2011 Net Worth Review

Once a month I update my net worth in Quicken (by adding in any expenses, updating my fund prices, etc.) And once a year I give you all a review of how I did the previous year. This is my wrap up for 2011. Here are the highlights:

• My net worth ended 2011 at an all-time high, up a "decent" 6.98% versus the previous year. Note that this includes my entire net worth -- including the value of items that didn't go up during the year (like my house, my cars, and cash investments), which weren't inconsequential in total value. This compares favorably to the market (S&P 500), which was flat. My gains were fueled by my savings throughout the year.


• I had record net worth highs for the first four months of 2011, with my peak at the end of April. From there the market headed down, down, down with every month lower than the previous one until October. In the end, my net worth on December 31 was the second-highest month end net worth of the year.


• This year's performance brings the compound annual growth rate of my net worth to 14.43% over the past 15 years when I started tracking it in 1996.


• This year I had my third-worst percentage gain in net worth though it was the seventh-highest in absolute dollars gained. Overall, my net worth is up 66.6% since the end of 2008 (which, BTW, was the only year I've had a loss in net worth.)


• If my net worth continues growing at 14.43% each year, I should hit my crossover point in five years. That said, I did not hit the retirement net worth goal I set in April, so I'll be playing a bit of catch-up this year to get back on track.

Overall, an "ok" year. If anything it reminded me to keep my savings rate high and keep plugging away. To make this happen, I'll keep doing the same old things: growing my career, spending much less than I earn, saving a ton, and investing in index funds. Hopefully the market will help me out at least a bit in 2012. ;-)

Comments

[Christa]

Those are some great numbers -- congratulations!

[Money for College Pro]

14.43% over the past 15 years is very impressive! Impressive and encouraging! Thanks for sharing.

[Nick]

Congratulations! That crossover point is right around the corner!

[MonkeyMonk]

Congratulations on the positive numbers!

One question: Are you including new contributions in that 14.43%? If so, without actual numbers the annual percentages are pretty meaningless to readers, aren't they? E.g., contributions of $40,000 annually would give radically different percentages to someone with a new worth of $100,000 vs. someone with a net worth of $1,000,000.

I totally understand why you don't give your actual numbers but it would seem like there might be a more useful way to present the numbers.

It also might be useful to understand how your money is allocated -- what percentage in equities, bonds, cash, real estate, etc.

[FMF]

MonkeyMonk --

I include everything in the 14.43%. My net worth in one year versus my net worth in another year.

And while I understand that you may like to see actual numbers, I do not feel comfortable sharing them. If you've been reading along for awhile, combine info from various posts, and do a few calculations, you can get a good sense of the sort of numbers I'm talking about. Others have done this and been rather accurate.

As for the allocation question, that's an interesting one. I'll consider it for a future post.

[MonkeyMonk]

I agree that you shouldn't be posting your real numbers and as a long-time reader I do have a very good idea what sort of numbers you're dealing with. Still, I've always wondered about the best way to present this sort of data while skirting around what is essentially the most important aspect ... the actual numbers.

For example, the annual growth rate of my net worth over the past 15 is better than yours but I suspect it's mostly due to two factors: 1) starting off with a very low net worth 15 years ago, and 2) making a few very profitable real estate transactions early on that in hindsight feel more like winning the lottery than any sort of financial saavyness on my part.

When I was just starting out a flat or downward stock market wouldn't have much effect on my net worth but now that I'm heavily invested in equities it can feel disasterous.

Regardless, I'm not in any way trying to diminish your accomplishments. Great work!

[FMF]

MonkeyMonk --

My progress has been much less dramatic than yours (or so it seems.) My biggest yearly gain was close to 28% I believe and I've only had one annual loss. So my increases have been slow and steady, built up over time, just like I talk about here much of the time.

And yes, it's much easier to have a large gain when your base is low. That's why my percentage gain this year was low but my increase in actual dollars was "average." ;-)

All this said, someday I may reveal all my finances, but that would probably be in my last "I'm outta here" post...

