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Personal finance, home value & net worth - your view?

6,591 Views | 54 Replies | Last: 6 yr ago by RK
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In reply to BombayAg • 9:31a, 4/26/17
BombayAg
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In reply to [removed post] • 9:50a, 4/26/17
jake2011 said:
BombayAg said:
Thanks everybody!
I think it is important for everyone to estimate their net worth as soon as possible so that they have a good realistic picture of where they are. It might come as a shock. It did for me in 2011 when I found out I had about $350k and I thought it was more than that. Use mint.com or even Excel.

jake, I invest in Nasdaq a lot. I think it is about 60%. It's been good and has played a big part in my portfolio growing. As it is an ETF that I have, and since Nasdaq is a combination of many companies (yes, tech heavy), I get a higher degree of diversification and gains that I would not get from buying individual stocks like I used to do. Earlier, a good investing year would mean gains of about $20k. This year I am close to $200k (in 3.5 months!) and maybe I'll hit 400k in gains by the end of the year. Trump's tax cuts will come and that will boost the market even more. I know, making money YTD has been a no-brainer but might as well take advantage of the market.

I have saved and sacrificed vacations and home upgrades over the years and I am now in a situation where I can spend a bit.

My wife started a new job with a 60% salary boost (!) 2 weeks ago. I lost my job a few weeks ago and I am starting a new one with a higher title and 12% salary hike, so life is good.


Be careful with that heavy of a NASDAQ allocation. The NASDAQ declined 90% from 2000 to 2003 and just eclipsed the 2000 high in 2016. That would definitely put a dent in your net worth.

Good point, thanks! I do think I need to diversify a bit more.
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aggieiniowa
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11:43a, 4/26/17
AG

Three years ago we moved into our longer term house. Mortgage doubled from where we were at. For us it was what worked for our family. Bigger house meant bigger payments, however we made a decision that if we moved we would still make the things that were "our" priorities first; kids college, 401k, brokerage account. While the mortgage doubled and it not an easy pill to swallow we still have fun, save and are able to go on vacation. We made sure that our priorities did not change just added more square feet for our family. Our plan was at year 15 of the mortgage it would be paid off as the first went to college. I may decide to pay it off faster in time, but other factors will go into that decision.
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Ed Carter
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1:39p, 4/27/17
AG
This conversation got me thinking What do you guys think about this:

http://www.financialsamurai.com/top-one-percent-net-worth-amounts-by-age/

Any financial planners on the board tend to agree or disagree with these figures?
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62strat
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3:25p, 4/27/17
AG
I'm right at 4X gross income at 36, so I'm on target I suppose. But I feel I am pretty far behind and was late to the game though (at aged 25 and 30, I was not 1x and 2x gross income).

I think someone savvy from right out of college should be higher than 4X 12-13 years later.
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Cyp0111
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In reply to BombayAg • 3:45p, 4/27/17
I would be extremely careful with your tech stocks and move to lock in gains and diversify. Some of the valuations are past 1999/2000 valuations on most major investment metrics.

I'm not saying liquidate your portfolio but your beta is likely rather large and I would assume the Dividend Yield is minimal making a long term hold a less than favorable investment outcome.

I'm not sure of allocation but we will likely see a 60% correction in some of the tech stocks. I track VC funding at risk as a leading indicator and they have reduced exposure by roughly 30% in the last quarter.


You look at even stalwarts like Netflix and the FCF burn is not sustainable for a long term investments. You should really look at diversifying into lower beta dividend stocks with some of the gains.

You would be amazed what $300K in a dividend income stock portfolio will look like in 15 years.
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Cyp0111
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In reply to Ed Carter • 3:57p, 4/27/17
That article seems rather aggressive IMO.

I think it should be average income over a 3-5 year period x multiplier.

Say you were making $100K from 27-30 and jumped to $200K at 31. You would likely not have the multiple described below.
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62strat
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In reply to Cyp0111 • 4:03p, 4/27/17
AG
Cyp0111 said:
That article seems rather aggressive IMO.

I think it should be average income over a 3-5 year period x multiplier.

Say you were making $100K from 27-30 and jumped to $200K at 31. You would likely not have the multiple described below.
That's a helluva raise!
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Cyp0111
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4:35p, 4/27/17
Looking at from more of total comp btw salary and bonus etc.
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YouBet
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10:51a, 4/28/17
AG
Only 5x at 43 and 41 years of age. Guess we are not elitists. But I will embrace our peasentry.
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RK
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10:54a, 4/28/17
AG
Quote:
I think it should be average income over a 3-5 year period x multiplier.

Say you were making $100K from 27-30 and jumped to $200K at 31. You would likely not have the multiple described below.
something along these lines makes more sense. should I feel bad because I've recently had a significant increase in income which results in a low multiplier....or should I feel happy that I've had a stagnant income but my multiplier looks good? as presented its a static description of a dynamic situation.
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JobSecurity
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11:03a, 4/28/17
AG
Someone earlier in the thread mentioned a home purchase price multiplier of salary. I'm curious what others were when they purchased?
2.5x salary seems to be a common number that I've heard and read. Obviously depending on your career circumstances you may be more or less willing to risk a higher multiplier.
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26.2
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11:18a, 4/28/17
We did around 1x and it has allowed us to purchase rentals afterwards. We absolutely could have been approved for more house if we wanted it, but made a strategic decision to live below our means and invest the rest.
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Cyp0111
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11:38a, 4/28/17
I think the multiplier also should have more factors involved.

Lets say your income is $225K combined which typically would result in a $450-$500K house. However, if one has extensive school debt and or other obligations they should look at a lower multiple.

Also, someone in their 30's with say $1MM in invested assets (stocks/bonds etc) could look at a higher multiple given large existing retirement which will benefit greatly from compounding interest and likely allow for a lower savings burden.

However, I'm always on the lower side when its comes to leverage multiples.
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11:40a, 4/28/17
RK
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11:51a, 4/28/17
AG
There are also quality of life factors (higher home price for lesser commute) and semi-tangibles (buying in a good school district vs private school option) that are common issues in big city environments that can affect buying decisions.
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Cyp0111
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In reply to [removed post] • 12:20p, 4/28/17
I think a $200K salary can handle greater than $300K home....
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In reply to Cyp0111 • 2:54p, 4/28/17
dubi
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In reply to 26.2 • 10:09p, 4/28/17
AG
26.2 said:
We did around 1x and it has allowed us to purchase rentals afterwards. We absolutely could have been approved for more house if we wanted it, but made a strategic decision to live below our means and invest the rest.
Our current home was < 1 x our combined annual income. That gave us plenty of cash for updating.
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Beerosch
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In reply to BombayAg • 2:47p, 5/2/17
AG
BombayAg said:
Today for the very first time, my net worth crossed 1 MILLION DOLLARS.
It's a personal milestone that I thought I would never see or maybe would be far off. It's been a long road of saving, sacrifice and investing. Back in 2011, I remember using mint.com and finding out that my net worth was about $350k.

Interestingly, it is on a day when Nasdaq crossed 6000 for the first time ever.


Note: By net worth, I mean Assets - Liabilities, not just Assets. I am not counting "assets" like furniture, electronic goods, clothes, etc.

Note -2: I want to thank this board in particular for providing me with 2 stock tips that made me a good amount of money. LVS (Las Vegas Sands) and GMCR (Green Mountain Coffee Roasters).
Congrats! That's a milestone I'm still going for. If you don't mind me asking how old are you?
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RK
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3:42p, 5/2/17
AG
19 [/texags]
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