and other factors. |
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ResNullius
Joined: 24 Oct 2007
Posts: 697
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| Posted: Tue Feb 09, 2010 8:40 pm Post subject: |
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| Interesting spread. We've got a well-heeled group here. |
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Triple digit golfer
Joined: 18 May 2009
Posts: 1287
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| Posted: Tue Feb 09, 2010 8:46 pm Post subject: |
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Age: 25 in two weeks.
Net worth: Right around $85,000. |
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conundrum
Joined: 09 May 2009
Posts: 647
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| Posted: Tue Feb 09, 2010 8:54 pm Post subject: |
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traineeinvestor
Agree that home equity should be included in net worth. My only point, and I think you agree, is that it is not real useful for us in calculating our withdrawal rate in retirement. For that reason we do not track it. Certainly everyone is different and there is nothing wrong with tracking net worth.
Drum  |
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traineeinvestor
Joined: 26 Nov 2008
Posts: 280
Location: Hong Kong
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| Posted: Tue Feb 09, 2010 9:00 pm Post subject: |
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| conundrum wrote: | traineeinvestor
Agree that home equity should be included in net worth. My only point, and I think you agree, is that it is not real useful for us in calculating our withdrawal rate in retirement. For that reason we do not track it. Certainly everyone is different and there is nothing wrong with tracking net worth.
Drum |
Agree (and apologies if it sounded otherwise).
Although I plan on not using my home equity to fund my retirement, it's there as an emergency fund of last resort should things go wrong. |
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Boris
Joined: 27 Feb 2007
Posts: 529
Location: CT
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| Posted: Tue Feb 09, 2010 9:33 pm Post subject: |
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| conundrum wrote: | traineeinvestor
Agree that home equity should be included in net worth. My only point, and I think you agree, is that it is not real useful for us in calculating our withdrawal rate in retirement. For that reason we do not track it. Certainly everyone is different and there is nothing wrong with tracking net worth.
Drum |
I don't agree with this at all. There are reverse mortgages, you can sell the property, etc. My 401k is part of my net worth but it would be pretty expensive (more so than the house), to get at that money. Should I then consider my 401k not part of my net worth?
Your net worth isn't just how much you can withdraw in retirement, but also how much you don't have to withdraw. If you rented an equivalent home you'd need to make up the difference in cash flow.
Net worth is your total assets minus your total liabilities. Period. 
P.S. The only problem with computing home value is that it's not always accurate, but Zillow and other sites keep us honest and give a good enough estimate of value.
_________________
Short term moves in the market are like "a tale Told by an idiot, full of sound and fury, Signifying nothing."
- John C. Bogle quoting Shakespeare |
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woof755
Joined: 05 Aug 2007
Posts: 2158
Location: North Carolina
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| Posted: Tue Feb 09, 2010 9:41 pm Post subject: |
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| Triple digit golfer wrote: | Age: 25 in two weeks.
Net worth: Right around $85,000. |
Nice work.
Pretty soon you'll be a triple digit investor! Pretty damn good for 25!
_________________
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise."
--Jason Zweig, quoted in The Bogleheads' Guide to Investing |
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woof755
Joined: 05 Aug 2007
Posts: 2158
Location: North Carolina
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| Posted: Tue Feb 09, 2010 9:43 pm Post subject: |
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Almost half of respondants are worth more than a million bucks. That used to be a lot of money!
(I'm not even close to being one of them)
_________________
"By singing in harmony from the same page of the same investing hymnal, the Diehards drown out market noise."
--Jason Zweig, quoted in The Bogleheads' Guide to Investing |
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market timer
Joined: 21 Aug 2007
Posts: 3076
Location: -$70K
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| Posted: Tue Feb 09, 2010 10:00 pm Post subject: |
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| woof755 wrote: | Almost half of respondants are worth more than a million bucks. That used to be a lot of money!
(I'm not even close to being one of them) |
Depends how you value the MD. Having the ability to earn $200K+/year is a nice asset. The present value of an extra $50K/year after-tax income, discounted at a 4% interest rate over 25 years, is $812K. |
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Gekko
Joined: 11 May 2007
Posts: 3521
Location: USA
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| Posted: Tue Feb 09, 2010 10:14 pm Post subject: |
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for the few people over $5M - i'd love to know ages and how they got their wealth - ie vicious long term saving/investing, business ownership sale, inheritance, speculation, etc.
also, if they have a nice full head of hair or not. if they're bald or balding and/or old, i'll feel better. |
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