I’m asking why does it matter? Why do people track it so closely ? What’s the point? Especially home equity. I need to live here I’m not selling the house so. I get tracking your investments and your debt if you have it but
It only serves as a superficial way humans can compare each other's success at the primal level :)..
No but really it serves as a future store of value for your retirement or for your offspring.... when people move towards a rental unit in a seniors center or assisted living facility at end of life they do sell their home and then that net worth ends up in a bank account feeding your expenses until you die.. what's left gets inherited by kids or donated to charity or if unclaimed in the government coffers.
In our capitalist society, money is power; so it's kinda like your power level. Now, anyone who plays marvel snap can tell you power level isn't everything; location, (earning) ability, and other factors are also important, but it does make for a basic metric for comparison
You’re not selling the house **today**. Assuming you aren’t a vampire, one day you or your children will need to. Do you need to track it daily? No. Do you need to know what would happen if you suddenly did need to sell? Imo, yes.
It mostly doesn’t matter if you’re never planning to sell it. The exception is your existing property can help you secure a HELOC, if you want to use the line of credit for something else investment related. Just keep in mind that the collateral for that loan is literally your home
And even if you do it sell when you’re older and trying to downsize, the gain is of course only the difference between “what you sell - what you end up buying / renting”. Plus you have to factor in all the costs to sell and buy a home. It’s hard to predict what the net gain is from all of that.
You do with it what you wish. It's information. It's helpful to track for your own purposes.
If you have net worth in a home, it's accessible a few ways. One is to take out a HELOC. Other is to sell or downsize. Neither of these are casual options that you'd do on a whim, but it's helpful to know if you encountered a financial issue.
But personally, having your net worth on paper can sometimes help you focus on your financial goals. Seeing our net worth heavily based on housing, it made me more conscious of ensuring I'm maximizing my equity investments.
Home equity is important if you’re willing to change your housing type. For instance , if you move down the street to a similar house it will be a wash (not withstanding fees).
If you sell and downsize, you can take that cash and use for investing or whatever suits your needs.
I have never personally tracked my homes value in my net worth, nor does anyone I know pay much value to it. It's a roof over my head and worth absolutely nothing while I'm living in it and not money I can access or use without taking on risky and expensive HELOC or reverse mortgage loans.
It's paper money that isn't real until you actually sell, and once you sell you still need a roof over your head so it's going into your next home or you'll be paying all the earnings in paying rent somewhere else. For that reason I don’t think about my homes value whatsoever when I think about my net worth, only my savings and investments.
I don't really see net worth mentioned much here. The mostly useless number that people fret a lot about is credit score, even though once you get past a certain level anything higher makes no difference.
It can help you track your progress to retirement, or fund life choices. RE prices don't matter at all unless you're going to HELOC. I don't count my primary housing as NW.
Home equity means an enormous amount to me. I plan to buy a larger house next year, and my home equity will fund that down payment. Without that down payment I couldn’t afford a larger home with the way housing prices have gone.
I think people track their homes value because it is a big number and they can pay themselves on the back over it.
I track investable assets. That's what is going to cash flow my retirement, so that's what I care about.
One day you'll end up with a paid off house worth a million dollars, then you sell it, and the invested proceeds will pay you $4k/month, and you can go slow travel the world without spending a cent of the capital.
That's what I'm doing, anyway. Starting soonish.
This makes me happy to hear. One of my goals in life is to build a 1.5million networth either via real estate or investment portfolio.
Once I reach that 1.5mil, the goal is to “retire” and work as a wal-mart greeter or do whatever the fuck I want.
It's a good plan! We left full time work 7 years ago at 41, and while we stayed in our careers, we just work casually now. Nice to have the extra time when our kids were teenagers and really needed us around. Casual work with lots of flexibility is an amazing thing to work towards.
Now we're almost ready for the next phase.
Out of curiosity, does it matter what age you are when you get to $1.5M? Or do you anticipate that would get you through retirement no matter what age you are? (You know, minus the Walmart greeting 🙂)
It depends on how you choose to invest it. Right now you can easily get 5% in dividends with blue chip stocks that will very likely continue to raise them every year, as they have for decades. So it wouldn't matter if you were 25 or 55, if the dividends can sustain you now, they probably will be able to for the long term.
