401-K Returns To Date!

[laurence]

I look forward to the day, believe me! When our combined portfolios hit six figures, we kind of just stared at the spreadsheet for a while...and giggled. Small potatos for many of you, I know, but at one point we were 50 grand in unsecured debt (credit cards plus student loans). We are hooked on saving now, just the reduced need for Tums is worth it!

 

[retire@40]

Re: 401-K Returns To Date!  

When our combined portfolios hit six figures, we kind of just stared at the spreadsheet for a while...and giggled.  Small potatos for many of you...

It's part of the milestones you need to hit. I remember when I hit the $100K mark, I was astonished that I really did it, especially since I came out of college like many with a negative net worth. Hard work and some luck got me there. One thing I did notice is that the second $100K is easier to make than the first $100K, the third is easier than the second, and so on. The key is to know when to stop accumulating points and to start using them. It's all part of goal-setting.

 

[unclemick]

Re: 401-K Returns To Date!  

Plunka,plunka, - yawn - plunka, plunka - boring maybe - but it worked for us - max DCA 401k,IRA's and time in the market.

80-90% of our ER, depending on how we valued our real estate.

 

[preben]

Re: 401-K Returns To Date!  

Good point retire@40!
I elebrated each milestone (initially each $10k, later each 100k) with a cigar and some champagne with a good friend on the FIRE track too.

To know when to stop is the hard part - 1.5M-2M and I should get going!

Side note: th: great line (from other thread): "which ***** jumped on like the last chopper out of 'Nam" - cracked me up! (still cleaning coffee of tie).

Cheers!

 

[unclemick]

Re: 401-K Returns To Date!  

Ben - you are there.

My late great Father had a phrase: "walking around with a **** eating grin on your face."

Wether work on or go out to play in ER - you'll 'know'.

There may be an equivalent Scan der houvien phrase!

 

[laurence]

So, curious, when people talk about net worth, do they include the equity in their house? I was when I referred to having a 7 figure net worth in a few years, but I don't factor it in when talking about the "portfolio". We bought our house in 2001 for 274k and our neighbor just sold for 600k, so you see it represents a huge portion of my net worth.....San Diego, land of rediculous houseing markets.

 

[hocus]

Re: 401-K Returns To Date!  

when people talk about net worth, do they include the equity in their house?

One of the checks I do on my plan each New Year's Day is to see whether my net worth has either remained the same or increassed over the course of the year. For purposes of that calculation, I include the net worth of my house. I have had enough big increases in the value of my house in recent years to keep my net worth stable even during the time that I did not have money coming in yet from my writing business.

 

[Hyperborea]

Re: 401-K Returns To Date!  

So, curious, when people talk about net worth, do they include the equity in their house?

Well, I generally don't talk about my networth.    But yes it is commonly included in the networth calculations.

For ER planning purposes I wouldn't use it in my calculations unless you plan on selling and moving.  The value is not going to be easily accessible in retirement until you get older and decide you want to start a reverse mortgage.  The house makes a nice fallback to the FIRE plans though - useful for funding the nursing home if your portfolio does poorly.

I do plan on selling and moving in retirement but I estimate that the net equity on my current home will completely buy me a home in my retirement destination.  Since I plan on "perpetual travelling" for a number of the early years of FIRE I will be putting that home equity into the investment portfolio for those years but it will not be used for calculating withdrawals.

 

[laurence]

Yowsers, just re-read my post, I really can't spell without my morning coffee! I'm definitely not including the equity in withdrawal calculations, just making sure I'm learning the language here.

 

[preben]

Re: 401-K Returns To Date!  

Since the use of net worth is basically in order to do a quick comparison of apples to apples (and not as such to plan for FIRE calculate SWRs or similar) then YES, any equity in home is to be included (would probably make sense to deduct estimated selling/broker costs Etc.).

The guy in the paid of $10mill mansion and no investments or savings have a NW of $10mill - not nil.

They (financial advisors targetting the rich) use another term when want to know the liquid/investable part.... forgot what it is though. (liquid NW?).

