What is your net worth?

[Horseman 1,514]

12 minutes ago, peenie said:

I finally purchased a home so I guess I’m in the negative. 

I wouldn't say so. Some people dont, but, I would count any equity as part of your net worth. You're good as long as housing prices dont go upside down.  Sucks if you have today's interest rates though. 

[peenie 1,690]

8 minutes ago, Strike said:

Congratulations

Thank you!! I purchased it in July. 

[Horseman 1,514]

1 hour ago, edjr said:

This is like when I see people on TV that have to tell people how smart they are. 

If you're talking about me I'd love for people to tell me where I'm wrong. Strike recommend some reading the changed my thinking quite a bit. I'm done working so I've made getting to retirement and financial Independence my hobby. I absorb as much as I can. I regularly meet with a financial advisor my company pays for.  I'd like to think I know quite a bit. More than the average investor for sure.  And it's a much better topic than politics. But so sorry if that bothers you your majesty.  

[peenie 1,690]

1 minute ago, Horseman said:

I wouldn't say so. Some people dont, but, I would count any equity as part of your net worth. You're good as long as housing prices dont go upside down.  Sucks if you have today's interest rates though. 

It’s funny, I was going to buy a house a couple of years ago at an interest rate of 3%, but pulled out because I felt I was significantly overpaying for the house. I got in a bidding war and I felt the house wouldn’t appraise for the value I agreed to pay so I pulled out. If I had only known the housing prices were not only going to continue to go up but the interest rates were going to go up too. Now, I’ve basically got the same price home but double the interest rate. But I needed a home, rent prices were ridiculous ($1900 for 1 bedroom). 

[Horseman 1,514]

1 minute ago, peenie said:

It’s funny, I was going to buy a house a couple of years ago at an interest rate of 3%, but pulled out because I felt I was significantly overpaying for the house. I got in a bidding war and I felt the house wouldn’t appraise for the value I agreed to pay so I pulled out. If I had only known the housing prices were not only going to continue to go up but the interest rates were going to go up too. Now, I’ve basically got the same price home but double the interest rate. But I needed a home, rent prices were ridiculous ($1900 for 1 bedroom). 

30 year fixed?

[edjr 5,567]

30 minutes ago, peenie said:

I finally purchased a home so I guess I’m in the negative. 

You didn’t steal it peacefully 

[peenie 1,690]

1 minute ago, Horseman said:

30 year fixed?

Yes and I’m old. I’ll have to work forever.
I do have money in my retirement, but not a lot like you guys have, but enough to cover the mortgage.

[peenie 1,690]

2 minutes ago, edjr said:

You didn’t steal it peacefully 

Lol, I didn’t steal it peacefully? What does that mean?

[Horseman 1,514]

7 minutes ago, peenie said:

Yes and I’m old. I’ll have to work forever.
I do have money in my retirement, but not a lot like you guys have, but enough to cover the mortgage.

Lots of people gave a mortgage in retirement. It just gets added into the amount of spend per year.  And there are things to make sure you're taking advantage of with your retirement accounts before just paying off a mortgage.  Any other debt? 

[peenie 1,690]

21 minutes ago, Horseman said:

Lots of people gave a mortgage in retirement. It just gets added into the amount of spend per year.  And there are things to make sure you're taking advantage of with your retirement accounts before just paying off a mortgage.  Any other debt? 

I have some credit card debt. I had to paint the house and get trees removed. If you subtract the price of my house from my retirement, investments, and savings….I am worth maybe 50K. 🥺

[jonmx 1,591]

Having a million for retirement is not rich in today's world.  That just means you can retire comfortably into a modest lifestyle.   If you have over a million for disposable spending after basic retirement needs, you are closer to the rich category.  

[BLS 313]

Last I checked, we're worth roughly $670k total.

We have about 450k in Investments, Roths, HSA, 401k, Brokerage accounts, etc.

Another 220k-ish in home value.  

Wife and I are dumping nearly 100k a year into retirement/investments.  We couldn't have done this without getting out of debt.

[Horseman 1,514]

9 hours ago, peenie said:

I have some credit card debt. I had to paint the house and get trees removed. If you subtract the price of my house from my retirement, investments, and savings….I am worth maybe 50K. 🥺

First step is to knock out the CC debt. After that can you afford 15% into retirement funds? 

Do that and then anytime you can make double payments on the mortgage do so. When interest rates come down look to refinance. If I remember right the break even point for closing cost refinancing is around a full percent. It might be that you refinance a couple different times. When you do look to see if changing it to a 15 year loan makes sense. 

