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Old 01-11-2013, 01:02 PM   #161
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I would not count my house which is paid off in my net worth. Yes it's part of the total but until it is sold it really is not accessible nor do I really know it's actual value. You wouldn't (or shouldn't) count SS or pension payments for the same reason as they are all part of future assets.
Of course, your house is part of your net worth. It isn't part of your investment portfolio, I agree.

But you "access" its value to you every day. You don't have to pay rent. You don't have to pay a mortgage. Your overall expenses are lower as a result than if you lived in a similar house that you wasn't a paid off house.
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Old 01-11-2013, 01:10 PM   #162
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Old 01-11-2013, 01:17 PM   #163
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Of course, your house is part of your net worth. It isn't part of your investment portfolio, I agree.

But you "access" its value to you every day. You don't have to pay rent. You don't have to pay a mortgage. Your overall expenses are lower as a result than if you lived in a similar house that you wasn't a paid off house.
I think people realize that a house has value as imputed rent. But the truth is if I were to rent my homes, I might not, due to being a scrooge, although my homes are not truly luxurious. I might just boondock in an RV and invest that money (DW permitting of course).

So, when I look at my homes, all I see are bills and my labor for upkeep. And the truth is that I take them for granted. I need to "love" my homes as my brothers and their wives love theirs. In their case, they put so much money into it, I am sure they count that in their net worth, as it would be the major part, I am afraid. Going too far the other way... It's an emotional thing, and people are not always rational.
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Old 01-11-2013, 03:13 PM   #164
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Um, no, it's an accounting thing.

Net worth = Assets minus Liabilities.

GAAP (generally accepted accounting principles) counts assets and liabilities on a financial basis. So, for example, your wonderful personality is not an asset on the balance sheet.

Any variation from GAAP is simply a personal view of your finances, viz. what you consider to be an asset. Many people on this forum do not consider their homes to be assets, but that makes all the poll and survey data meaningless, since one cannot compare apples and oranges.

I include my home in my net worth. When doing SWR calculations, the denominator I use is investable assets. My definition of investable assets also excludes investment real estate, because of its lack of liquidity.
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Old 01-11-2013, 03:16 PM   #165
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Ten days and 160+ posts later, the net worth/home inclusion debate drags on...and on...
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Old 01-11-2013, 03:46 PM   #166
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Originally Posted by Katsmeow View Post
Of course, your house is part of your net worth. It isn't part of your investment portfolio, I agree.

But you "access" its value to you every day. You don't have to pay rent. You don't have to pay a mortgage. Your overall expenses are lower as a result than if you lived in a similar house that you wasn't a paid off house.
I agree with you but unless you sold your house how can you assess it's increase re your net worth. Maybe I am wrong but I interpreted the thread subject to be portfolio net worth increase. I never include my house in net worth unless I was thinking "if I died today my estate would be worth about $X".
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Old 01-11-2013, 03:49 PM   #167
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I include my home in my net worth. When doing SWR calculations, the denominator I use is investable assets. My definition of investable assets also excludes investment real estate, because of its lack of liquidity.
I don't even use all my investable assets when calculating my SWR, but rather a subset of my investable assets that I have earmarked as my "retirement portfolio". The rest of it I can do with whatever I please !
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Old 01-11-2013, 03:54 PM   #168
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GAAP (generally accepted accounting principles) counts assets and liabilities on a financial basis. So, for example, your wonderful personality is not an asset on the balance sheet.
As long as my personality is not a liability, I am happy.
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Old 01-11-2013, 10:48 PM   #169
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OK, so I estimated my home values using Zillow, added those to my Quicken bottom, and had a 26% increase in net worth. I have not found a way to have it permanently listed in Quicken. I am not sure I want to though. For in a bull market, the positive stock change each day, when computed as a percentage gain, is diluted out when I have inert assets in there.

I already hold quite a bit of cash, and at the end of each day, I would have to switch the screen to see the gain of my hand-picked stocks separately from the MFs, and also from the cash which does not move of course. I want to see how the stocks and the MFs do relative to the indices. Cash and RE values do not do anything for me in a bull market. I think I will leave the RE out for now.

I think I will wait until the next bear market to add the RE to remind myself that I am not going to be penniless. It's like during the 2008-2009 when I looked at the portfolio broken down by security types, and was so relieved to see that indeed the cash part really stayed constant and did not drop 2-3% a day like the MFs and stocks.

Funny how one's mind works.
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Old 01-11-2013, 10:58 PM   #170
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Curiously, our real estate (house and retirement apartment) went up that same 14% (as all the other investments), according to Zillow. There is inflation, but I don't think 14%!
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Old 01-11-2013, 11:09 PM   #171
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Our RE market tanked badly in 2008-2009, so I guess the value has recovered some last year. I do not know for sure as I do not track it. It is still only about 60% of that top value.

Well, somehow I do not trust RE value as being "real" because of the past RE bubble. Yet, the stock market valuation could also be ethereal. So why do I care more about the portfolio?

I think it's simply because of the liquidity of equities compared to RE, and the idea that I can easily capture that peak value with a few mouse clicks. Of course I was just fooling myself that I could time the top of the market. Still, that illusion lingers.
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Old 01-11-2013, 11:13 PM   #172
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Ten days and 160+ posts later, the net worth/home inclusion debate drags on...and on...
+1 What it all comes down to, as I see it, is what purpose is intended for the calculation. When that is unclear, it seems that as a group we tend to get lost in definitions and semantics.
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Old 01-11-2013, 11:21 PM   #173
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Eh, I have tried to draw people to travel and food threads, but not everybody is interested. So, I have to come here to BS.
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Old 01-12-2013, 08:32 AM   #174
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This was easy, as it is every year since ER. No house, no pension, no SS, no other income and my tangible assets might be worth $500 on a good day. Drawing down my taxable accounts. Total of taxable and tax deferred down 0.02% for the year. I gave that a semi-enthusiastic 'Whoo hoo'.
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Old 01-12-2013, 09:36 AM   #175
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20% increase in 2012. Still working and saving. Investment performance was more like 9%. A great year in retrospect.
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Old 01-12-2013, 09:37 AM   #176
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401K was up 10% investment gains, 14.6% overall....roared past 3/4 million this year.....stretching to hit $1 million by the end of my 50th year (2 years).

Roths had modest gains, but did add 10 grand to them.

Hoping to spend a little less this year and put a little more in saving, but the wife may have other ideas.

Really wish I did not have another 13 years of work......
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Old 01-12-2013, 09:59 AM   #177
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Old 01-12-2013, 12:58 PM   #178
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This was easy, as it is every year since ER. No house, no pension, no SS, no other income and my tangible assets might be worth $500 on a good day. Drawing down my taxable accounts. Total of taxable and tax deferred down 0.02% for the year. I gave that a semi-enthusiastic 'Whoo hoo'.
A nice alternative to the rest of us! Love the fact that there are other ways to ER.

IDMAT: you'd get along with my BIL, except he lives in the USA backwoods and doesn't have a thing.
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Old 01-12-2013, 01:48 PM   #179
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My net worth went up 15% in 2012! Still working and contributing max to the 401K.
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Old 01-12-2013, 03:00 PM   #180
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