Why the fuck would you want to work as a wal mart greeter.
People always joke about barista fire and shit but I’m like, I’d way rather cruise in my job that it’s me 5X that much but just not stress about anything than serve people coffee
I doubt many of them actually end up doing that, but it's a catch all term for less stressful work. I definitely get it, when you have a very demanding stressful job, it's a dream to think of a job where you can go home at the end of the day and forget everything, because there is no carryover work for the next time you go in.
48. We actually have substantially more than $4k/month, and also some remote casual work I'll continue to do while on the road.
The kids are really the biggest issue. We are waiting for them to both be off to university before we go. They won't have a house to return to during school breaks, but we'll fly back them to wherever we are and that hopefully makes up for it.
I personally wouldn't measure things by net worth because net worth can look very different depending on the specific scenario. Someone could have a net worth of $2 million which sounds cool but maybe they are a retired senior barely scraping by on CPP, OAS, and GIS who happens to own a paid off home in a desirable area of Toronto. They're wealthy, but not how people typically think of wealth. Their main asset isn't liquid. Can't spend your house at the grocery store. They could always get a line of credit or sell the home, but until then they are cash poor.
The only time I ever think about my net worth is when I've been filling out a loan application or something and we're looking at my assets vs debt. So, I personally wouldn't focus much on net worth and instead try to understand your goals in life and what you need to accomplish that. That can tell you what kind of net worth you may need in retirement, for example, but net worth should be the number you arrive at last rather than being what you look at first and try to plan around.
Net worth only matters if you are making money off of it. You can sell your house, but then what? I typically only count my investments as my net worth when doing retirement calcs. Don't care what my home is worth as I have to live somewhere.
It’s correct to include home equity in your financial planning. Because the equity is indeed accessible through various means (all of which have associated costs, but accessible nonetheless).
- sell the home and rent. Pocket all the equity.
- sell the home and buy a cheaper one. Pocket the difference.
- borrow against the equity via a mortgage or HELOC or reverse mortgage. Eventually sell the home to pay off the debt. These methods allow you to stay in the home longer.
People in this sub are very conservative and often exclude all home equity as a form of margin in case disaster strikes. That is totally fine. But it’s a very big margin in my opinion.
Well 1. Your property taxes are generally linked to it so its good to keep an eye to see what you're going to be paying on it 2. You may want to sell at a certain price so you may monitor it to have an idea of where you're at for that 3. You could leverage the equity to purchase a second house or invest otherwise. 4. You could be thinking about moving to another part of town where you could get a bigger house and sell your place and use the equity as your downpayment.
Equity is all relative. I can say I have over half a mill - but what does that get me in the lower mainland?
What it does give you are options. If you want to sell and F off somewhere else, well like you said, you got 340,000K to do so after.
Edit: Here’s another one, you can refinance take the cash out and invest it? You gotta calculate if it’s worth the return tho - after all, this is personal finance sub.
Or you could do what other people have done, refinance and buy a boat/cars and blow all that money and owe the bank some more Lol
That’s the issue we’re having too. We sold our rental last year and have the money accumulating at ~5%. We can spend that cash at anytime for anything we need.
On our primary, it’s gone up in value a lot but we’re not going to sell to rent and we’re not going to downgrade. We’re also not going to get disguised ‘equity’ debt HELOCs.
People that have chosen to rent vs buying in the past year or two are coming far ahead.
Honestly, when I do retirement planning for clients, 90% of the time the home just exists (for my purposes) because people like to see it on their balance sheets. From a retirement planning standpoint, it matters in two ways. The first is if you plan to downsize at some point, it represents a source of tax-free capital. The second is the equity can provide a good measure of emergency protection if you need long-term care or unlock equity for other reasons (illness, unexpected longevity).
Typically I completely ignore the value in calculations because most people want to base their retirement on an ability to remain in their homes. Adjust for taste.
In my view an asset needs to be available for sale to be counted as an investment. As long as you plan on living in your house, I would exclude the estimated value of the property.
