2012 Net Worth Review and Giving Update

Each year on FMF I post a review of my net worth (here's the one from last year) as well as list the charities supported by FMF (here's the list from last year) during the previous year. This year I'm combining the two into one post.

Net Worth

Here are my 2012 net worth highlights:

• My net worth ended 2012 at another all-time high, up 15.9% versus the previous year which was very close to the S&P 500 return of 16.0%. 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. It also includes my savings during the year.


• In addition to this gain, I added a liability to my net worth. My kids are in high school now and college isn't that far off. I have always included the value of their 529s in my net worth, but now that those dollars will be spent within the next several years, it's time for me to recognize the expense side. So I created a liability for college costs. I booked a good amount of costs in this year, so much so that if I had not included it, my net worth would have been up another 1.8% to 17.7% overall.


• I had record net worth highs for nine of the twelve months in 2012. That certainly made for a nice year. :)


• This year's performance brings the compound annual growth rate of my net worth to 14.52% over the past 16 years when I started tracking it in 1996.


• If my net worth continues growing at this rate, I should hit my crossover point in three years. In addition, I made up ground I lost last year in my retirement net worth goal and now I am a bit ahead of projections.


• My growth projection for 2013 is actually a bit lower than that at 11.8%. It includes an 8% growth estimate for my investments plus savings from both my income as well as my rental real estate holdings.

Charities

One of my resolutions last year was to concentrate my donations on fewer charities. I certainly accomplished that this year. In addition to my church, here are the charities FMF supported in 2012:

• Eagles Summit Ranch
• House of Mercy
• Meijer Gardens
• Salvation Army

That's it for this year! How did your net worth perform on 2012?

Comments

[Jane Savers @ The Money Puzzle]

I was very disapointed with my net worth in 2012 because my goal was to reduce debt by $5,000 and I did not hit that goal. I have given myself an even more ambitious goal of reducing debt by $8,000 this year.

Reducing debt raises net worth.

[Mike Hunt]

Net worth went up by approximately 8% in 2012- congratulations on a very healthy NW increase!

-Mike

[Lance @ Money Life and More]

I had an awesome net worth year in terms of both percent and dollars. Of course, it is easier for the % to increase while my overall net worth isn't as big yet. The older I get I imagine that percentage will significantly decrease over the years.

[Strick]

"My growth projection for 2013 is actually a bit lower than that at 11.8%. It includes an 8% growth estimate for my investments plus savings from both my income as well as my rental real estate holdings."

I'm really impressed you have built a portfolio that allows for you to make a projection like this. I've reached the point I'm sure you're already at where my savings don't have that great of an effect as compared with my investment returns. I'm still watching mine go up 20% one year and down 10% the next (i.e. my average returns have been pretty good but volitility so high theres no way i could even begin to pick a % increase for a year, it would be like me saying I think the s&P 500 will go up 8% this year (a ridiculous prediction to make). I think I really need to start looking in to rental properties like you and the relative steadiness of the income produced. Currently my crossover point could be a few years away or many many years away depending upon whether we have a 1990s market or a 2000 market.

[jim]

Nice work.

How much of your increase is from additional savings versus growth of assets? You estimated '13 would be 8% in grwoth and 11% total, so +3% from savings? Is that your general pattern?

If someones net worth is lower and they're younger then its easier to get higher annual growth from savings. But if your net worth gets bigger then the growth will rely mostly on asset appreciation. I assume your net worth is relatively high. ;)

My net worth is up about 7-8% a year over the past few years. But there have been some bigger ups / downs in there.

[Ross]

That really says something about your assets when you net worth increase is about the same as the stock market increase. It's safe to say that your assets are rather sizable.

[SR]

FMF:

How do you track your net worth? Do you have a custom excel spreadsheet or does Quicken automatically do it for you?

[FMF]

SR -

I track using Quicken.

[FMF]

Jim -

I save about 2-3% each year. It's roughly the same dollar amount each year, so the percentage declines as my net worth goes up.

[Net Worth Snowball]

What a timely post! I just started my own personal finance blog, Net Worth Snowball to share my methods of building my net worth on my path to financial independence.

My net worth grew 32% in 2012, and hopefully will approach 30% again for 2013.

Thanks for the great work your blog, FMF. I have been a loyal reader for nearly three years.

[Jonathan]

Our 2012 NW growth was about 36%. It would have been higher but for one-time costs associated with purchasing two new rental properties (closing costs, fix-up costs). For us, the increase comes entirely from "savings" because we invest for cash flow. So far, I haven't made any adjustments for the underlying value of any of our assets, and just log it as the purchase price. So the income each month goes toward net worth growth and future investments.

We've only been tracking NW for about 2 years now, since about the time we bought our first rental property, so I don't expect we'll keep up huge percentage increases each year. However, I do hope and expect to keep increasing the dollar gains each year.

[Jose]

I track whether I've had a good year or not by the increase in my net worth. I target a minimum of 12% year over year and although it seems aggressive, it includes significant contributions to retirement accounts as well as pay down of debt so it's reasonable within the context of my finances. I only hit 9% in 2012 but I'm ok with that, I just need to work a little harder in 2013 to make up the gap.

[TL]

We don't calculate using the normal net worth calculation since we don't include the value of our pensions, cars, house and other similar property. In the past we included these; however, a bad incident selling our house and uncertainty about the values of these assets lead us to change our formula a little bit. It gives us a peace of mind only looking at stocks, funds, bonds, and cash.

That being said, our net worth increased 22%. Sometimes I estimate the increase without our contributions to get a feel for how much of the increase was due to our contributions and how much was due to the market. Without the contributions, our net worth increased by 13% so it was a little behind the market. This is not unexpected since we have quite a bit in municipal bonds or municipal bond ETFs.

[Aspiring Blogger]

Our Net Worth was up by 32% in 2012. That represents a $60k increase, which we're pretty proud of. I know that as we get older and accumulate more wealth our % increase will drop, but hopefully the $ amount will continue to increase. Congrats on your increase!
AB

[PJinNC]

Our net worth was up 24% in 2012. 62% was attributable to increased value of retirement investments, and 38% to retiring debt.

[WorkSaveLive]

Great work on the net worth increase! We increased ours by about 100% but that's because it's relatively low. lol. :)

I love all of the charitable giving stuff as well. It's great to bless others with what's been entrusted to you!

[Money Beagle]

Great work. I have never included the 529 plan values in our net worth but I don't really understand the whole concept of creating a liability for college funding either. I know that everybody calculates their net worth using different data, so as long as it makes sense and works for you, I'm all for it.

[Erik]

Here are my networth changes for the last 9 years: 6%, 10%, 13%, 11%, -14%, 9%, 8%, 1%, 10%. That comes to a CAGR of between 5% & 6%.

The four years of -14, 9, 8, and 1 left my net worth almost exactly in the same place 4 years later.

It shows how one really bad year of -14% can take a long while to correct. I am not too discouraged as I just hit a milestone net worth value but it took longer than I expected to get here.

[Nick @ ayoungpro.com]

Great progress. My net worth at this point in my life is sadly negative. I love reading your updates they give me inspiration to get that turned around!