How much is your net worth?

springwater · Post by **springwater** » Fri Mar 16, 2007 9:52 am

This is an anonymous poll. Consider all assets (including investment accounts, IRA's, home equity) and then subtract all liabilities such as student loans, credit card, debt mortgages, etc.

Sheepdog · Post by **Sheepdog** » Fri Mar 16, 2007 10:20 am

A poll of everyone does not mean a lot to me except that it shows what the net worth is for those who enter it.
Individual polls by age grouping may be more meaningful to individuals here to see where they are in the averages. And, it would show how net worth does grow with age..
For example, one poll might be for under 30, another 30-39, 40-49 and so on with the last perhaps being 70 and older.

Wagnerjb · Post by **Wagnerjb** » Fri Mar 16, 2007 10:24 am

Wouldn't it be more meaningful to ask people what their net worth balance represents as a percentage of their income?

For a high-income lawyer at 50 years old, a million dollars may be unimpressive. But for a $40,000 a year investor at 35 years old, having a $250,000 portfolio might be very impressive indeed.

Just a thought...

wwhan · Post by **wwhan** » Fri Mar 16, 2007 11:00 am

Some people started generating a lot of income, late in life. Earlier in life, they may have made very little income and struggled to get by.

Nitsuj · Post by **Nitsuj** » Fri Mar 16, 2007 11:17 am

Look how big my pee pee is!

phartizan · Post by **phartizan** » Fri Mar 16, 2007 11:25 am

Yes, this is a good start, and while more detail would be interesting, restricting this to the universe of diehards is also misleading.

I mentioned calculators to compare one's net worth here , like this one and this Savings Comparison Calculator 2006, to show how you stack up to others.

orthros · Post by **orthros** » Fri Mar 16, 2007 2:35 pm

LOL Nitsuj, but this is still interesting to me.

Given that the median net worth is around $86K in the U.S., with 7% having a negative net worth, it would be fascinating to see the median and distribution of folks here.

And yes, I'm well aware about response bias and the "e-weewee" factor.

WiseNLucky · Post by **WiseNLucky** » Fri Mar 16, 2007 2:52 pm

Diehards, umm Bogleheads, tend to do well in these sorts of polls.

livesoft · Post by **livesoft** » Fri Mar 16, 2007 3:02 pm

What I find interesting about such polls is that contrary to popular belief, it seems that millionaires do not use financial advisors.

With more than 40% of the respondents professed millionaires,
I will infer that since they are posting on this message board that they have invested in Vanguard mutual funds on their own without the help of an advisor. They also probably are not involved in hedge funds, timber futures, private equity, and other alternative investments.

Would they be less wealthy if they had an advisor?

WiseNLucky · Post by **WiseNLucky** » Fri Mar 16, 2007 3:20 pm

livesoft wrote:Would they be less wealthy if they had an advisor?

I would!

Sheepdog · Post by **Sheepdog** » Fri Mar 16, 2007 3:38 pm

I remember very well when I told my "advisor" that she would not handle my investments any longer. I said I was not satisfied with her results. So, she said very sarcastically," That's not fair. I suppose you are going to be one of those 'no loaders'?" I said, "Damn right".
Yes, I would have a lot less keeping an advisor.
Jim

Orion · Post by **Orion** » Fri Mar 16, 2007 5:16 pm

What got me started doing it myself was that I was arguing with an advisor suggested by a friend that his portfolio didn't make sense for me. (Mostly because of a variable annuity whose expenses didn't allow it to break-even with a pure taxable account until after 90 years by my calculation.) He called in the firm's accountant to explain it to me. The accountant looked at my spreadsheet and told the advisor that I was right. A few minutes later when the advisor left to pick up a printout, the accountant leaned over and whispered: "You're so analytical, I think you could do this yourself.".

If I could have worked with the accountant instead of the advisor, I might have stuck with them for a while.

I haven't talked to them in over 6 years but last week I got a notice of a class action settlement against them.