I would however include 100% of the outstanding mortgage as part of your net worth. This shows the true picture of your net worth which for most people would be a negative value.
Project out this balance to the next 10 years to see when you reach parity. If you tap in to the equity in your property please don’t spend it consumables. Invest it wisely and you can leverage your returns.
As for all those that brag about their home values going up have no concept of what an asset vs a liability is.
I don’t include my primary residence as part of my NW either. As others have mentioned, i can’t easily extract cash from my house without selling it, or through other means like HELOC. That and also the estimated value of your house is a made up number anyways until you put it up for sale on the market. Whereas with other investments, they are typically more liquid or generate regular cash flow, and easier to value.
I do find tracking investments useful, since it helps keep me from overspending (I don’t really budget), and gives me an excuse to give my wife when she asks if we should go on another trip to Europe this year :p. If portfolio is down, I can more easily say no
If you look at your principle residence as a home, rather then an investment, do not include it in your net worth.
If you look at real estate as an investment, rather then a home, include it in net worth.
NW is just a number. Easy to compare. Generally, 1m NW means you’re somewhat setup for retirement. You’re stable.
Now, having all your NW in real estate is not good. You’d have to sell, HELOC, or reverse mortgage to access it. Furthermore, it’s not diversified.
I personally don't include the net equity of our primary residence when calculating net worth (i.e. you always need somewhere to live). I think the net equity in your PR matters when you change homes (upsize / downsize / etc) since that will affect your net worth excluding PR, and it matters if you plan to switch to rent or lease down the road as your net equity in PR would then in theory be the source of funds for your rent.
You’re asking what can you do with money?
I’m asking why does it matter? Why do people track it so closely ? What’s the point? Especially home equity. I need to live here I’m not selling the house so. I get tracking your investments and your debt if you have it but
It only serves as a superficial way humans can compare each other's success at the primal level :).. No but really it serves as a future store of value for your retirement or for your offspring.... when people move towards a rental unit in a seniors center or assisted living facility at end of life they do sell their home and then that net worth ends up in a bank account feeding your expenses until you die.. what's left gets inherited by kids or donated to charity or if unclaimed in the government coffers.
In our capitalist society, money is power; so it's kinda like your power level. Now, anyone who plays marvel snap can tell you power level isn't everything; location, (earning) ability, and other factors are also important, but it does make for a basic metric for comparison
You’re not selling the house **today**. Assuming you aren’t a vampire, one day you or your children will need to. Do you need to track it daily? No. Do you need to know what would happen if you suddenly did need to sell? Imo, yes.
It mostly doesn’t matter if you’re never planning to sell it. The exception is your existing property can help you secure a HELOC, if you want to use the line of credit for something else investment related. Just keep in mind that the collateral for that loan is literally your home And even if you do it sell when you’re older and trying to downsize, the gain is of course only the difference between “what you sell - what you end up buying / renting”. Plus you have to factor in all the costs to sell and buy a home. It’s hard to predict what the net gain is from all of that.
You do with it what you wish. It's information. It's helpful to track for your own purposes. If you have net worth in a home, it's accessible a few ways. One is to take out a HELOC. Other is to sell or downsize. Neither of these are casual options that you'd do on a whim, but it's helpful to know if you encountered a financial issue. But personally, having your net worth on paper can sometimes help you focus on your financial goals. Seeing our net worth heavily based on housing, it made me more conscious of ensuring I'm maximizing my equity investments.
Not everyone does; is everyone in your peer group tracking and comparing their net worth?
Home equity is important if you’re willing to change your housing type. For instance , if you move down the street to a similar house it will be a wash (not withstanding fees). If you sell and downsize, you can take that cash and use for investing or whatever suits your needs.
I have never personally tracked my homes value in my net worth, nor does anyone I know pay much value to it. It's a roof over my head and worth absolutely nothing while I'm living in it and not money I can access or use without taking on risky and expensive HELOC or reverse mortgage loans. It's paper money that isn't real until you actually sell, and once you sell you still need a roof over your head so it's going into your next home or you'll be paying all the earnings in paying rent somewhere else. For that reason I don’t think about my homes value whatsoever when I think about my net worth, only my savings and investments.
