Tracking Net Worth and Compound Interest Calculating

[Blue531]

I've been tracking my net worth on a monthly basis since 1999--the first year in which it first went positive. I had been investing in my company 401k for a year and saving money aside from it, too. I have found tracking NW to be a simple yet effective exercise that kept me motivated and on the steady path to financial freedom. I would suggest to anyone starting out to begin logging theirs. It is very empowering to see one's wealth increase little by little over time, assuming, of course a person is working toward decreasing spending and increasing investments or at the least maintaining spending and increasing investments. I would also suggest using a compound interest calculator or a 401k calculator and play with the numbers as a motivational tool. Seeing how compounding of my money could grow over time was also a very effective tool for me. And what an amazing one it is!

What exercises, tools or the like have helped you on your journey to financial freedom and independence?

 

[Dash man]

I track my net worth quarterly just to see how things are going. This quarter it didn’t change much because of Roth conversions and the estimated taxes that go with it. Buying a new BMW didn’t help either [emoji16]. I don’t count cars or stuff in net worth. Cash depletion was replaced by real estate increases, so investable assets are down a bit. A couple of my speculative stocks took it on the chin too, but they are history. I’m done with speculation play and back to a solid strategy of a mix of dividend growth and growth oriented stocks.
I also update my twenty year income/expense estimates spreadsheet quarterly. I begin social security this month and our first month of Medicare is next month. Healthcare expenses should go down significantly from now on.

 

[Aerides]

When I was working, I used to update my excel sheet on friday payday mornings, every 2 weeks. All manual, but I enjoyed the exercise of it.

Nowadays I don't do anything nearly as time consuming. I log into Fidelity Full view maybe every 2 weeks, just to glance and check for anything wonky. 30 secs.

 

[mwilson]

I started tracking net worth, income and account balances in a spreadsheet after the 2000 crash. It seemed there _had_ to have been a mistake for my balances to be that low. Went through old 401k statements and - Nope!

Still update that spreadsheet to this day. Good tool to see progress, compare to benchmarks, and also compare past projections to actual results - I'm just over 10% of my projected net worth from 15 year ago. I also calculate my actual annualized rate of return - very different than the average of all yearly returns.

So, sort of accidental that I did this, but glad that I did.

 

[rodi]

I'm a quicken user so I can do this whenever I update my accounts. And using the quicken lifetime planner I can see projected increases... (like your compound interest calculator.)

FWIW - I don't bother to include the equity in my paid off house. I *do* include the expenses (taxes, insurance, etc.) and the rental income from our granny flat... Just not the equity. When I had a mortgage, I included the debt, but not the equity. It's a personal choice and not suggesting anyone else do that.

 

[street]

I have not kept track of NW through the years and for me I don't see a need to keep track of NW. I'm not saying it isn't a great idea I just don't.

I do track once a month my portfolio to see where I'm at but don't my total NW.

 

[USGrant1962]

I've been tracking my net worth on a monthly basis since 1999--the first year in which it first went positive. I had been investing in my company 401k for a year and saving money aside from it, too. I have found tracking NW to be a simple yet effective exercise that kept me motivated and on the steady path to financial freedom. I would suggest to anyone starting out to begin logging theirs. It is very empowering to see one's wealth increase little by little over time, assuming, of course a person is working toward decreasing spending and increasing investments or at the least maintaining spending and increasing investments. I would also suggest using a compound interest calculator or a 401k calculator and play with the numbers as a motivational tool. Seeing how compounding of my money could grow over time was also a very effective tool for me. And what an amazing one it is!

What exercises, tools or the like have helped you on your journey to financial freedom and independence?

I track net worth in Personal Capital, but have only done so for a few years. Not really actionable, but interesting none the less. I just recently bumped the value of my house, though not to the extent that Zillow or Realtor suggests.

 

[youbet]

I have not kept track of NW through the years and for me I don't see a need to keep track of NW. I'm not saying it isn't a great idea I just don't.

I do track once a month my portfolio to see where I'm at but don't my total NW.

Deep into FIRE (74 yo and 16 years since I last earned a penny), my assets are consolidated at Schwab so that other than our home, cars and a few bux in a local bank, NW is displayed every time I sign in. There's even an historical graph.

The difference between my total NW and my FIRE portfolio is only a few percent (5% or so), which I consider "close enough." When you do your once a month tracking of your portfolio, isn't that more or less giving you your NW?

 

[RetiredHappy]

For the past 15 years or so, I have been keeping track of cash flow on an Excel spreadsheet, projected income and expenses for the following 30 years, monthly for the next 10 years and the rest are yearly. Investments are in a separate bucket, updated with actual numbers at end of the year and estimated withdrawals and growth for the following 20 years.

Since I retired young, we kept a ton of money in cash which was supposed to fund us for about 7 years but we burnt through the pile 4 years into retirement. I guess we have an expense problem. I also have a type of investment which matures every 5 years and generates significant capital gains and the lumpy income becomes spending money for the following couple of years. When I turn 65, we should not need anymore money from our investments other than my husband's RMD. Our SS and annuities are the other 2 legs of the 3 legged stool.