I'm sure there are some good advisors, but I found it easier to read the books and just do it than to read the books and then test the advisors.

jeff mc · Post by **jeff mc** » Fri Mar 16, 2007 6:37 pm

my takeaway: it's not simply "look at me (and my huge p-p), but it's really, look at US... as expected, this histogram puts the 'average american household' to shame.

anonymous polling like this does several things... reduces responder bias, increases response rate, improves accuracy/honesty of responses.

this poll helps us 'cut to the chase'. i believe we're (or at least "i", i shouldn't talk for other 1100 bogleheads) drawn to this forum for 3 reasons... 1) increase our net worth, 2) help others figure out their investing lives to help increase their net worth, 3) entertainment value

i now have a 'set and forget it' AA (so, i'm not really here for reason 1, altho that was my orig. mission). i don't give much advice these days, so it's not really 2. i guess i keep visiting here strictly due to 3.

oh... and 4), i guess it would be to brag about my ER (0.196%!). but i did that on the old board a few months ago, and started a survey on ER, so i guess i'll just coast here and enjoy the data and conversations.

maybe do another poll on some subset of financial questions (salary, tax rate, % saved, age started 'really investing', retirement age, target nest egg, % intl-SC, etc... so many poll possibilities, so little time

good poll idea, springwater

White Coat Investor · Post by **White Coat Investor** » Fri Mar 16, 2007 7:11 pm

Wagnerjb wrote:Wouldn't it be more meaningful to ask people what their net worth balance represents as a percentage of their income?

For a high-income lawyer at 50 years old, a million dollars may be unimpressive. But for a $40,000 a year investor at 35 years old, having a $250,000 portfolio might be very impressive indeed.

Just a thought...

Not fair for those of us who spent a long time in school only to instantly acquire a relatively high income. My net worth:income ratio is low, but was very good just a few years ago when my income was negative!

If you want a test of someone's investing/saving ability, how about a ratio of net worth/every dollar they ever made?

Murray Boyd · Post by **Murray Boyd** » Fri Mar 16, 2007 7:39 pm

Can we call grad school tuition and foregone income human capital?

CABob · Post by **CABob** » Fri Mar 16, 2007 8:16 pm

Wagnerjb wrote:

Wouldn't it be more meaningful to ask people what their net worth balance represents as a percentage of their income?

EmergDoc wrote:

Not fair for those of us who spent a long time in school only to instantly acquire a relatively high income. My net worth:income ratio is low, but was very good just a few years ago when my income was negative!

If you want a test of someone's investing/saving ability, how about a ratio of net worth/every dollar they ever made?

Good points. I think the idea I have come away with is that this sort of data needs to have two or more dimensions.
Comparing net worth of someone in or just completing school doesn't really make sense. Likewise comparing income of someone just entering the work world with someone in mid or late employment phase is immaterial. And someone retired with almost no income compared to one of the above isn't appropriate.
Perhaps what is needed is data that would relate net worth to age or some other factor in the form of a chart or graph.

Bob

Zander · Post by **Zander** » Fri Mar 16, 2007 8:47 pm

livesoft wrote:What I find interesting about such polls is that contrary to popular belief, it seems that millionaires do not use financial advisors.

With more than 40% of the respondents professed millionaires,
I will infer that since they are posting on this message board that they have invested in Vanguard mutual funds on their own without the help of an advisor. They also probably are not involved in hedge funds, timber futures, private equity, and other alternative investments.

Would they be less wealthy if they had an advisor?

undoubtedly yes. Costs DO matter. Advisors do not add value, they subtract it. It is simple mathematics.

jeff mc · Post by **jeff mc** » Fri Mar 16, 2007 8:57 pm

just to be a contrarian... how many people do NOT use an advisor, and do NOT invest in equities or even bonds, but have their inheritance/nest egg invested in "safe" savings accounts or money markets or stable value funds 'on their own'? is this better than a fee-skimming advisor who understands the different kinds of risk and sets up a reasonable AA?

