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May 02, 2011


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Most of our investments are in deals that may pay off big time--or may be total losses. It's impossible to place a current value on them, or to project a future value. But I just started tracking our "trackable" net worth 3 months ago (cash, funds, debts, property), and now with 4 data points we've seen significant gains each month. In fact, accelerating gains each month, though a fair percentage of the total gains comes from unrealized gains in a mutual fund account and a Roth IRA. At age 27, we haven't given a thought to a "retirement number," but going forward our primary investing focus will be on cash-generating real estate with the expectation that before too long our investment cash flow will begin to overtake our W-2 income (at which point we may "retire").

I know what you mean FMF. Thanks to aggressive saving and the increasing stock market, our net worth is up over 55% in the last year. It's kinda weird seeing your net worth fluctuate by thousands of dollars daily, depending on what the market's doing.

Nice work FMF! It's amazing what kind of net worth you can obtain by investing in those low cost index mutual funds that you and I both love! Passive investing forever! :)

I am two month ahead of my minigoal of $10,000 and enjoying the run up. However, since I have over 30 years to go, if it crashes I'll just pick up more stocks on sale. So either way works for me.

Calculating my net worth is quite easy. I have $21K in debt. $23K in 401(K). So my net worth is only $2K. Pathetic, I know. But consider this: A month ago, my net worth was -$7.5K. Going from negative to positive is a huge success story for me. I'm around 25 years in age. My goal is to have $3 million in 401(K) by when I'm 59.5 years. And have another $1 million in mutual funds, stocks, bonds, cash, money market, etc. I'll probably have a paid off house then also. With minimum life style changes, I can afford to retire at when 50 with only $1 mil in cash asset.

it's a nice feeling to have! I still have trouble divorcing myself from getting excited over the $ increase vs the percentage gain

FMF - I honestly think you are going overboard just a bit in calculating your net worth every single month. I track mine at a high level once per quarter and then do a deeper dive once per year. It's also at that once per year check-up that I make decisions about things like portfolio rebalancing, do I need to increase my 401(k) contribution, should I start paying my mortgage more quickly, am I properly insured against various risks, etc. I think looking at it month to month might motivate you to make short-term decisions that are not the best moves in the long-term. Just one guy's opinion.

Bad_Brad, I think it depends what your purpose for tracking it is. In my case, for example, I'm just fascinated by analytics and accounting and numbers, and I want to see how fast the numbers grow. I'm not making any decisions relating to the numbers, I just want to see what they are and be able to identify any trends early on. Especially trends that might indicate that we're inflating our lifestyle or backsliding on general thriftiness.

I have been using Quicken for almost 15 years and have been tracking my Net Worth on a regular basis as well. Lately I've been dropping Net Worth numbers into Excel to play with them, do some projections to see how things will go if the growth rate remains steady, etc. Since December 1997, my Net Worth (without real estate) has a CAGR of about 24.5%. Although that does include a couple early years, where small amounts pretty much doubled, but if I take those out it's still a respectable 20.5%.

So, that said, question for you, FMF: You said you have "averaged" 14.94% per year. Is that a true average, a CAGR, or ? I looked at my average, and it was more like 28%, which to me wouldn't be as accurate as CAGR to assess the change to Net Worth over time.

Brett --

Yes, my "average" is CAGR.

BTW, sounds as if you've been doing pretty well yourself. :-)

After reading your article i did calculate my net worth. I did not included my or my husbands pensions in the calculation because I did not know how to calculate its cash value. Any suggestions?

Also I have some cash to invest but dont have the investment knowledge to do it... any suggestions on that as well?

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