 

[HenryD]

I've been tracking my net worth on a monthly basis since 1999--the first year in which it first went positive.

What exercises, tools or the like have helped you on your journey to financial freedom and independence?

I fit our historic monthly net worth with a polynomial. That lets me predict our eventual FI to see if we are on target. It's a remarkably good fit at > 0.98 R^2. It's a great motivator and planning tool. I stare at the graph a lot. Probably too much.

 

[audreyh1]

I record net worth at least quarterly. The number is always displayed in Quicken. I also compare my net worth against accumulated inflation since I retired. If net worth growth is beating inflation since retiring I feel like I’m I ahead of the game.

I use this cumulative inflation calculator: https://inflationdata.com/inflation/inflation_calculators/Cumulative_Inflation_Calculator.aspx

 

[pb4uski]

I'm a quicken user so I can do this whenever I update my accounts. And using the quicken lifetime planner I can see projected increases... (like your compound interest calculator.)

FWIW - I don't bother to include the equity in my paid off house. I *do* include the expenses (taxes, insurance, etc.) and the rental income from our granny flat... Just not the equity. When I had a mortgage, I included the debt, but not the equity. It's a personal choice and not suggesting anyone else do that.

Another long-time Quicken user here. I have our entire personal balance sheet in Quicken with most accounts linked to the provider. I click on One-Step Update, let Quicken do its fetching of transactions and then reviand accept them.

Also a long time user of Lifetime Planner and used it to plan for our retirement and continue to review the plan now and then.

 

[RobbieB]

I just look at the monthly statements that come in the mail.

 

[jollystomper]

I started with spreadsheets back in the late 1980s, tracking it monthly. I switched to Quicken in 1996 and have been using it since then. I watched it closely during our accumulation/saving/investing phase to comparing with various sources showing what a "good" net worth for my age/salary should be.

Since retiring and not longer focused on accumulation, I do not really "track" it, though it is always available in Quicken. I track cash flow more, as that is what our retirement plan is more focused on.

 

[Montecfo]

I do not total my net worth unless I am doing a balance sheet for some reason.

I track my financial portfolio monthly in a spreadsheet along with some key cash flow metrics. Nothing complicated.

I remember as an early accumulator with most of my net worth in my home at that time being disappointed to realize it is "non-home" net worth that matters, since you have to live somewhere.

If you want to track net worth including your home, the challenge is there is no truly objective way to accurately measure FMV on an interim basis. Using assessed value is at least somewhat objective in some jurisdictions but only changes annually.

 

[brett]

Quarterly. With an in depth review in November that includes any tax implications. No spreadsheet, just review the statements.

And we have only ever budgeted or followed spending on a total monthly after tax spend. Never keep track of how many cans of beans we buy and at what price, YoY.

So perhaps we are not the best example. But it has worked for us and we are financially secure. But...I am very comfortable with numbers and can remember most buys and prices.

 

[Golden sunsets]

Our spreadsheet(s) date back to 1991. I used to update/add a column every 6 months but now I do it monthly and hide columns so that it stays concise. Over the years we've added sheets to cover other aspects/projections, of our financial lives, so that the document is now huge. I converted it to Google sheets a few years ago so it lives in the cloud now. I'm very attached to my spreadsheet.[emoji5]

 

[RunningBum]

I try not to overly obsess, which I could easily do especially since I'm a numbers geek. Most would probably say I still obsess, but around here I might be average? Mainly I keep 4 spreadsheets:

1) Investment Net Worth, showing the value of my investment accounts, including NPV of the pension and SS I'll get later. All reduced by deferred taxes, so that a Roth conversion doesn't change the bottom line number. This also tracks my AA to my goal AA. I save a dated copy of this at least once per year, going back to 1999 (but not every year in the terrible 2000s). Between those saved I update the spreadsheet whenever I feel like it under the same base file name.

Recently I added another spreadsheet just to enter and graph those values. I really like the up-slope of the graph after the dotcom bust.

2) Monthly spending. Not itemized, just a one line number of what goes in and out of my checking account since most everything runs through there eventually. I note any special expenses like a new car, so I can easily see the cause of a blip. I just keep adding rows and total them up at the end of each year, along with a running 12 month tally, so I've got full history from when I started this in 2011, the year I retired.

3) Variable % Withdrawal, which takes the after-tax number from my Net Worth spreadsheet and multiplies it by the factor used each year to give me my yearly spending allowance. I modified the one from Bogleheads, making it more conservative. From this I can get a rough investment return, increase or decrease in net worth, how much under/over I was spending for the year, and cumulative over/under. And I also compare it to 4% and 3.5% + inflation from my starting number for comparison, and against the model I used to decide the VPW factor I'd use. I have a line for year so I've got history starting from 2016. So this only gets updated once a year.

4) Roth conversion / ACA tracking spreadsheet. Every year I track all income as I receive it (monthly, mostly interest and dividends), so that I can get my Roth conversion as close as possible to the ACA cliff (with a safety factor) or the top of 0% QDivs tax rate.