using an advisor for these people would be a very good thing for their net worth. not as good as DIY (do it yourself) management, but still better than 'safely' investing their money in a savings account or money market for 40 years.

so, in certain cases, advisors undoubtely add value to their customers. and, yes, their customers buys their advisors some yachts. w/ lots of money in play for a long period, it's not a matter of IF that could buy a yacht... it's just a matter of WHO will own the yacht or parts of that yacht... the advisor, the bank, or the investor?

springwater · Post by **springwater** » Fri Mar 16, 2007 9:06 pm

using an advisor for these people would be a very good thing for their net worth. not as good as DIY (do it yourself) management, but still better than 'safely' investing their money in a savings account or money market for 40 years.

Yes, I agree with you. As with anything in life, you can do it yourself or contract out. For many people, they hate finances. They hate thinking about it and they contract out. For these people, having an advisor put them in a reasonable equity/bond allocation at 1-2% fees is probably better than if they did nothing and left their money in a savings account at 0.6% interest. Notice I said the term reasonable. There are many horrible advisors out there that will make you wish you left your money in a savings account at 0.6%!

It's the same thing about car maintenance, home repairs, cleaning. You can learn to do a lot of it yourself or contract it out and pay a substantial fee for choosing to be ignorant.

And sometimes you get hosed with bad mechanics or housekeepers or what not. That's the cost of choosing to be lazy or ignorant.
Ultimately, that is the person's choice.

investorperson · Post by **investorperson** » Sat Mar 17, 2007 2:28 am

This poll makes me think...hmmm...what do you all do for a living?!? It seems like you all do things that eventually lead you to become millionaires (well, I'm sure a lot of that has to do with being Bogleheads!, investing early, etc...)

DaleMaley · Post by **DaleMaley** » Sat Mar 17, 2007 6:00 am

The only age versus net worth data or guideline I have seen is from The Millionaire Next Door book. Authors suggest that people who do a good job of living below their means so they can save and invest.....should have a net worth equal to their age divided by 10 times their income.

For example:

Age = 60
Income = $100K

Net Worth = (60/10) x $100K = $600K

For a higher income person:

Age = 60
Income = $200K

Net Worth = $1.2M

The authors go on to say the exceptionally good savers and investors will accumulate twice the guideline of age divided by 10 times income:

Age = 60
Income = $100K

Net Worth = 2 x (60/10) x $100K = $1.2M

I bet there are many Diehards who meet the 2X guideline since they are typically great savers and investors compared to the general population.

frank_davis · Post by **frank_davis** » Sat Mar 17, 2007 8:21 am

As these polls are anonymous, we cannot know how accurate they are.
I could imagine some that are offended by the subject(like the peepee guy) might just pick the highest net worth in protest. It would be interesting to see the net worth without the home equity taken into account. Or the percent of net worth in home equity as compared to investments.

AnthonyF · Post by **AnthonyF** » Sat Mar 17, 2007 9:55 am

The contempt for advisors in this thread is understanble since the word "advisor" is misused in the financial services industry.

I'd argue that the stories above depict salespeople, selling products. The posters did not hire an advisor. The bought products that they ultimately found to be unacceptable. The responbility lies with the posters who did not do their due diligence.

Good advisors are hard to find but they are out there. In addition to investment planning, they offer other very valuable services in other other financial areas. On the investment side, an advisor who sticks to a passive approached based on the personal risk tolerance of his/her client, actually adds quite a bit of value, many times by doing NOTHING. Educating and keeping clients from making mistakes, such as the ones described in this thread, is a real value provided by TRUE advisors.

Regards, Tony

Wagnerjb · Post by **Wagnerjb** » Sat Mar 17, 2007 10:25 am

springwater wrote:Yes, I agree with you. As with anything in life, you can do it yourself or contract out. For many people, they hate finances. They hate thinking about it and they contract out. For these people, having an advisor put them in a reasonable equity/bond allocation at 1-2% fees is probably better than if they did nothing and left their money in a savings account at 0.6% interest. Notice I said the term reasonable. There are many horrible advisors out there that will make you wish you left your money in a savings account at 0.6%!

