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How s Your Net Worth Doing (Free Money Finance)

Post on: 3 Июнь, 2015 No Comment

November 02, 2009

How’s Your Net Worth Doing?

This blog has been about one thing from day one: helping you grow your net worth. So maybe its time for a bit of a net worth check-up, huh?

The reason Im bringing up the issue now is that Im seeing a lot of pieces on net worth today versus what people used to have. For instance, the MSNBC article says that net worth is up but still way below what it once was. A summary:

Americans wealth rose this spring for the first time in nearly two years, with stocks and home values gaining as the recession faded.

Still, household net worth remains about 19 percent below its peak in the third quarter of 2007, before the recession began.

And heres an MSN Money article on how long it will take retirement accounts to get back to where they once were (I realize that theres much more to net worth than retirement accounts, but for many people, especially the older ones highlighted in the article, retirement funds are a huge part of net worth.) Their take:

VanDerhei says the median decline for 401k plans that posted losses between Jan. 1, 2008, and early August 2009 for investors ages 45 to 64 was 19.6%, or a median loss of $12,386. Losses in retirement plans were less horrific than the broader equity market because most 401k accounts have some allocations to bonds. But the pain was generally worse for older workers, who have larger retirement savings. For them, the dollar loss was bigger, even with more conservative allocations.

So, how long do older workers need to wait to see a full recovery in their 401ks? That depends on two major factors: how much they can save and how quickly markets grow. The key will be savings.

Im planning on doing a full net worth review of my progress for you all at the end of the year. But I can give you a few hints now on how Im doing:

I took a big, big hit when the market went down. My net worth was down roughly 20% at the bottom of the markets drop.

I kept saving, kept buying stock (bought even more than I would have normally), and kept plugging away.

As of last month, I was within 0.3% of my all-time net worth high. Assuming the market holds up, I keep saving (which I will), and I get a decent bonus this year, I should end 2009 with my highest net worth ever.

The key for me has been saving (just like they note in the comments above.) Sure, the market rally has been nice and helpful, but the fact that I have such a big gap between income and expenses that allows me to save a bundle has really been whats helped my net worth recover faster than average. Just another reason we all should work to increase our incomes (for most of us this means growing our careers) while also keeping expenses as low as possible.

For those of you thinking all this saving has me living like a miser, think again. Weve actually been buying a lot of extra items for our house the past year including a new TV, cable TV reception, new heater and AC units, furniture (I may post on this sometime soon), and more. In fact, weve been on a pretty decent spending spree as of late — with several items from our list purchased and more to come. Two more benefits of a large margin between income and expenses are that 1) you can buy things out of current income (not savings), which weve done and 2) when tough times hit, if you have the money to buy, you can get some really, really good deals.

So, how are you doing? Is your net worth up, down or close to level?