Net Worth Update, April 2011

As most of you know, I update my net worth monthly (using Quicken) to keep track of where I stand financially.

I completed this task for April 2011 just this past weekend and the results were so good I just had to share some highlights with you:

• The market has been on a tear as of late, driving my net worth to the highest level ever (if it would keep up this pace for a bit, I'd be at my minimum retirement number in a short period of time.) :-) In fact, April was the eighth consecutive month that my net worth has increased and during those eight months my net worth has risen 25.8%.


• Given the results above, I'm on track to hit my recently developed five-year retirement goals (and then some.)


• I started tracking my net worth in January of 1996. Since then, my net worth has been up and average 14.94% per year. Not bad -- especially now that the numbers are larger. It's much easier to have a 50% gain when your net worth is $50,000 than it is to post out a much smaller gain when your net worth is much higher.


• The low point in my net worth was 2008, when it fell 15.7% -- the only year I've had a reduction in net worth.


• Since then, my net worth is up 68.3% and is now tracking along the same line/projection it was before the market meltdown. In other words, I didn't miss any progress with the downturn, it returned strong enough to make up for the losses. Key to this was that I poured a ton of cash into the market when it was down (cash we had on the sidelines because we thought we were going to buy a new home.) That money was invested and is up big-time (as you might imagine).


• Of course, what goes up, must come down, so I don't expect this strong pace to continue in a straight line upward. The market will go down at some point, then up again, then down again and so on, and it will take my net worth with it. Thus is the nature of financial life once you get to the point where your investments are the majority of your net worth. Not that I'm complaining, just lamenting a bit about the days when saving alone was enough to keep my net worth going up no matter what the market was doing. ;-)

How about you? I'm sure many of you are doing quite well too given the market's performance. Please share your results with us all.

Comments

[Jonathan]

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").

[Robert M]

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.

[Jacob @ My Personal Finance Journey]

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! :)

[Ginger]

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.

[Nameless]

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.

[Joe]

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

[Bad_Brad]

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.

[Jonathan]

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.

[Brett]

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.

[FMF]

Brett --

Yes, my "average" is CAGR.

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

[Lisa]

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?