It's the same thing about car maintenance, home repairs, cleaning. You can learn to do a lot of it yourself or contract it out and pay a substantial fee for choosing to be ignorant.

And sometimes you get hosed with bad mechanics or housekeepers or what not. That's the cost of choosing to be lazy or ignorant.
Ultimately, that is the person's choice.

I am not sure I would call people lazy or ignorant for contracting out certain tasks. They are just balancing their leisure and income. The guy who works many hours and has a nice salary - he may happily pay $25 or $50 to have his lawn mowed each week so that he can enjoy his weekends, whether that be watching his kids play soccer or whether he is playing golf with friends. That same guy could easily change the oil in his car, but he can afford to have Jiffy Lube do it for him and he values the free time more highly.

When it comes to more complex and important tasks, more issues come into play. You need to invest more time (either learning or doing the task itself) in those tasks. Do I want to invest the time to learn how to repair my car's engine? I am sure I am capable of learning, but is the time worth it? The higher a person's income and the less free time he has, the more this decision leans towards hiring a mechanic. Also, don't forget safety. Will you repair the engine properly?

A personal example: when I bought a new house in Houston I paid "full price" to have the builder install a sprinker system in my yard. My neighbor spent one full day doing it himself. He worked outside in the Houston summer heat, sweating his #@* off. Sure, he probably saved $1500 or $2000 over what I spent if you don't account for his time. Me....I would have electrocuted myself or flooded the garage with my lack of training in this area.

I think people become proficient in areas that they feel comfortable in. For me, that is finance. Luckily for those who like finance, the "benefits" of spending time in that area are much higher since we are saving money on a much bigger area - our nest egg. I may spend $1500 on auto maintenance each year and I may be able to cut this to $500 with training. But avoiding the 1% (or more) than a financial advisor would charge me - on my entire nest egg - is many many many times more than the $1000 I would save on car maintenance or yardwork or sewing my own clothes, etc.

Best wishes.

rob · Post by **rob** » Sat Mar 17, 2007 11:33 am

WiseNLucky wrote:
livesoft wrote:Would they be less wealthy if they had an advisor?
I would!

Me Three!

I did talk to an Amex salesmen when I started investing but I basically knew I wanted to do it myself (although the brokerage/stock path) but I paid him $300 to do up a plan and whatnot just for a reasonableness type of check (didn't know Vanguard e.t.c.).

Got the impressive bound book with VA, Wraps for taxable & charts up to wazzo e.t.c. Years later I was working at a financial services co (IT type not sales) and installed some software some of the users had for selling - I just laughed when I saw the output - it was that same impressive bound book -> Would have taken him maybe 30minutes to key in the stuff that he generated for me.

Orion · Post by **Orion** » Sat Mar 17, 2007 1:15 pm

AnthonyF wrote:I'd argue that the stories above depict salespeople, selling products. ....

Good advisors are hard to find but they are out there.

I'm sure they are but I've had 1 to 4 hours of meetings each with 5 potential local advisors and gave up and did it myself. I'm pretty sure that several published advisors are excellent but they don't live near me and I'm guessing that they're not taking new clients.

I agree though that many people don't want to do it themselves. (I didn't!) But I wonder what they end up with. A friend showed me his advisor-defined portfolio. There was a nice color pie chart showing 50% stocks and 50% bonds. Going a little deeper, the "50% bonds" was comprised of 6 bond funds. But each fund was high yield/junk. (Not to mention loaded and with high expense ratios.) The "50% stock" was comprised of 2 individual stocks. One was a company I had never heard of. I don't know if I was successful at expressing how bizarre this seemed.

WiseNLucky · Post by **WiseNLucky** » Sat Mar 17, 2007 6:03 pm

EmergDoc wrote:If you want a test of someone's investing/saving ability, how about a ratio of net worth/every dollar they ever made?

That's a point I made here. I just passed it.

