I found a site that I really like; it’s called Net Worth IQ and it’s a social network around calculating (& sharing if you feel so inclined) your net Worth.
To be conservative in calculating your Net Worth, you should LEAVE OUT:
a) Any ‘equity’ in your house that you NEVER intend to release as investment (i.e. borrow against for purchasing, when the timing is right, income-producing-buy-and-hold-investment-real-estate).
b) Any supposed ‘equity’ that you have in your business.
Let’s call the result your INVESTMENT NET WORTH …
It’s the only one that matters!
Why?
Well,there are only TWO reasons to even bother calculating your Net Worth:
1. To ensure that your ‘portfolio’ matches the Rules of the Rich (e.g. the 20% ‘rule’ on home equity that I talk about in a recent post), and
2. To check whether your INVESTMENT NET WORTH (which should be in passive income-producing investments by then) can FUND your ideal retirement with at least 99% chance that your money won’t run out before you do.
I must confess that for the purposes of the Net Worth IQ site … I broke those two rules, so I should lower my Net Worth by approx. $2.5M, and I may make that change later – I haven’t decided yet.
BUT, I have already done the calcs and am acutely aware that my INVESTMENT NET WORTH can EASILY fund my retirement starting next year (I’ll be 50 … now, that’s old, Man!).
If this makes sense to you … check out some Tips that I have already left on that site and this blog.
Now, what’s YOUR Investment Net Worth … more importantly, can it fund your IDEAL retirement?