Most financial experts agree that calculating your net worth is valuable to understanding your financial picture, so I decided to recalculate mine and create a break down of my net worth by category. Here’s what I found:
Cash 3.2%: Emergency fund and working accounts like checking and savings. Also includes non-invested money in brokerage accounts. I expect this to decrease over the next year as I invest more in ETFs and buy a car (with cash).
Unproductive Real Estate 8.3%: This is our house. It’s unproductive because it doesn’t appreciate or provide me interest. I’m happy to see that this is a low percentage of our net worth, but I’m looking forward to this diluting over the next few years. For most middle-class people the house is some insane percentage, keeping this low is critical because you want your money to be working for you.
Other Stuff .9%:
Productive Assets (Investments)
Bonds 1.8%: Dull, and boring, but high yielding compared to the rest of the things that you can buy today. These are tax-free government bonds that I inherited. I’m not planning on liquidating them, but I won’t be buying more. Honestly, I hate these, but I’m happy to see they are less than 2% of my net worth.
Single Stocks 2.8%: The most surprising category, because I thought this would be a lot higher. I own a couple of stocks in companies that I find interesting and undervalued. These include:
- Realty Income Corp.
- At&t (check out that dividend)
Productive Real Estate 2.3%: I have two Private REITs: Fundrise and Diversyfund. This is small because these private REITs are risky, but so far are paying off well. Fundrise is averaging about 8% per year and invested my money in properties all over the country. I’m planning on writing more about these in the future, but they act as a low-cost actively managed mutual fund for real estate. I appreciate that in both cases they are very clear and transparent about the properties they own or help finance. The biggest downside to these is that they are illiquid, so I can’t just pull my money out like I can with a publicly-traded REIT.
ETFs 80.7%: Whoo Hoo! I’m very excited to find out that over 80% of my net worth is invested in ETFs. I’ve been aggressively buying over the past few years and will continue until my spare cash is down to just my 6-month emergency fund. I also hope that the bonds will get called over the next few years. This allows me to re-invest that money into ETFs. Here’s a breakdown of my ETF investments:
Most of my new investments are going into RPG because it invests in smaller companies that are likely to grow when larger companies get stagnant. I’m not too caught up in the investment mix because diversification is all that matters.
What did we learn?
All good things for me. It’s nice to see how everything is broken down, and I feel well diversified. If you’re looking at your investments it’s important to know that this is a mature portfolio. Your investment breakdowns will look very different from mine. That’s ok. Stay diversified and keep building.