Hi All,
With the start of a new month, my wife and I sat down and added up our net worth. As of this morning our wealth is somewhere around $937,000. The bulk of our assets are in real estate and retirement. We also have some cash, precious metals and bonds. The roughly $43,000 listed under business assets are the security deposits for our rentals and value of the two blogs we own (this one and cleverdude.com).
When we measured our wealth back in February we were looking at around $907,000. This means we’ve seen 3.3% growth in three months. The bulk of this is due to increases in our retirement mutual funds and stocks.
Two thoughts:
1) Stocks can generate a huge amount of value. Once you get to around $400,000 in stock, small movements in the overall market tend to have a pretty big dollar impact on your net worth. For example, on a basis of 400k, a 3% gain is $12,000. Twelve thousand is a lot of money and 3% gains happen in the stock market all the time. If you reinvest the cash, the total adds up more quickly. This point here is that compound interest works well in simulations, but its true in real life.
Just an aside – at some point our stock holdings are likely to get out of control. If we both continue to contribute at this rate (e.g. $30,000 per year at 7% interest) we are likely to get something like $4,060,000 by retirement.
2) Bonds and precious metals continue to lag. We’ve got about $9,200 in precious metals and $3,500 in savings bonds. Gold and silver are way off their highs, and savings bonds are the ugly red headed stepchild of the fixed income world. With the prevailing rate of interest being so low, savings bonds are actually losing money when you factor in realistic inflation numbers. Another disadvantage of these asset classes is that they don’t produce cash – we would need to sell them to get the value.
The good news is that we’re just a stones throw away from achieving net worth of a million dollars. If all goes well, we should get there at the end of this year.
If you’re interested in learning more about our net worth, click here.
As always, if you have any ideas for increasing your net worth quickly, please don’t hesitate to drop us a line.
Best,
James
Good job this month! When I first started my blog back in February 2012, we were just under a million like you. You’ll get there in no time.
Your balance sheet is much different thank me however where 50% is in real estate and 50% in the market. Do you have a post about how you aquired so many properties and how you invest in real estate?
Hey Jake,
Thanks for the comment. We acquired the real estate over time. Every time we moved, we ended up converting our real estate into rental properties, the stocks comes from just investing via our 401ks over time. There isn’t much mystery to it.
James
Well done James. You have 5 investment properties. I haven’t read anything about them yet as I’m new here but I’d be interested to learn how you started out with them and how they have done for you along the way. Our mortgage is pretty much paid off now (just finalizing it all) so we hope to start looking at other ways to invest our money. Someone told me not to put all my eggs in one basket now that the mortgage is paid when I mentioned an investment property. What is your feelings on that? Yes we also pay into retirement savings but not as much as we
should so we will ramp that up as well. Cheers Mr.CBB