Having updated my net worth tracking spreadsheet recently due to new highs (knock on wood!!!):
I had some interesting personal data to share.
I track our net worth against inflation, since over a long period of time that is what matters to us. If we beat inflation, we win the game. Any excess above inflation we feel like is a gift. We are fine with spending down our investments, but it's nice when they beat inflation.
I have net worth tracked against Dec 1999 (I retired in August 1999), and Dec 2011. So I'm comparing almost 20 years and also the recent seven years. The two time periods simply have to do my record keeping and are coincidental.
What is interesting is that the real growth over the two time periods is virtually identical:
- Growth in net worth since Dec 1999 is 104.5%, but after almost 21 years of inflation, real growth is 49.80%
- Growth in net worth since Dec 2011 is 65.2%, but after almost 9 years of inflation is 49.85%
That indicates that real growth went below zero at some point during 2000-2011, and recovered by the end of 2011, and that is basically what happened. The difficult 2000-2011 period (which had two nasty bear markets) we at least managed to catch back up with inflation by the end of it, but the real growth happened after that period. Well - actually didn't break even until 9/2012. At 12/2011 we were still down 10% in real terms. Also, FWIW, inflation from 2012 - 2020 has been quite a bit lower than the previous period. And obviously, the longer the time period, the bigger the bite from cumulative inflation.
I use the following calculator for cumulative inflation over long time periods.
http://inflationdata.com/inflation/inflation_calculators/Cumulative_Inflation_Calculator.aspx