[Mike Honcho 4,035]

Not much 

[Horseman 1,514]

8 hours ago, BLS said:

Wife and I are dumping nearly 100k a year into retirement/investments.  We couldn't have done this without getting out of debt.

Atta Boy!  We've been doing the same for several years now.

New Limits 2024

401k/401k Roth: $23,000 plus $7,500 catchup if over 50 = $30,500

After Tax 401K: $69,000 plus $7,500 catchup if over 50 minus $30,500 above = $46,000 (mega backdoor)

HSA: $8,300 plus $1,000 catchup if over 55 = $9,300

Roth IRA: $7,000 plus $1,000 catchup if over 50 = $8,000 (backdoor)

Total = $93,800

Plus probably another $20,000 or so from the wife's IRA and SEP.  Won't know until we file taxes.

 

 

[Alias Detective 1,179]

On 1/14/2024 at 8:39 PM, Horseman said:

Buying things just because you can.

Gambling. 

Two things you'll never hear from an Investment Adviser.  

I love to gamble.

[Alias Detective 1,179]

23 hours ago, Horseman said:

I'm going to use this thought to try and get this thread back on track.  I'm not so sure I agree with this philosophy, especially when retiring early.   I'd like to know @Strike's thoughts as he referred All About Asset Allocation to me which after reading I read 5 other books on the subject.  But that book was written over 10 years ago and in my argument below, have times changed?

My argument against being conservative at retirement and questioning the application of a 60-40 stock to bond portfolio:

1 - What is magic about the date you retire?  Even if you wait to 65 to retire you still have 20-30 years to recover from a downturn in the market.  The last 3 recover periods since the tech bubble in 2000 (time it took for the S&P 500 to return to highs):

2000 Tech - 7 years

2008 Global - 5 years

2020 Covid - 7 months

I hope we are seeing a trend of shorter and shorter recovery periods. But, if you're going to be in the market more than 10 years, not 10 years to retirement, you should be able to recover from any stock market crash. You might note that the recovery periods total 12 years over the past 24 years and that is the argument for 50% fixed income and 50% equity, but it's not.

2 - Out of the recovery times listed above here is the amount of time that the market was actually in downfall before equities started to gain again:

2000 Tech - 3 years out of 7

2008 Global - 2 years out of 5

2020 Covid - 2 months out of 7

The crash is always less than half the time than it takes for equities to recover.  In other words equities are actually rising more than half the time during a recession. Doing the simple math again I think that is an argument for 25% fixed income and 75% equity portfolio. Not 50-50 or 60-40.

3 - In a recent discussion with my financial advisor about this he mentioned that moving forward it might be the end of the 60-40 stock to bond portfolio as the standard.  Take a look at this comparison between Vanguards Total Bond fund and Total Stock Market fund:

https://www.portfoliovisualizer.com/fund-performance?s=y&sl=sKIZkKgpghaF8q0seX0XX

The reason for holding fixed income jumps off the page during the 2008 Global Crisis.  But if you look at Covid since the fixed income market stopped being inversely correlated to equities. You didn't get to reap the benefits of being heavy in fixed income for 2020 Covid or the down market in 2022.  Not saying that trend continues, but who knows.  However, even if it continues you still can't deny the importance of some fixed income for rebalancing purposes.  Again my argument for 25% fixed income and 75% equity even in a total equity driven market.

Would love anybody to shoot holes in the above.   I'm mid 50's and looking to retire this year.  Convince me I need to go higher fixed income.  My current asset allocation:

30% Big Cap

10% Small Cap

5% Micro Cap

20% International

10% REIT

20% Bond

5% High Yield Bond

Indexes, individual stocks and bonds, managed mutual funds, ETF's?

 

Who is your trust in to do your research on the small, micro, mid, large, REIT, high yield......In other words, what software/firms algo's are you using?

[Horseman 1,514]

4 minutes ago, Alias Detective said:

Indexes, individual stocks and bonds, managed mutual funds, ETF's?

 

Who is your trust in to do your research on the small, micro, mid, large, REIT, high yield......In other words, what software are you using?

As I move towards retirement I'm moving out of individual stocks and into very low cost mutual funds and ETFs.  In my main retirement account I am using a mix of Fidelity's ZERO cost funds along with some others that are very low cost.  If you use Portfolio Visualizer you can see that FSKAX (Fidelity ZERO cost total market mutual fund) and VTI (Vanguard Total Market ETF) are the exact same thing, for example,  so it doesn't really matter which one you use. And you can buy and sell between the two for tax harvesting.  I like mutual funds in retirement accounts though because you're always buying them at the NAV price.  I like ETFs in taxed accounts because they can use rules that allow them to reinvest dividend and such without being taxed.

