Random thoughts on net worth.

[rodi]

My sister and I were going for our weekly 'catch up' 4 mile walk this morning. We discussed the market. We are both retired and both have similar portfolio sizes (mine's bigger, but she has a pension - so it works out). We both have paid off houses in the same neighborhood.

We talked about the market drop from a year ago (when it was close to peak). And we talked about the crazy real estate market. As has been discussed here - we're probably off the peak of home prices in our area but it's still way up.

We also talked about the granny flat my husband I have and how the tenant turnover is going. (Tenants of the past 8 years just purchased a home and we've been prepping and showing it.) We were charging significantly below market to old tenants because they were great tenants and the market was going up crazy. New tenant we just signed the lease with is at the lower end of market rate - but way higher than previous tenants. We figure it's about a $10k bump in income per year.

We realized, as we discussed it, that even though the financial markets have given our net worth a big hit... the home values in our pricy area have gone up way more than our losses. It was a reassuring idea.

So... despite the market hit to our portfolio - it's really nice to see that we're doing as good or better than ever.

(Note to self - need to update my signature line... rent income now makes up a bigger chunk of our spending)

 

[ShokWaveRider]

We only include the price we paid for our home as our home value for net worth purposes. Our home has doubled since then, but NW is not affected (As it could go back down just as easily).

 

[OldShooter]

When I look at anything I look at 5-year graphs. 23 months ago we were seeing exciting new highs for the S&P, now we are seeing them again -- just from the other side. Looking across the full five years, the S&P is up by almost 50% and that is without considering the five years of dividends paid. IMO five and ten years are investors' time frames. Shorter time frames are for noise traders.

DW and I are happy people. The noise doesn't bother us a bit.

 

[captain3d]

Enjoy it while it lasts. House prices are on a slower deflating bubble than the other stuff

 

[Alan]

DD just put her house up for sale in LA this week. She is hoping to get about 25% more than she paid for it in 2018. She is moving back to England, to the town she was born in, and where we and our son currently live. Much lower COL plus she will continue working for the same company she is working for now as they have offices in England and they are happy to have her working from home.

Her net worth won’t change much but she will have a lot less invested in her primary home plus that home will be much larger than she has in LA. Her partner is doing the same and their long range plans are to split their time between England and Australia as he is Australian American (she is British American).

 

[copyright1997reloaded]

We only include the price we paid for our home as our home value for net worth purposes. Our home has doubled since then, but NW is not affected (As it could go back down just as easily).

Isn't that true for most asset classes? (That they can go down.)

 

[rodi]

I realize housing can/will continue to go down... And I'm not making any investment changes (in real estate or markets) based on the current trends. It was just an ah-ha moment when I realized that despite the losses in the market of a few hundred thousand, the gains in housing more than matched it.

And you can't spend your house as easily as other financial instruments.

I rarely use 'net worth' in planning, because our house is not what we're withdrawing for living expenses. Just a nice ah-ha moment. And the bonus of increased rental income as our new tenant moves in is spendable icing on the cake.

 

[Montecfo]

I rarely use 'net worth' in planning, because our house is not what we're withdrawing for living expenses. Just a nice ah-ha moment. And the bonus of increased rental income as our new tenant moves in is spendable icing on the cake.

Agree. My targets have all been based on non-home net worth.

 

[FLSUnFIRE]

Where I am the rental value of my home would net me >75% of my expenses if I moved to a LCOL area... that would be worst case but I'm far from starving. Rents have gone up even faster than RE prices here. Lots of inventory being built so depending on migration trends prices may stabilize a bit in a couple years.

 

[aja8888]

Net worth is what my daughter will end up with someday, not soon, I hope. What we are dong now is playing "wack a mole" with rising costs.

Our home values here in south Texas are not anywhere comparable to the over inflated home prices in Ca and other states. If our value (perceived, of course) goes down $20,000, it's no big deal. And we are not relying on the home value as a potential income to cover ongoing living expenses.

 

[Car-Guy]

Like most folks here that own their homes, I'm sure mine has gone up too. How much? Heck if I know but we have had a couple of unsolicited offers to buy our property/home this year... I shut them down before they could get to the point of making an offer. Just not interested at this time.

Regarding net worth: I haven't calculated/tracked that in a couple of years now. Once a year I'll add up my account balances to make sure they are well above my magic number but other than that, I just don't care anymore. I'm not going to take the time to figure the value of my property, vehicles, collectables etc and add them to my liquid assets.

But back in the day (not long ago) when I did regularly track/calculate my net worth, I always debated within my own mind what should be included beyond what I listed above... I know a lot of folks would include the value of their pensions... Others would not. Similarly some would include the value of their SS payments, others would not. And some folks would even include the value of their "yet to be received inheritance", which I think was a bridge too far.

Anyway, the debate in my mind is now settled... I just don't try to figure it anymore. It is what it is.

 

[braumeister]

DD just put her house up for sale in LA this week. She is hoping to get about 25% more than she paid for it in 2018. She is moving back to England, to the town she was born in, and where we and our son currently live. Much lower COL plus she will continue working for the same company she is working for now as they have offices in England and they are happy to have her working from home.

Sounds wonderful, and a very nice example of how globalization can produce positive effects.

