Net Worth Update

Woo hoo! What a great April. Ok, so I'm getting a bit ahead of myself. :-)

I thought I'd give you all a quick update on my net worth for the year. I used to do this every month, then every quarter, but there wasn't enough new happening to really warrant such regular updates. So I decided to post on it only when there was something newsworthy that had happened. And for me, April 2009 was a newsworthy month.

Let's start with a summary of where our net worth now stands:

• Net worth was up 7.1% for the month which now puts us up 3.1% for the year.

• Net worth is at its highest level since September 2008. Still a long way to go to get back to the top, but it's nice to "make up" several months and start the pat to recovery. 

There were three basic keys to making this happen for me:

• By far the biggest impact was that the market was up big-time, with the S&P 500 index growing 9.4 percent in April, the biggest monthly increase since March 2000. Our net worth increase wasn't as big as the market's jump simply because a good portion of our assets are in cash, in preparation for us buying a new home. FYI, this is the same reason our net worth wasn't down as much as most people's when the market tanked over the past few months.

• We received decent tax refunds. I know, I shouldn't get a tax refund, and believe me, I try not to. But there are too many moving parts to our income to get close. The main culprit this year was that I received a good bonus at work and a big chunk was automatically deducted for taxes. It was that amount that I received back in April.

• My side business continues to do well.

Overall, it was a great month and I hope to have a few more like it this year. :-)

How about you? How's your net worth performed over the last few months?

Comments

[Paul]

It's great to see your net worth improve on a month-to-month basis, isn't it? I track ours carefully and update it about every month or six weeks. If you max out your 401(k), make other non-retirement oriented savings and investments, and pay extra on your mortgage each month, it's hard not to see improvement. That said the last year or so has been tough, with the plunging stock market. Our net worth is certainly lower than the September 2008 high point.

We have no debt other than our mortgage and are aggressive savers and investors. One hint: if you want to nearly always see an improvement in net worth month-to-month, pay extra on your mortgage as well as saving and investing aggressively. Remember, as far as net worth is concerned, reducing your outstanding mortgage balance by $1000 is the same as putting $1000 in a money market account, mutual fund, or getting a $1000 investment gain. Besides, it cultivates good money discipline! I realize there are complex calculations that you could do to determine whether that $1000 is better off being spent on mortgage principal reduction or savings/investment, but we're fortunate to be able to do both. I highly recommend it!

Good luck to all in building net worth.

[Neil]

Hi

It just goes to prove the importance of keeping faith with the markets. You wouldn't have seen this kind of recovery in your net worth if you were holding your money as cash (although I'm sure someone is going to point out that it wouldn't have gone down in the first place!)

As for me, making steady progress with my side income and encouraged by the same market bounce in the UK.

[Mike Hunt]

I am about the same now as my peak net worth in June 2008. The stocks that I was underwater on have rallied and I sold, pocketing a small gain. I have some money in stocks long term and a decent chunk for trading. I think the market has risen too fast and is in need for a pullback so my shorter term money is all back in cash again. Will wait for the next panic (commercial residential bust, Alt-A bust, the need for the banks to come back to Uncle Sambo yet again) and jump in to make some more money then.

As always, I'll update you more on what happens then.

-Mike

[Tim]

Our net worth is highest it has ever been. It took a dip in Q2-Q3 2008 due to the market as we lost 20% last year. But we've recovered nicely YTD due to the market rebounding as well as tightening up spending starting mid 2008. We're 4.5% higher now compared to June 2008 and up 7.3% YTD.

[Jason]

My net worth is also the highest it's ever been. Mine is due to my young age (24), and not having a whole lot invested in the stock market when it took a huge drop.

[Doc S]

Is it really a false hope though that the market was up? I find it a bit of a tease to include my retirement package in my networth. I know it is a neccessary asset when calculating Networth but it is still far feteched to me knowing that I can not use that money to pay off any of my outstanding debts until im 65! Just a random thought with that. Congrats on a progressive month, lets see howt he market goes the rest of this quarter.

[FMF]

Doc --

Here's my take:

1. It's an asset and net worth = assets - liabilities.

2. I don't have any debts.

3. Just like I got the benefit from the market rising this time, I took the BIG market hit over the past few months, so I'm comparing apples to apples.

#3 is probably the biggest point. As long as you're consistent (counting some things, not counting others, etc.) you'll get a decent relative read on where your net worth is compared to what it's been.