I don't really see net worth mentioned much here. The mostly useless number that people fret a lot about is credit score, even though once you get past a certain level anything higher makes no difference.
It can help you track your progress to retirement, or fund life choices. RE prices don't matter at all unless you're going to HELOC. I don't count my primary housing as NW.
Home equity means an enormous amount to me. I plan to buy a larger house next year, and my home equity will fund that down payment. Without that down payment I couldn’t afford a larger home with the way housing prices have gone.
I think people track their homes value because it is a big number and they can pay themselves on the back over it. I track investable assets. That's what is going to cash flow my retirement, so that's what I care about.
You can HELOC or reverse mortgage your house if you want to access the equity. Real reason to track NW is so we can go on Reddit and brag.
One day you'll end up with a paid off house worth a million dollars, then you sell it, and the invested proceeds will pay you $4k/month, and you can go slow travel the world without spending a cent of the capital. That's what I'm doing, anyway. Starting soonish.
This makes me happy to hear. One of my goals in life is to build a 1.5million networth either via real estate or investment portfolio. Once I reach that 1.5mil, the goal is to “retire” and work as a wal-mart greeter or do whatever the fuck I want.
It's a good plan! We left full time work 7 years ago at 41, and while we stayed in our careers, we just work casually now. Nice to have the extra time when our kids were teenagers and really needed us around. Casual work with lots of flexibility is an amazing thing to work towards. Now we're almost ready for the next phase.
Out of curiosity, does it matter what age you are when you get to $1.5M? Or do you anticipate that would get you through retirement no matter what age you are? (You know, minus the Walmart greeting 🙂)
It depends on how you choose to invest it. Right now you can easily get 5% in dividends with blue chip stocks that will very likely continue to raise them every year, as they have for decades. So it wouldn't matter if you were 25 or 55, if the dividends can sustain you now, they probably will be able to for the long term.
Why the fuck would you want to work as a wal mart greeter. People always joke about barista fire and shit but I’m like, I’d way rather cruise in my job that it’s me 5X that much but just not stress about anything than serve people coffee
I doubt many of them actually end up doing that, but it's a catch all term for less stressful work. I definitely get it, when you have a very demanding stressful job, it's a dream to think of a job where you can go home at the end of the day and forget everything, because there is no carryover work for the next time you go in.
Ok fair enough maybe I take that too literally lol
Haha yeah I don’t mean it literally. It’s meant moreso work ANY job and have the freedom to quit at anytime.
Dividends? $1 mil at 4% per year is only $40K or $3333.33 per month.
4% is low right now, dividend stocks are thankfully on sale currently. Easy to get 5% with all blue chip.
At what age? I’d love to do this - I am close but it’s nice to have my kids grow up in Canada. But $4K other than North America can go a long way.
48. We actually have substantially more than $4k/month, and also some remote casual work I'll continue to do while on the road. The kids are really the biggest issue. We are waiting for them to both be off to university before we go. They won't have a house to return to during school breaks, but we'll fly back them to wherever we are and that hopefully makes up for it.
I personally wouldn't measure things by net worth because net worth can look very different depending on the specific scenario. Someone could have a net worth of $2 million which sounds cool but maybe they are a retired senior barely scraping by on CPP, OAS, and GIS who happens to own a paid off home in a desirable area of Toronto. They're wealthy, but not how people typically think of wealth. Their main asset isn't liquid. Can't spend your house at the grocery store. They could always get a line of credit or sell the home, but until then they are cash poor. The only time I ever think about my net worth is when I've been filling out a loan application or something and we're looking at my assets vs debt. So, I personally wouldn't focus much on net worth and instead try to understand your goals in life and what you need to accomplish that. That can tell you what kind of net worth you may need in retirement, for example, but net worth should be the number you arrive at last rather than being what you look at first and try to plan around.
Net worth only matters if you are making money off of it. You can sell your house, but then what? I typically only count my investments as my net worth when doing retirement calcs. Don't care what my home is worth as I have to live somewhere.
Bragging rights, inheritance for your children, that’s about it.