My company pays for a financial advisor who I trust that I vet all my changes through.  He uses some sort of software to do cash flow analysis, but, I don't really use any software for picking the funds. Morningstar if it's something I've never heard of.  Almost all of these funds I am taking about target some sort of index fund. That makes them virtually all the same anyway, see portfolio visualizer.  But, they are efficient and low cost.

For example:

Big Cap - VV

Sm Cap - VBR

Micro - IWC

International - VXUS

Reit - VNQ

Bond - BND

High Y Bond - USHY

Where VV = FNILX, VBR = FZIPX, etc. If you went with mutual funds.

OR just go simple:

VTI - FSKAX

VXUS - FZILX

BND - FXNAX

Note: Bonds aren't so great in taxable accounts because, well taxes.  In my next meeting with my financial advisor we are going dive into tax efficient municipal bonds versus yield on corporate bonds that are subject to higher taxes and where that break point is.  Right now I'm just using VTEB and VTES.  

[Strike 3,979]

23 hours ago, Horseman said:

I'm going to use this thought to try and get this thread back on track.  I'm not so sure I agree with this philosophy, especially when retiring early.   I'd like to know @Strike's thoughts as he referred All About Asset Allocation to me which after reading I read 5 other books on the subject.  But that book was written over 10 years ago and in my argument below, have times changed?

My argument against being conservative at retirement and questioning the application of a 60-40 stock to bond portfolio:

1 - What is magic about the date you retire?  Even if you wait to 65 to retire you still have 20-30 years to recover from a downturn in the market.  The last 3 recover periods since the tech bubble in 2000 (time it took for the S&P 500 to return to highs):

2000 Tech - 7 years

2008 Global - 5 years

2020 Covid - 7 months

I hope we are seeing a trend of shorter and shorter recovery periods. But, if you're going to be in the market more than 10 years, not 10 years to retirement, you should be able to recover from any stock market crash. You might note that the recovery periods total 12 years over the past 24 years and that is the argument for 50% fixed income and 50% equity, but it's not.

2 - Out of the recovery times listed above here is the amount of time that the market was actually in downfall before equities started to gain again:

2000 Tech - 3 years out of 7

2008 Global - 2 years out of 5

2020 Covid - 2 months out of 7

The crash is always less than half the time than it takes for equities to recover.  In other words equities are actually rising more than half the time during a recession. Doing the simple math again I think that is an argument for 25% fixed income and 75% equity portfolio. Not 50-50 or 60-40.

3 - In a recent discussion with my financial advisor about this he mentioned that moving forward it might be the end of the 60-40 stock to bond portfolio as the standard.  Take a look at this comparison between Vanguards Total Bond fund and Total Stock Market fund:

https://www.portfoliovisualizer.com/fund-performance?s=y&sl=sKIZkKgpghaF8q0seX0XX

The reason for holding fixed income jumps off the page during the 2008 Global Crisis.  But if you look at Covid since the fixed income market stopped being inversely correlated to equities. You didn't get to reap the benefits of being heavy in fixed income for 2020 Covid or the down market in 2022.  Not saying that trend continues, but who knows.  However, even if it continues you still can't deny the importance of some fixed income for rebalancing purposes.  Again my argument for 25% fixed income and 75% equity even in a total equity driven market.

Would love anybody to shoot holes in the above.   I'm mid 50's and looking to retire this year.  Convince me I need to go higher fixed income.  My current asset allocation:

30% Big Cap

10% Small Cap

5% Micro Cap

20% International

10% REIT

20% Bond

5% High Yield Bond

 

Meant to get back to some of these.  I have no issue with anything you've written here but not sure why you felt the need to note the age of the book "All about asset allocation."  I think you actually underestimated it's age.  It's more than 10 years old.  However, that doesn't change it's relevance or value.  A book called "The intelligent investor",  a book Warren Buffett calls "By far the best book on investing ever written", was originally written over 70 years ago.  The concepts to invest well don't change that much over time.   I don't think the asset allocation book suggests how you should provision your asset allocation.  It just says to determine your risk factor and invest accordingly.

Other than that, good post.  For me personally, I don't plan on adjusting my asset allocation that much in retirement.  I think as far as things changing the old "move most of your money to bonds and plan on taking out 4% per year" mantras may be a little outdated, but that's just my opinion. 

