Net Worth Update #4: Going down with the markets!

Another month has gone by which means its time for another net worth update. If you recall last month was a pretty solid month. When it comes to net worth, this month wasn’t quite as good as the markets decided to go on a roller coaster. While this didn’t really bother me it was ALL over the news.

My net worth calculation

I do net worth posts just a little different than some. I use my net worth to make sure I’m making good financial decisions so include things like my children’s 529 and update the value of my home every month. If you want more details on that I’d highly recommend reading a previous post of mine on how I added 250k to my net worth in 7 years. It includes all the details and my though processes.

Back to the roller coaster ride that was October.

My October net worth numbers

If you haven’t read (p.s. if this is you how did you avoid all the news?), the markets were just crazy last month. With all of that being said here is how I ended up last month:

The first thing I do is check to see if its a positive or negative number. So we started off good but then I realized that’s a really small number. I consider any month a win especially when some of the greatest financial minds out there have these as the first two rules of wealth.

Rule #1: Don’t lose money

Rule #2: Don’t forget rule #1.

Net worth takeaway

Every month one thing stands out when I take a look at my net worth calculation. This month my takeaway was the realization of what percentage of my assets are tied up in things that are the stock market or have a positive correlation with them.

See I’m always trying to protect, or at the very least be aware, of the worst case scenario. I started playing with some numbers and put together this chart.

See those big areas of red and orange? Ya those make up a good chunk of my net worth. The red one is my retirement accounts and make up 37% of my net worth. The big orange one is my home equity and that makes up 27% of my net worth.

What happens when there’s a crash?

This is the question I’m constantly asking myself. Hypothetically A 30% market crash would effect my retirement accounts but would also, over time, reduce my home equity.

I would venture to guess that if the markets dropped by 30% and the US went into a recession my net worth would drop somewhere in the neighborhood of 20%. That sounds about right to me. Its good to be aware of these things.

Are you aware of what would happen to your investments? While we don’t know when its going to happen, we do know its going to happen at some point. I like to protect my downside and think through my actions ahead of time.

Patience and Focus – Keys to Wealth

Patience and focus are two huge keys for me and growing wealth. I need to have patience and realize that Rome wasn’t built in a day. I also need to focus on what I can control. No one can control the markets. However, I can control how much I invest and do my best to continue to grow that amount each day, month and year.

Rome wasn’t built in a day

I’m showing my hand here but here is a link to a youtube video by Jocko Willink all about the thought that Rome wasn’t built in a day. Thinking through this should give you two thoughts.

The first is that you should have patience. Getting your net worth to 1 million, 5 million or whatever your goal is will take time. However, you have to put in the work every single day. We need to realize that if the Romans had taken every other day off it never would have been built!

One Response

  1. Stephen @ thefirelane November 7, 2018

Leave a Reply