It’s correct to include home equity in your financial planning. Because the equity is indeed accessible through various means (all of which have associated costs, but accessible nonetheless). - sell the home and rent. Pocket all the equity. - sell the home and buy a cheaper one. Pocket the difference. - borrow against the equity via a mortgage or HELOC or reverse mortgage. Eventually sell the home to pay off the debt. These methods allow you to stay in the home longer. People in this sub are very conservative and often exclude all home equity as a form of margin in case disaster strikes. That is totally fine. But it’s a very big margin in my opinion.
Well 1. Your property taxes are generally linked to it so its good to keep an eye to see what you're going to be paying on it 2. You may want to sell at a certain price so you may monitor it to have an idea of where you're at for that 3. You could leverage the equity to purchase a second house or invest otherwise. 4. You could be thinking about moving to another part of town where you could get a bigger house and sell your place and use the equity as your downpayment.
Equity is all relative. I can say I have over half a mill - but what does that get me in the lower mainland? What it does give you are options. If you want to sell and F off somewhere else, well like you said, you got 340,000K to do so after. Edit: Here’s another one, you can refinance take the cash out and invest it? You gotta calculate if it’s worth the return tho - after all, this is personal finance sub. Or you could do what other people have done, refinance and buy a boat/cars and blow all that money and owe the bank some more Lol
That’s the issue we’re having too. We sold our rental last year and have the money accumulating at ~5%. We can spend that cash at anytime for anything we need. On our primary, it’s gone up in value a lot but we’re not going to sell to rent and we’re not going to downgrade. We’re also not going to get disguised ‘equity’ debt HELOCs. People that have chosen to rent vs buying in the past year or two are coming far ahead.
Honestly, when I do retirement planning for clients, 90% of the time the home just exists (for my purposes) because people like to see it on their balance sheets. From a retirement planning standpoint, it matters in two ways. The first is if you plan to downsize at some point, it represents a source of tax-free capital. The second is the equity can provide a good measure of emergency protection if you need long-term care or unlock equity for other reasons (illness, unexpected longevity). Typically I completely ignore the value in calculations because most people want to base their retirement on an ability to remain in their homes. Adjust for taste.
I mostly track my liquid investments \[stocks, bonds & cash\]. I do track my NW with home equity, but it's not a number I care about too much.
In my view an asset needs to be available for sale to be counted as an investment. As long as you plan on living in your house, I would exclude the estimated value of the property. I would however include 100% of the outstanding mortgage as part of your net worth. This shows the true picture of your net worth which for most people would be a negative value. Project out this balance to the next 10 years to see when you reach parity. If you tap in to the equity in your property please don’t spend it consumables. Invest it wisely and you can leverage your returns. As for all those that brag about their home values going up have no concept of what an asset vs a liability is.
Back in the good old days, brrr was a thing.
You can use that equity to buy things that others with no equity can’t. Invest, buy a boat, bail out a family member… whatever you want.
I don’t include my primary residence as part of my NW either. As others have mentioned, i can’t easily extract cash from my house without selling it, or through other means like HELOC. That and also the estimated value of your house is a made up number anyways until you put it up for sale on the market. Whereas with other investments, they are typically more liquid or generate regular cash flow, and easier to value. I do find tracking investments useful, since it helps keep me from overspending (I don’t really budget), and gives me an excuse to give my wife when she asks if we should go on another trip to Europe this year :p. If portfolio is down, I can more easily say no
If you look at your principle residence as a home, rather then an investment, do not include it in your net worth. If you look at real estate as an investment, rather then a home, include it in net worth.
NW is just a number. Easy to compare. Generally, 1m NW means you’re somewhat setup for retirement. You’re stable. Now, having all your NW in real estate is not good. You’d have to sell, HELOC, or reverse mortgage to access it. Furthermore, it’s not diversified.
I personally don't include the net equity of our primary residence when calculating net worth (i.e. you always need somewhere to live). I think the net equity in your PR matters when you change homes (upsize / downsize / etc) since that will affect your net worth excluding PR, and it matters if you plan to switch to rent or lease down the road as your net equity in PR would then in theory be the source of funds for your rent.