I find these all very useful. I don't find it to be work at all, and maybe it helps to keep my mind sharp. Some might just skip Roth conversions to avoid this work. That's their business. I don't find it that much work, and it's also useful as a check on income tax form entries before I file. If a turbotax number is smaller than what I have in the spreadsheet, I see if I've missed a 1099.

 

[street]

Deep into FIRE (74 yo and 16 years since I last earned a penny), my assets are consolidated at Schwab so that other than our home, cars and a few bux in a local bank, NW is displayed every time I sign in. There's even an historical graph.

The difference between my total NW and my FIRE portfolio is only a few percent (5% or so), which I consider "close enough." When you do your once a month tracking of your portfolio, isn't that more or less giving you your NW?

Well, you might be right. I just don't put a value on the ranch, my home or any of my earthly possessions. I'm just interested in investments, cash and where I'm at from month to month, year to year, where I was at when I retired verses where I'm at today etc..

I do things the unorthodox way so, you will have to forgive my uneducated way. Thank you. Lol

 

[ProspectiveBum]

I’ve been tracking our NW in a spreadsheet (with breakouts for investable and retirement assets) for about 6 years. I used to update it monthly, but have dialed that back to quarterly starting at the beginning of 2020. I just wish I’d started doing it much, much earlier.

 

[scrabbler1]

I began working in 1985. For the next 10 years, until I bought my first PC in 1995, my NW record-keeping was on pencil and paper along with the quarterly 401k statements.

When I bought that first PC, everything changed. After creating more elaborate spreadsheets to replace the taxable worksheets on pencil and paper (which I still do as a back-up), and creating a similarly more elaborate spreadsheet for the 401k, I was now more able to monitor my NW (investments only). Still, the spreadsheets were separate from each other because taxable was updated every month (mid-month, when my bank statement came out, as well as on 12/31) while the 401k was still updated every quarter.

But the spreadsheets allowed me to calculate things I couldn't do with pencil and paper, such as approximate monthly rate of returns, for both taxable and the 401k.

I also put each mutual fund into a spreadsheet so I could monitor them as well as more easily determine a cost basis whenever I sold any shares.

When my company introduced its company stock program (ESOP), I created a spreadsheet for that, eventually combining it with my 401k spreadsheet when the company merged the 2 into its single quarterly statement.

I put my checkbook register into a spreadsheet and expanded it to better keep track of my expenses; I built a very useful skeleton version of my income tax returns to see if my withholding was right as well as watch for possible estimated tax payments via "what-if" scenarios.

As my ER plans began to unfold, I created another key spreadsheet to estimate my expenses and income from my projected ER age of 45 through age 65, the important part of my ER before my "reinforcements" arrive - unfettered access to my IRA, frozen company pension, and SS. This spreadsheet also has an estimated cash flow I create each year, like an estimated checkbook register, so I know when I have surpluses I can invest elsewhere. Another useful spreadsheet was an enhanced expense summary spreadsheet which combined the pencil-and-paper summaries I did every year.

After I ERed, I created a spreadsheet for my rollover IRA which (finally) combined my IRA and taxable accounts. I included the data points prior to 2008 on a quarterly basis.

 

[TheWizard]

I don't track my net worth, hardly ever did.
Eight years into retirement, I do monitor my 403(b) plan, my Roth IRA, and my taxable account every week or so to make sure nothing strange is going on, and to keep an eye on limit order status in the latter two accounts.

And toward the end of each year, I do a projection an income projection for the year, including dividends in my taxable account. This lets me figure my Roth conversion amount for the year, to keep my AGI from getting into the next higher IRMAA tier.

And I typically update my income projection spreadsheet each January with updated SS and annuity monthly income numbers, as well as updated 403(b) balance, which affects my eventual RMDs.

Note: "compound interest" is a non factor in most serious investment performance, either before or after the start of retirement.
And I don't try to project what my combined portfolio balance might be a year from now, etc. It will likely be larger most years and that's fine...

 

[Midpack]

I’ve tracked our net worth quarterly since 1994, just posted the corresponding graph in another thread. The magic of investing, compounding and staying the course…

 

[rk911]

I've been tracking my net worth on a monthly basis since 1999--the first year in which it first went positive. I had been investing in my company 401k for a year and saving money aside from it, too. I have found tracking NW to be a simple yet effective exercise that kept me motivated and on the steady path to financial freedom. I would suggest to anyone starting out to begin logging theirs. It is very empowering to see one's wealth increase little by little over time, assuming, of course a person is working toward decreasing spending and increasing investments or at the least maintaining spending and increasing investments. I would also suggest using a compound interest calculator or a 401k calculator and play with the numbers as a motivational tool. Seeing how compounding of my money could grow over time was also a very effective tool for me. And what an amazing one it is!

What exercises, tools or the like have helped you on your journey to financial freedom and independence?

we’ve also been tracking our net worth for the past 15-yrs or so. you are absolutely correct about that being a motivator.

 

[DangerDad]

I became much more focused on finances—including NW and other metrics—since deciding to retire the end of this year. I review and record all this financial stuff quarterly.