Net Worth Update November 2019

Calculating my net worth is now part of my monthly routine. So here is my update for November 2019.

But few last months, I have been really busy and updating the blog was a hard thing to do! With 2020 apporaching, it is time to get my priorities right and fully embrace the FIRE journey.

I’ve decided to calculate my net worth and to start tracking it on a monthly basis as I already do with other personal finance indicators.

On a very simplistic view:

Net Worth = Assets-Liabilities

Assets are what we own such as a residence or money and liabilities are what we owe, generally debt.

Why Is It Important to Track?

Well, with one single value we can say a lot about our financial life. It also helps to visualize progress towards financial goals.

As time goes by, our net worth will vary and it should allow us to map how rich or poor we actually are.

Remember that looking rich does not necessarily mean being rich. Having a big house or driving an expensive car just means we are most likely falling into the trap of lifestyle inflation, with a huge amount of debt.

So if we owe too much and if we are not able to pay for it anymore, we would be left with nothing. So be aware!

Ideally, we do not want to carry too much debt, unless that is somehow part of our investment strategy. If yes, then stick to it but be conscient of the risks.

What comes in, should always be higher than what goes out. This creates the magic positive cash flow. That money can then be invested that generate more income.

Asset Listing

So I have listed what I own (and what I consider to be relevant):

• Real Estate
• Money
• Savings
• Investments

I exclude minor values such as computers, guitars, smartphones, furniture, etc (due to the low impact these represent on my portfolio). If these are assets or not it is another story!

So adding up what is impactful, taking the current market value of my real estate, and current savings/investments I would end up with 683,725€

The main performance drivers to my assets growth, were the consistent savings and the performance of my Equity Portfolio.

The biggest chunk of my net worth is in real estate., but I also track monthly my other assets in here.

Evaluating real estate can be a bit tricky so I have used online evaluation tools which gave me a projection of what I would be able to get if I sold everything today. However, the real price will always be different and fees/taxes would have to be taken into account.

So I take such an amount with a grain of salt and I do not consider it as 100% realistic.

However, the main goal of tracking my net worth is to track its evolution and more importantly its direction. Like everyone else, I want my net worth to keep increasing with time.

Liabilities Listing

Assets are great but most of us have liabilities as well. I am no exception so here it goes:

• Mortgage
• Loans

So adding these I currently have 466,395€ in liabilities, mostly into my mortgage.

I had a calculation error on my previous data, so I had higher liabilities than I had registered but the difference is not so huge.

Ideally, we want our liabilities to decrease with time unless we are using debt to leverage our investment strategy.

While I might agree, that our mortgage can be considered a long term investment, it is not a golden rule.

There are many factors to take into account but at least in Luxembourg, we can argue it has been a safe haven and considered a good investment over the years.

I also have a few other loans but since their interest rate is so low, I am not really worried about paying them off. I think I am better off using the money to capitalize on my investments but it’s a personal decision.

I have been quite disciplined so far and I take all my savings/investments in Auto mode.

It means, I pay myself first before spending my income by setting up automatic monthly transfers. To be able do it, it helps if we have a good picture of our monthly expenses and living within a budget as I mention here.

I am not against paying off debt when interest rates are higher than your investment returns. This a common analysis on whether you should pay debt or invest.

The Net Worth

So taking my assets and liabilities, I am worth 217,330€ in November 2019!

After adjusting my value for August, here is my progression. Since August, my net worth grew by 6.86%.

The best net worth combination is to always increase your assets and decrease liabilities month after month.

My net worth is not bad at all considering I am in my early 30s!

However, I would be much better off if I had started my financial freedom mission a few years back. So my advice to peole is to start saving and investing yesterday…

My current mindset, priorities, and discipline would avoided a few financial mistakes that every millennial tends to make.

But taking into account my savings rate and investments, I manage to overcome my initial target of 215,000 at the end of 2019.

I am very happy with this result and it shows to me that progress comes with every little step we take in the right direction.

As a side note, my net worth is largely linked to the performance of financial markets. So in case of any downturn I have to expect a major impact.

What is your net worth goal? Let me know in the comments below.