Taylor Larimore · Post by **Taylor Larimore** » Sat Mar 17, 2007 7:45 pm

Hi:
It is difficult to believe that over half of those who responded are millionaires. Certainly the majority of Bogleheads are nowwhere near that wealthy--although many will get there if they follow Mr. Bogle's advice.

I also noticed the percentage of responders did not total 100%?

Anyway, it is an interesting post.

Thank you and best wishes.
Taylor

Murray Boyd · Post by **Murray Boyd** » Sat Mar 17, 2007 10:30 pm

Well, that's what I thought at first, but given the huge runup in house prices, and considering that most families have two incomes now, I expect a lot of middle-class couples who have been faithfully contributing to their 401Ks are at the million dollar mark.

haban01 · Post by **haban01** » Sat Mar 17, 2007 11:26 pm

Hello Taylor-

I had the same thoughts as well! I have to remember that I have another 30 years in the working world. When you can buy a home in Wisconsin for 120K that is 1300 sq. ft and the same home in CA is 500K, I can see how the net worth can really add up.

WiseNLucky · Post by **WiseNLucky** » Sun Mar 18, 2007 1:59 am

Taylor Larimore wrote:Hi:
It is difficult to believe that over half of those who responded are millionaires. Certainly the majority of Bogleheads are nowwhere near that wealthy--although many will get there if they follow Mr. Bogle's advice.

Good point. The responses (175) are 14.3% of total members. While those with larger net worths are more likely to enter a poll like this than those with smaller ones, I suspect the number of self-reported millionaires is unrealistic.

It would be interesting to see how the age demographic of the group skews. Older diehards are more likely to end up in the millionaire group.

I also noticed the percentage of responders did not total 100%?

Taylor

I checked the math and discovered that the resulting percentages are truncated rather than rounded. 10 responses out of 175 is 5.7% but the percentage shows only 5%. That makes the total add up to only 96%.

Pincher Martin · Post by **Pincher Martin** » Sun Mar 18, 2007 3:57 am

It wouldn't surprise me if the poll is largely accurate.

There are several successful older investors here -- men who have been smartly putting their money away for many years in what was probably the best bull market (for both stocks and bonds) in U.S. history. Most of them between the ages of fifty and seventy are sure to be millionaires. (And if they owned their own homes, many in this same group also would have benefited from the recent and unprecedented surge in home prices.)

Remember: it's not just the poll that may have a selection bias. This website also most likely has a selection bias, and that bias probably favors the kind of person who squeezes the most out of his investments -- just the sort of person you would expect might accumulate a million dollars worth of assets by his middle age.

Another point to remember is that having a net worth of a million dollars is not quite the extraordinary feat it once was.

unclemick · Post by **unclemick** » Sun Mar 18, 2007 8:04 am

Hmm - some random shots:

Retired at 49 with way, way under 500k - financial assets(not counting house and other junk) - increased over four fold AFTER retirement(going into 14th year).

Due to the power of compounding AND all praise to Bogle (balanced index) - age 21 to 49 working was under 1/3 of current nest egg.

Handgrenade math with one year temp work mixed in - but the general idea works. Also it helped that I was a cheap SOB early in retirement and Mr Market was kind in the 90's. Was able to weather some severe Katrina expenses and keep on trucking.

Time in the market plus all that good Bogle stuff - stay the middle way (nod to Ben Graham) - so far so good.

heh heh heh 8) .

Brad · Post by **Brad** » Mon Mar 19, 2007 5:05 pm

Let's keep in mind that this is a very self-selecting group. Who spends time on an investment website, let alone a Vanguard-oriented site, a company dedicated to low cost, stay the course, etc.

I remember when I was first starting out, it seemed that whatever I saved was virtually meaningless. What was a few thousand dollars?

But keep saving, maxing out 401k, stick with stocks in low-cost index funds, luck out with mostly bull markets, and after a few decades, lo and behold, you have accumulated something.

I vaguely remember on Vanguard's website reading they passed a milestone on the number of Voyager customers. I think, but don't quote me, it was over 1 million folks.

Bogleheads.org