It is a follow up to the 'Going to 100% Cash' Thread.
Net worth excluding home (and mortgage) total assets - total liabilities. I keep it simple - I don't include most things such cars (but, you should include the car loan as a liability) or jewelery. Basically, if the residual value of a person's car (or the loan) is a large part of their net worth computations; they probably are a long way from ER.
If you, exclude your home and strip out all the money from your working income (and associated investments/re-investments) from 01/01/07 to est. 12/31/10 - what is the change in net worth?
I kinda thought so. My peripheral point is that your decision to go 100% cash (and my decision to remain 100% stocks and DCA into low-cost mutual funds, as I have since at least 1993) can't be separated from your life situation, your risk tolerance, your goals, etc. [I've been a little cranky this week because of work, so I apologize if that is coming through in my posts. It certainly isn't personal, dex.]
In my case I do include my home and my mortgage in my net worth calculations. I have a separate FIRE spreadsheet that assumes I pay off my mortgage at retirement and thus makes the appropriate adjustments to net worth and cash flow.
I also include my car at KBB value and household furnishings, although those two in total account for about 1.15% of my net worth. No car loan.
Stripping out my home, mortgage, investments, and reinvestments is more work than I care to do. Roughly speaking, I've increased my home value at the rate of 1% per quarter (semi-arbitrary based on long term historical average of inflation + 1%), my mortgage is a 15 year fixed at 4.625% that I've been paying regular payments, and I've been investing and reinvesting about 10-25% of my salary over that time.
I also have child support payments which are a large portion of my cash flow. Since I consider my future remaining child support payments to be a large negative NPV, every month when I knock one of those out, that negative NPV drops and my FIRE net worth goes up accordingly.
Maybe I am not understanding the thread ... but, if your net worth increased 7.5588% in the past 3 years and your main investments are: VTSMX, VFINX, VFIAX, FUSEX ... when I look up the 3 year return on all these investments they are about 8% negative. So, I assume it is saying that in spite of a major decline in all your main investments you still managed to increase your net worth via savings. Or am I totally missing the point?
You are exactly correct. I owned a chunk of those funds at the beginning of 2007 and have been DCA'ing from my paycheck into them over the past 4 years. Since my AA is 100% stocks and I don't market time (by any definition of the word ;-) ) my total return very closely matches the historical performance of those funds (which obviously relatively closely track each other in the case of these particular 4 funds).
My net worth has also gone up somewhat as a result of mortgage payments and student loan payments reducing my liabilities, and the aforementioned arbitrary home value increases on the asset side.
I've also increased "my" net worth by adding to my kids' college accounts over time. (Those are similarly segregated in my FIRE spreadsheet.)
Finally, I doubt Vanguard provides 4-year figures, but I did try to pick a 4 year timeframe that matched dex's as closely as possible. Since I keep track of my net worth approximately at the end of every calendar year, the closest match I could get was 01/01/07-today. So Vanguard's 3-year timeframe you saw would probably exclude the early part of 2007. Not sure if that made much of a difference.
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