 

[braumeister]

Like most folks here that own their homes, I'm sure mine has gone up too. How much? Heck if I know but we have had a couple of unsolicited offers to buy our property/home this year.

Calculation of "net worth" (however you define it) really doesn't have any value for me, but I do keep track occasionally. For the value of my home I simply use the assessed valuation (what my property tax is calculated on). That is updated every few years and is always well below what the actual selling price would be.

 

[Ronstar]

Calculation of "net worth" (however you define it) really doesn't have any value for me….

Me either. Until I sell the house and get the proceeds in cash, the value of our house is very subjective and moot in the grand scope of things. Yes home equity is part of net worth, but shouldn’t be considered an investable asset IMO.

 

[NW-Bound]

Though I am traveling and do not have time to make trades as I do at home, I still look at my portfolio each day. Hence, I know the pain y'all talk about.

But the truth is, as the days go by I am concerned more and more about my physical decline than my financial condition. It is not likely I will run out of money, despite currently having no illness, no life-threatening condition. If anything, I will spend less and less as my physical condition declines further.

Not to sound too gloomy, but we have seen plenty of fellow posters departing, including people who seemed to be in good health, or at least I did not see them talk about it.

So, unless you are cutting it too close financially, you should not worry too much about money. All that money may not do you much good. Sad.

 

[38Chevy454]

I can appreciate the thought that house up while investments are down helps the psychological aspect of recent market downturn. I'm like many of the replies in that i don't really calculate net worth. What matters is where I can get money for my monthly expenses, and that is from investments outside of housing. My house value is for my estate to be concerned with.

 

[jebmke]

Calculation of "net worth" (however you define it) really doesn't have any value for me, but I do keep track occasionally. For the value of my home I simply use the assessed valuation (what my property tax is calculated on). That is updated every few years and is always well below what the actual selling price would be.

Same here although I do give my estate attorney a complete asset valuation periodically in case there is something that should be changed with our estate plan.

Otherwise, I only look at liquid assets and I only do that once in a while.

 

[Dash man]

I track my net worth regularly since it’s pretty easy to do. It helps us to make decisions regarding gifts and charitable giving since we may be on the edge of the estate tax exclusions when they change in 2026. We’d rather give away assets now than have the feds take 40% later.

 

[Earl E Retyre]

We realized, as we discussed it, that even though the financial markets have given our net worth a big hit... the home values in our pricy area have gone up way more than our losses. It was a reassuring idea.

So... despite the market hit to our portfolio - it's really nice to see that we're doing as good or better than ever.

It is so coincidental that you post this today. Once a year, we update our net worth spreadsheet at the end of September and we did that today. While our stocks took a HUGE hit, our real estate values have gone up enough to where our total net worth is about break even compared to a year ago.

 

[jollystomper]

But the truth is, as the days go by I am concerned more and more about my physical decline than my financial condition. It is not likely I will run out of money, despite currently having no illness, no life-threatening condition. If anything, I will spend less and less as my physical condition declines further.

+1

I track my net worth as a "side effect" of using Quicken . Since retiring I focus more on cash flow, since I have a non-cola pension that still covers the majority of our spending. I still find it amazing that 4 years after retirement my cash+investment assets is still noticeably larger than what I had when I retired, and I have a very conservative AA.

But health is more important. For the first time in many years, my annual eye and physical exams have resulted in several recommended followup tests, including moving up the timing for my next colonoscopy . I feel great, but I head the doctors advice, and so far the completed followups have not raised any concerns. This matters more to me than the daily net worth fluctuations.

 

[Rianne]

Isn't NW constantly changing? Say, portfolio +/- net worth. For instance, using firecalc as the starting portfolio, my understanding is, to leave out real estate value but include rental income, right? Beginning portfolios has always been confusing to me. It changes day to day. As NW changes day to day.

Our house value in the spring of 2022 was 20% more than it is today, according to realtor.com. Taking into account all the home sales up to about August, it fell considerably.

 

[SJhawkins]

Calculation of "net worth" (however you define it) really doesn't have any value for me, but I do keep track occasionally. For the value of my home I simply use the assessed valuation (what my property tax is calculated on). That is updated every few years and is always well below what the actual selling price would be.

This is what we do too, we really dont use the home value for much planning really, maybe more of perspective on how one can pay for some long term care if anything.

 

[COcheesehead]

I use only liquid assets for planning retirement income. I do track all our assets: autos, home and other higher value items for a true net worth, but really only use our brokerage assets plus 75% of our planned social security benefits for income planning.

 

[ShokWaveRider]

I use only liquid assets for planning retirement income. I do track all our assets: autos, home and other higher value items for a true net worth, but really only use our brokerage assets plus 75% of our planned social security benefits for income planning.

Us too.

 

[athena53]

Not to sound too gloomy, but we have seen plenty of fellow posters departing, including people who seemed to be in good health, or at least I did not see them talk about it.

Yeah, I know- my travel budget could be cut 90% in the blink of an eye. Hope that doesn't happen for many years. Still many places to see.

I quit tracking my net worth (including and excluding home equity) because it's depressing and I'm OK with my current mix of investments. I have a bigger % of cash than ever. I remind myself that my withdrawal rate since I retired 8 years ago averages about 3.5% so it should be sustainable through markets like this.