*Investors Blog*
- Thread starter Warstud
- Start date
Net worth and retirement accounts are vastly different.
If having a $1M investment portfolio that's not being risked in any crazy way is "mediocre", I'm sure many people would settle for "mediocre". The context of the word is completely relative to whoever is using the word.
Falls into the legacy asset category.
A home, especially free and clear, is a hedge against future rent or mortgage costs. It is a solid investment, especially around here.
I did al the upgrades, including the solar energy project, while I was working.
If everything went south, I could live on my Social Security payments and a little more.
Having a home free and clear is a key component of minimizing recurring costs. I live dirt cheap. I could also easily sell it for a substantial gain and move somewhere else and bank the net proceeds. A solid investment, in my case.
There is also I smaty move; marry up. I did! Ha!
Patman
Staff member
I’m sure glad that I have a condo that is fully paid for, and no other debt. It has allowed me to retire early (two years ago at 53) and the monthly costs of living there are very cheap. IMO owning your own place is one of the best investments you can make, as long as you don’t get in over your head.
Yes. But I can say the same about mine that is likely worth 1/10th of yours. Although yours produces electricity which is cool.
I am not anti home ownership - just the opposite. But as an investment standpoint, people that consider their house value part of their net worth are fooling themselves, unless there prepared to sell the asset and take the profit.
We've had the home ownership discussion a bunch. I like a decent chunk of equity and a decent chunk of leverage. But I've said that before.
I'd like to point out the in the above quote it stipulated in retirement accounts, which means it has to be in a 401K, IRA, etc. Due to limitations on what you can put into a retirement account, yeah it's kind of difficult / takes a long time to get to that 1M mark. For comparison purposes, it's much easier to get past that 1M mark in a non-retirement account where you can put in as much money as you can spare into it. Somehow this always happens where people start taking about a subset of investment portfolios that is in retirement accounts which presumably is (if you are reading this thread) your non retirement accounts exceed the value of your retirement accounts. Plus people tend to have multiple small retirement accounts (because of switching employers) which pulls the averages down.
Well, the point of contention was this post:
So the discussion was “investment account” - which got twisted, just a bit, into “retirement account”.
But I was talking portfolio - which would include both.
And the point of contention - a millionaire (equal to, or greater than, a million) in your investment account is mediocre.
I still disagree with that point. It’s statistically untrue. It’s philosophically untrue. It’s an opening shot in an internet measuring contest. A way to say “mine is bigger than yours”.
Perhaps for a primary residence but for a vacation or secondary home, it's clearly part of one's net worth.
Patman
Staff member
I have told my story before but my ex wife and I bought a brand new house, pre construction, in 2016 for 1.1 million and moved into it in 2018. In 2021 we sold it for 1.8 million. We specifically bought the house as an investment (we lived in it too) because we knew the new home prices in Oakville were priced way below the market value of the other established neighborhoods nearby and that in 3-4 years it would be worth closer to 2 million. So in this (albeit rare) case, it was an incredibly good investment for us (which allowed both of us to retire early)
If your willing to sell it, sure. Friend of mine has 4 rentals - in addition to his own home. Clearly investments.
I am glad it worked out. Most wouldn't be willing to arbitrage their family home. I would not.
But if you sell the family home then what? Most people are not interested in selling their home to become renters, and hence it shouldn't be counted IMHO. To each there own, its a meaningless number at the end of the day.
China says it will not raise tariffs any higher than their new 125%
Says it would be childish to do so because as it is in effect it makes the USA and China no longer trading partners and will no longer get caught up or involved in this silly game anymore. (my take as I read it)
WMT doing wonderful as always considering, AMZN still in the toilet and Meta eh... shows promise to me, I say it over and over, who can advertise to over 3 billion people?. (I paid just shy of $500 a share for it last year) Sure would have loved to cash out at $700 but it will be back. AMZN I am not so sure but that usually means it's a buy> I think. (paid 220)
Says it would be childish to do so because as it is in effect it makes the USA and China no longer trading partners and will no longer get caught up or involved in this silly game anymore. (my take as I read it)
WMT doing wonderful as always considering, AMZN still in the toilet and Meta eh... shows promise to me, I say it over and over, who can advertise to over 3 billion people?. (I paid just shy of $500 a share for it last year) Sure would have loved to cash out at $700 but it will be back. AMZN I am not so sure but that usually means it's a buy> I think. (paid 220)
We bought our beach house in Cape May County NJ exactly 15 years ago yesterday. It was the very bottom of that real estate market...not that we were really cognizant of that then. Paid $450K in 2010.
Maybe put $50-$60K into it over the years including new roof and siding currently, pool replastered and updated 3 years ago.
Current value is $1.2-$1.3 million. Tell me again how that equity is not part of overall net worth.
Maybe put $50-$60K into it over the years including new roof and siding currently, pool replastered and updated 3 years ago.
Current value is $1.2-$1.3 million. Tell me again how that equity is not part of overall net worth.
Interesting point; I would take it one step further. People bash CA and Silicon Valley for a number of reasons, housing cost being one of them. Well, there is unbound opportunity here. I am a beneficiary of that opportunity. Where else in the world can you squander so many years and still have a chance?
Nokia just announced another new facility here in San Jose; they cited the low cost - high quality of the Community Colleges' tech degrees and will support that.
Another point; secure housing is a great way to initialize generational wealth. It may not do as much for the 1st owner, but it may for the next generation. One "issue" I am struggling with is my trust.
I flat out love it here.
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I’m not trying to compare to anyone, which is why being in the 96 percentile ahead of all the people that don’t save (or just 6% to get the match) doesn’t mean I’m where I need to be. If folks want to pat themselves on the back and be complacent for being in the 96 percentile, rather than doing the math and seeing if it’s sufficient for their goals, that’s on them.
See, I’ve taken my position exactly because I’m not interested in a measuring contest.
Then, I think we can agree that a million or more is insufficient for you. In that case, for you, “mediocre”.
But for most people - it’s not mediocre.
By simple mathematical definition - 96th percentile is well above average.
Now, we can both make a case that the average should be much higher.
But the stats are what they are.
The vast majority of people simply do not put away enough for a comfortable retirement. It’s not that they plan to fail.
But they do fail to plan.
Broken record time... The answer is teaching personal finance starting in grade school. Will it everyone lsten? Nope. But give kids a fighting chance. That's my opinion.
Boil it down to one concept: short term vs long term.
Boil it down to one concept: short term vs long term.
The banking lobby kills any attempt of making finance required.
