Net Worth Review: June 2007 (Reality Hits)

Every month, I give a bit of detail on how my net worth did the prior month. This post will detail how I did in June 2007.

In June 2007, the S&P 500 was down -1.81% yet my net worth was down only -0.82% during the same time. Nothing to write home about, but at least I'm better than average. :-)

My net worth is now up 8.27% so far for 2007 and on track to be up 16.53% (which is close to my 10-year average) for the year if it keeps going at this rate. For the year, the S&P 500 is up 5.99%, so by that measure, I'm outpacing the averages by a good amount as well.

A few things to add as updates:

• My net worth will be below the average next month as I gave a big chunk of stock away to a charity. It will take me a few months to make that up financially.

• My results will be a bit below the market in an up market and a bit better than the market in a down market because I'm measuring my net worth versus the S&P 500. And while the S&P 500 fluctuates high and low as stocks move up and down, a good portion of my assets are more stable and change rather slowly. For instance, I have a good cash position now as we save for our future house and, of course, the value of my current home (a decent part of our net worth) doesn't change much. 

• I'm down now to owning only five stocks -- all the rest of my investments are in index funds or mutual funds of some sort. I'm moving more and more out of mutual funds and into index funds, though I'm doing it slowly to minimize taxes. (FYI, here's how I'm doing it.)

Comments

[Deborah]

I do not do an actual tracking of how I do on my own blog, but I do like reading them on other people's blog.

I find it difficult as to how you set out criteria for net worth. When I look at my stuff I don't look at the hard assets such as car, house, personal belonging, I only look at the accounts, such as bank account, retirement savings accounts and margin account. I don't look at the credit cards because I pay them off in full each month.

The home is a big part of net worth, but how do you set out a value for it? We bought our home in 2003 and the last home in our complex sold for 55% more than what we paid. I don't consider that a real gain. I very strongly suspect that that "gain" in net worth will be given back, or at least partly given back. It is simply unsustainable beyond any measure of reality.

I guess I just consider that valuation so much more fickle than say the bank accounts, which give indisputable hard numbers. It doesn't mean that these numbers are any less prone to ups and downs, but I can calculate them with certainty at that particular point in time.

Here's the thing, I what I really want to measure is how the accounts are doing, not how fickle the real estate market is doing, but you do need to use some kind of value for the home to do that. Interesting that I call the real estate market fickle and you say it doesn't change much...

If I use the price we paid for our home we were up about 2.2% for June. If I use the last sold in our complex price I get that we were up about 1.5% for June.

As for the housing trade thing... I've watched the housing market since I was a teen and I've been aware of the cost of housing since I was a teen. I guess there is nothing like losing your mother and watching your grandfather mismanage and lose her entire estate that will wake a up as a teen to being aware of the housing market.

I have watched the market go through essentially 3 bulls, and current in its fourth bull. I think we are at a top or close to a top in Canada, in general we have little evidence of our prices declining quit yet. After every top the prices give back for the next 4-7 years or so. You can't time the market for an absolute bottom, but you can identify a top and I think you can generalize that getting in 4-7 after a top will be the most economically beneficial to people inclined towards wanting home ownership.

[FMF]

Deborah --

As far as how to set a value for our house, I check both online and offline (recent sales of comparable houses in our area) sources, the estimate a value for our house. I factor it down for selling costs (what we'd pay to sell it), so I have an accurate measure of what it's really worth to us.

I update the numbers every six months or so -- I don't change them monthly.