 

[preben]

Re: 401-K Returns To Date!  

ah!: http://money.cnn.com/2004/06/15/pf/millionaires/

High net worth individuals! One could however also fall in that target group if renting and only have a measly 1Mill investable (as that is what these studies are used for: target people with money to invest and earn fat commissions on them!).

Quote:

In 2002, when the S&P 500 stock index dropped 22 percent, the number of high net worth individuals (defined as those with $1 million or more in investment capital excluding home equity) fell 100,000. The S&P rallied 28.7 percent in 2003.

Worldwide, a half a million individuals joined the millionaire's club, which topped 7.7 million. Their overall wealth topped $28.8 trillion, a jump of 7.7 percent over the year before.

The United States produced the most new millionaires but Hong Kong, at 30 percent, and India, at 22 percent showed the largest percentage gains. China, with a 12 percent jump in millionaires, was right behind the United States.

 

[retire@40]

Re: 401-K Returns To Date!  

So, curious, when people talk about net worth, do they include the equity in their house?

Theoretically, all your assets count to determine net worth including your home, your car, and even the 5 cent pencil on your desk. However, if you never plan on selling your house or renting it, or getting a reverse mortgage, etc., then it should not be part of your net worth calculations for ER purposes.

I do not include net worth of my house when I speak of net worth for retirement purposes because at this point in time I do not plan on doing any of the above.

 

[Tommy_Dolitte]

Re: 401-K Returns To Date!  

I don't understand why people that live in areas where housing is overvalued don't cash in and move to the Southeast? (i.e. Cali, NY, DC, Minneapolis)

I was in Georgia this week....I could live like a King there with the same living expenses.

TD

 

[Eagle43]

I don't understand why people that live in areas where housing is overvalued don't cash in and move to the Southeast? (i.e. Cali, NY, DC, Minneapolis)

I was in Georgia this week....I could live like a King there with the same living expenses.

TD

Please Tommy Dolitte, don't start that. They may come.

 

[Cut-Throat]

Re: 401-K Returns To Date!  

I don't understand why people that live in areas where housing is overvalued don't cash in and move to the Southeast? (i.e. Cali, NY, DC, Minneapolis)

I was in Georgia this week....I could live like a King there with the same living expenses.

TD

You get what you pay for!  - I travel all over the world and I'm not moving from Minneapolis inspite of Dec, Jan and Feb

 

[laurence]

Tommy D. ,

For me, it's three reasons:

My wife's family, my wife's family, and my wife's family.

I do hope to downsize to a townhome/condo once we are empty nesters, since our priority is travel. Since we plan on having the house paid off before we are empty nesters, I'm hoping to be able to buy a nice condo and sock an extra 200k in the bank, to boot! Plus, if everything else falls apart, we always have that ace in the hole of moving some place cheaper.

(no attempt to take a logical stance for the pay off mortgage vs. invest debate - we just like the emotional security of no house payment)

 

[Jarhead*]

Re: 401-K Returns To Date!  

Tommy D. ,

For me, it's three reasons:

My wife's family, my wife's family, and my wife's family.  

I do hope to downsize to a townhome/condo once we are empty nesters, since our priority is travel.  Since we plan on having the house paid off before we are empty nesters, I'm hoping to be able to buy a nice condo and sock an extra 200k in the bank, to boot!  Plus, if everything else falls apart, we always have that ace in the hole of moving some place cheaper.  

(no attempt to take a logical stance for the pay off mortgage vs. invest debate - we just like the emotional security of no house payment)

Laurencwill: Not that you need it, but let me add a couple more good reasons for you.
San Diego, arguably has the best climate in the U.S.
Propostion 13

 

[laurence]

Yes! It's not like I'm trapped in Hell on Earth here!
San Diego is just wonderful. My neighbor owns a sailboat, we went out on it last Saturday just to tool around. He was trying to get me to go in half on it, mostly to help him with the slip rental. My wife told me I could get a Kayak.

Prop 13 is the reason we will probably never upgrade to a bigger house. Right now our property tax is ~200 a month, if we moved to a house with say, one more bedroom, we'd jump up to ~700 a month, and you can't pay it off like a mortgage! Stay here = EER (extra-early retirement)!