[Mark]

If you don't want to show numbers, you could always show the total increase as you have, and approximately how much of that was new money. For example, if you have $1 million, you added $40K, and you had a total of 14.4%, you could say that your total was 14.4%, of which 4% was added money. I realize this is far from exact, because your "new money" also earned returns, you paid off some of a mortgage (well not you of course, but some people!), etc. But it gives a useful ballpark figure.

[Mike Hunt]

Hi FMF,

I am confident I have a good idea where you are at but will not mention anything as I respect you wishes. Just under 7% is not a bad number but it does tell you that as your portfolio gets larger the savings coming from savings will get smaller & smaller percentage-wise without investments producing gains.

My net worth was up 8% year over year, and nearly all of it came from savings, so we are nearly in the same boat.

Well done and keep it up- the cross over point may recede or come nearer by a few years but you will get there eventually.

Best regards,

Mike

[Stacey Jansen]

Hi FMF,

I've been a long time reader to. I've been slow to switch my portfolio over to a pure Index strategy, so I'm wondering how different your % allocation to Index Funds and across your Index Funds has changed over the years or has it been fairly similar for a while. Have you adjusted your allocation? Can you share your allocation of Index Funds? Thanks

Stacey

[Alex]

FMF,
Have you used Yodlee before? You can set it up so you could review your net worth daily.
Alex

[FMF]

Mike --

Yes, you and I are on the same path. Here's to a good market this year to help us along! :-)

Stacey --

That's a good question. I'll look at it for the subject of a future post.

Alex --

I use Quicken (offline) and have for years. If I went online with my data, I'd probably use Mint.

[Old Limey]

I never kept track of my investment portfolio when I was working other than to look at my 401K over which I had very minimal investment choices.

I retired in September 1992 and have kept a daily record since the start of 1993 when I had consolidated all of our investments at Fidelity. The numbers below are for our Fidelity investments only, they do not include our real estate, cars or credit union accounts. For comparison purposes I am using VFINX which is Vanguard's S&P500 fund that includes dividends.

Between 1993 and 2006 I was trading actively with mutual funds and using both fund selection and market timing techniques. In 2007 I decided to move into the slow lane and invest strictly for income.

Year APR (Old Limey) .. APR (VFINX)
1993 ........ 75.19 .............. 10.96
1994 ........ 6.69 ................ 1.88
1995 ........ 16.04 ............. 37.48
1996 ........ 7.28 ............. 25.49
1997 ........ 29.27 ............. 31.00
1998 ........ 41.39 ............. 30.18
1999 ........ 60.75 ............. 20.78
2000 ........ 29.79 ............ -9.06
2001 ........ 5.11 ............ -12.20
2002 ........ 2.03 ............ -22.15
2003 ........ 27.37 ............. 28.50
2004 ........ 7.64 ............. 10.74
2005 ........ 4.12 .............. 4.77
2006 ........ 17.59 .............. 15.71
2007 ........ 5.13 ............... 5.41
2008 ........ 2.59 ............. -36.91
2009 ........ 4.44 .............. 26.49
2010 ........ 4.46 .............. 14.91
2011 ........ 5.51 ............... 1.97

19 Yr. APR ...... 17.42% ........... 7.73%
19 Yr. GAIN . 2014.13% ....... 311.35%

[Old Limey]

In case you're wondering why my first year was so great I saw that emerging markets were exploding so I put everything into one fund which was FEMKX, Fidelity's emerging market fund. It went straight up until it peaked on 1/5/94 and then fell off a cliff so I bailed out quickly. I have never concentrated everything in one fund since. During the dot.com bubble, 1997 - March 2000 I used 4 or 5 funds but they were all aggressive growth hi-tech funds that contained the best of the Nasdaq 100 companies.

[Rob G.]

Congratulations on the great results!

I was up 10.5% in 2011 largely based on my high savings rate. If you are like me, 2012 is looking pretty good so far.

[Melissa @ Little House in the Valley]

Five years is within sight. Thanks for sharing, and here is to hoping your 2012 is even stronger.

[Dr. Street]

Toal CAGR is somewhat misleading. People normally love using CAGR after having a down year (denominator).

I would be interested in the growth rate y/y of existing investments less new deposits