[Horseman 1,514]

39 minutes ago, Strike said:

 

Meant to get back to some of these.  I have no issue with anything you've written here but not sure why you felt the need to note the age of the book "All about asset allocation."  I think you actually underestimated it's age.  It's more than 10 years old.  However, that doesn't change it's relevance or value.  A book called "The intelligent investor",  a book Warren Buffett calls "By far the best book on investing ever written", was originally written over 70 years ago.  The concepts to invest well don't change that much over time.   I don't think the asset allocation book suggests how you should provision your asset allocation.  It just says to determine your risk factor and invest accordingly.

Other than that, good post.  For me personally, I don't plan on adjusting my asset allocation that much in retirement.  I think as far as things changing the old "move most of your money to bonds and plan on taking out 4% per year" mantras may be a little outdated, but that's just my opinion. 

Only because we've seen fixed income stop being inversely correlated to stocks during covid and in the downturn in 2022. My point/discussion item #3.  That's a short time period though and I am probably wrong.  Just a discussion if 60-40 or 50-50 portfolios are still relevant to retirement age investors.  The recommended allocations in the book feel really conservative.  I automatically put myself in the mid-life investor category.  And yes it all depends on the individual investor's risk tolerance.  

100% spot on book for investment strategy though for sure.  Appreciate you recommending it.  You should be able to tell that my allocations follow that book pretty closely.  

[edjr 5,567]

12 hours ago, BLS said:

Last I checked, we're worth roughly $670k total.

We have about 450k in Investments, Roths, HSA, 401k, Brokerage accounts, etc.

Another 220k-ish in home value.  

Wife and I are dumping nearly 100k a year into retirement/investments.  We couldn't have done this without getting out of debt.

That include the carnage from the Dodge Charger?

[Raven Fan 362]

On 1/15/2024 at 12:54 PM, Horseman said:

We've moved on.  Put the troll on ignore.  

LMFAO

[seafoam1 1,879]

On 1/15/2024 at 11:12 PM, peenie said:

I have some credit card debt. I had to paint the house and get trees removed. If you subtract the price of my house from my retirement, investments, and savings….I am worth maybe 50K. 🥺

That doesn't make any sense. But maybe you know that already.

[peenie 1,690]

On 1/16/2024 at 11:55 PM, seafoam1 said:

That doesn't make any sense. But maybe you know that already.

I was asked if I had any debts and I answered: I have some credit card debt.

The main question this thread asked is what is your net worth. If I subtract my mortgage loan from my all my savings, stocks and my retirement then I have 50K left. What doesn't make sense? Unlike you guys, I don't have lots of money. 

[nobody 2,043]

28 minutes ago, peenie said:

I was asked if I had any debts and I answered: I have some credit card debt.

The main question this thread asked is what is your net worth. If I subtract my mortgage loan from my all my savings, stocks and my retirement then I have 50K left. What doesn't make sense? Unlike you guys, I don't have lots of money. 

the outstanding mortgage balance is typically offset by your home's value in a net worth calculation because you could sell your house and pay off the loan (and potentially keep any profit).

His confusion is because you seem to be ignoring the home value.

[peenie 1,690]

43 minutes ago, nobody said:

the outstanding mortgage balance is typically offset by your home's value in a net worth calculation because you could sell your house and pay off the loan (and potentially keep any profit).

His confusion is because you seem to be ignoring the home value.

the outstanding mortgage balance is offset by your home's value.....in a net worth calcuation.....

Honestly, I don't understand what you wrote.

My home would sell for $290,000 today.  I live in a tiny but cute shack. 

[The Psychic Observer 193]

Just now, peenie said:

the outstanding mortgage balance is offset by your home's value.....in a net worth calcuation.....

Honestly, I don't understand what you wrote.

My home would sell for $290,000 today.  

And what is the balance on your mortgage?  lets say $250,000

$290,000 - $250,000 = $40,000 which is how much equity you have in your house.  This gets added to your net worth.

[peenie 1,690]

14 minutes ago, The Psychic Observer said:

And what is the balance on your mortgage?  lets say $250,000

$290,000 - $250,000 = $40,000 which is how much equity you have in your house.  This gets added to your net worth.

Principal Balance

$255,410.15

Okay, thanks! I'm worth 80K

[nobody 2,043]

Now I'm confused.  You said if you subtract your mortgage from your savings, stocks, and retirement you'd be worth $50k. 

If you're house is worth 35k above your outstanding mortgage, your net worth would then be:

Savings + stocks + retirement + $35k - any additional debt

[peenie 1,690]

12 minutes ago, nobody said:

Now I'm confused.  You said if you subtract your mortgage from your savings, stocks, and retirement you'd be worth $50k. 

If you're house is worth 35k above your outstanding mortgage, your net worth would then be:

Savings + stocks + retirement + $35k - any additional debt

cash savings + stocks + retirement = $310K

House worth today = $290K

Amount of money I still owe the bank for the mortgage loan = $255K

310K - 255K = 55K 

290K - 255K = 35K

50 + 30 = 80 (rounding)

[nobody 2,043]

Your net worth is 310k+35k of equity in the house.

Or if you prefer... 310k + $290k house value - $255k outstanding mortgage

[MLCKAA 395]

9 minutes ago, peenie said:

cash savings + stocks + retirement = $310K

House worth today = $290K

Amount of money I still owe the bank for the mortgage loan = $255K

 

So it sounds like your net worth is $355k

[nobody 2,043]

Think of it this way.  The bank loaned you $255k.  You took that money and you bought an asset.  That asset is worth something if you decide to sell it.  Specifically $290k in this instance.

It's the same as if the bank loaned you $255k and you just put it in a bank.  In that case the asset is the cash and not a house.

Now if you took the money and wasted it on a party or something and had nothing to show for it, then you'd be worth the $50k you originally calculated.

[peenie 1,690]

Really???? Y'all....I thought I was in super debt. Like the house loan was the same as credit card debt. Let me just say that my Dad, nor my Mom owns or owned a home so I'm pretty ignorant. Thank you for helping explain this to me. It still feels like a super credit card debt. I feel totally overwhelmed by the amount I owe the bank. I feel I'm going to have to work forever to pay it off. 

[seafoam1 1,879]

6 minutes ago, peenie said:

Really???? Y'all....I thought I was in super debt. Like the house loan was the same as credit card debt. Let me just say that my Dad, nor my Mom owns or owned a home so I'm pretty ignorant. Thank you for helping explain this to me. It still feels like a super credit card debt. I feel totally overwhelmed by the amount I owe the bank. I feel I'm going to have to work forever to pay it off. 

Depending on your home equity, your income, your expenses, and other debt, you could be in good shape, or you could be focked.

It seems you are not sure of where you are at this time. You should take this very seriously and empower yourself with the information you need to self assess. Basically, get a little help from the right people. 

[The Psychic Observer 193]

13 minutes ago, peenie said:

Really???? Y'all....I thought I was in super debt. Like the house loan was the same as credit card debt. Let me just say that my Dad, nor my Mom owns or owned a home so I'm pretty ignorant. Thank you for helping explain this to me. It still feels like a super credit card debt. I feel totally overwhelmed by the amount I owe the bank. I feel I'm going to have to work forever to pay it off. 

At any point you can sell the house and pay off the debt.  There is nothing to be overwhelmed about.  As long as you don't start borrowing more against your home (home equity loan).  Keep paying your mortgage, don't let your house fall apart, and you'll be fine.

[seafoam1 1,879]

2 minutes ago, The Psychic Observer said:

At any point you can sell the house and pay off the debt.  There is nothing to be overwhelmed about.  As long as you don't start borrowing more against your home (home equity loan).  Keep paying your mortgage, don't let your house fall apart, and you'll be fine.

You know nothing about her life situation. Stop giving random errant advice. 

[Horseman 1,514]

16 minutes ago, peenie said:

Really???? Y'all....I thought I was in super debt. Like the house loan was the same as credit card debt. Let me just say that my Dad, nor my Mom owns or owned a home so I'm pretty ignorant. Thank you for helping explain this to me. It still feels like a super credit card debt. I feel totally overwhelmed by the amount I owe the bank. I feel I'm going to have to work forever to pay it off. 

You don't treat mortgage debt the same as other debt.  Do you have a car loan or is it paid for?  Any other debt besides the credit cards?

[The Psychic Observer 193]

Just now, seafoam1 said:

You know nothing about her life situation. Stop giving random advice. 

It's general advice for any homeowner that feels overwhelmed about their mortgage.

[Horseman 1,514]

35 minutes ago, peenie said:

cash savings + stocks + retirement = $310K

House worth today = $290K

Amount of money I still owe the bank for the mortgage loan = $255K

310K - 255K = 55K 

290K - 255K = 35K

50 + 30 = 80 (rounding)

 

25 minutes ago, MLCKAA said:

So it sounds like your net worth is $355k

She has credit card debt and possibly others that would subtract from the 345K.  I agree you wouldn't count the mortgage debt.