My net worth would have taken a drop, as far as the paper goes, but if I sold it then, it would most definitely be a loss. I guess if I felt that it was always a direct loss or a gain, if the market went nuts and I made a 50K gain in a day, I’d be dancing around like I just won it in the lottery. And if it plummeted the same, I’d feel despondent like I’d just accidentally torched that 50K that I have sitting in my guest room (not really). Nah, I just think of it as paper losses and gains. It can be halved in week if there were really tough times in the market, but if it was in my bank account, it’s pretty solid.
@59
Does your investment portfolio website include your nonretirement assets? Does it include your nonfinancial assets (such as real estate)? That is why I use excel. Does your investment portfolio website allow you to project your asset growth into the future so you can estimate your net worth 20 years from now?
I have financial/credit relationship with two companies. TIAA-CREF and Bank of America. My credit card comes from BOA. My brokerage account is with Merrill Lynch, which of course, is part of BOA. I do not have a mortgage (the house is paid off). I never pay interest expense on CC transaction. I pay off the account balance every month. My sons, one whom is at college, has a BOA checking account and when he needs money I make a free TF from my account to his account. No need to write and mail checks.
If you do it in excel you get the whole financial picture and it is offline so no need to worry about identity theft or encryption or any of that. You can also forecast asset values to future points in time so if you are say 45 right now and have assets made up of (1) cash and investments, (2) education funds and prepayments (3) retirement assets such as 401, IRA’s, supplemental retirement funds and (3) real estate assets you can project growth for each asset class to next year and the year after that and so forth. My growth rate right now on many of my assets is close to zero because I am in cash and missing the rally. Goes to show you how smart I am.
Every now and then, on this board, people talk about getting their kids or parents to make better financial decisions. Use excel. I can’t get my mom to do this in excel. My mom and dad bought a house in 1966 for $25,000. That was the house I grew up in with my two sisters and my adopted parents. My dad was 28 years in the Navy (WW II generation) and if not for his pension my mom would not be able to make ends meet. My dad has passed away and my mom is no longer capable of thinking straight so my sisters and I got POA to help and protect her (she was the victim of fraud about a year ago that we uncovered and stopped). I just paid off her mortgage of $90,000 and she will pay me back out of my dad’s monthly pension which she still gets at about a $1,000 a month. The pension is way more than that but she will pay me back at about what she was paying in a mortgage before I paid it off.
If you are wondering how you can buy a house for $25,000 in 1966 and still owe $90,000 on it in 2017 you are following along very well. Good question. Some people do not manage their money very well. Some people, probably half the population, doesn’t have anything set aside for retirement. So how do we as parents teach our kids to make better financial decisions including using credit wisely including how to finance education? I think excel is one useful tool and I need to teach my kids how to use it. My kids are 22 and 19. They need to look at the big picture financially and A minus L equals Net Worth in excel is a good way to do it. Every time you get paid A (cash goes up). Every time you charge something on a credit card L goes up. You can hang on to every receipt to update your excel schedule and like I said you can forecast out into the future. That way people can see what a $2,000 contribution to a Roth IRA does to their net worth not just today but 30 years from today. If that isn’t financial planning for the masses at a virtually zero cost I do not know what is.
Sorry, a little late to this thread.
“Has anyone tried to move your retirement fund into Solo 401K before? With the Solo 401K, you can acquire real estate with it, which I did. With the real estate, you can get rent and appreciation in value. I invested two homes in the down turn of the real estate market and double the value in about 3 years, in the mean time I received income(net expenses) from the rent which will fund my RMD when I am 70.5 years old.”
@artloversplus - why is there a benefit to owning real estate in a 401k vs outside a retirement account? You can balance income against depreciation and when you cash out, you pay capital gains instead of ordinary income. In fact, that also bugs me a lot thinking about my equities investments in my retirement accounts.
^Because if you rent out and you do all the work, you have the rental income tax free as well as management fee saved doing the work yourself is tax free. In other words, you are contributing more than usually allowed to, your own labor managing the rental property as well as the rental income. It is not legal in an IRA. I don’t know anything about solo 401k.
I couldn’t agree with you more GoNoles85. I agree that if we taught everyone how to use excel and if they simply thought about their money in a simple spreadsheet way (e.g., here is the money in, here is the money out, how can I make this pile big and that pile small) much financial pain could be lessened.
I built our excel workbook. There is one page for retirement accounts - which as you get older can proliferate even if they are at one institution depending on how you earn your money (403s, 401, SEPs IRAs). One page for non-retirement assets. One page for consolidations with year-over-year charts for net, percentages by asset type (equity, bonds, etc.) and a chart for asset categories (retirement, real estate, other non-retirement investment, etc.).
For anyone who hasn’t done this yet, just start now. Don’t worry about getting a good backwards look. Just start now. Build it now and then update it at the end of 2017. Do the same at the end of 2018. Again in 2019. Within 5 years you too will have a nice “picture” of what is going on financially in your life.
I would also suggest downloading your year end CC transactions to Excel. Same with bank transactions. Just save the file now and then look at it when you have time. It can help to see where money is being spent. While impossible to predict future needs, it can help to see which current expenses will disappear once children are out of the house.
“Does your investment portfolio website include your nonretirement assets?”
Yes.
“Does it include your nonfinancial assets (such as real estate)?”
Of course not. But very easy to factor in just in my head. RE prices don’t change daily or even monthly. I also don’t really on it for retirement so my mindset is it’s just gravy.
“That is why I use excel. Does your investment portfolio website allow you to project your asset growth into the future so you can estimate your net worth 20 years from now?”
Yes, they have tools I can utilize but another thing that doesn’t need to be done on a regular basis. Once or twice a year is fine. Don’t confuse obsession with detail and a daily reckoning with sound financial planning. You could have both but what you are doing isn’t needed for the latter.
@“Delicate Arch”
Why do you need separate pages/tabs for each asset class? Why can’t you have everything on one page/tab? The one I use has one page for the checking account which keeps track of every penny in and out. It does not have to be updated up to the minute unless you are as anal retentive as I am about money. It takes literally seconds anyway.
The next page/tab on the sale excel file is for A = L + NW.
One of the A’s is the checking account balance. There is one line item for each asset. I am conservative, like most accountants, so I do not list assets such as my cars or personal items such as clothes and jewelry my wife owns. I assign a zero value to all of that. My A are cash, investments, PP College plans, 401’s, house, etc. My L is zero because the only CC I use is paid off each month. So A equals NW in my case.
I am a little pissed I’ve missed out on the rally but whatever it will dip again and when it does I’ll put some case to work. I decided, because of this thread, to open my 19-year old son’s bank statement that he left sitting around the kitchen for two weeks. Yup. Glad I did that. Time to show him A=L+NW. I’ll give him a starter excel file set up like mine and when the older one comes home for a break from college I’ll show him. They have good habits but I can already see they are wasting money eating out.
I know some of you will pass out because I violated his privacy by opening his bank statement. Oh, I totally agree. But it is a teachable moment and he needs to hear it. Parent your kids whoever you see fit I assure I know what I am doing with mine.
Forgot to say my third page/tab is for stock transactions. Basically schedule D of the 1040. That way I know my basis in all stock investments and options I buy and sell. It should match up to the brokerage statements I get to the penny. I can get the entire picture in 3 pages/tabs that all link back to the Net Worth tab. I estimate my house value by looking at comparables which is easy to find online at the property appraiser’s site. Everything else comes from bank or brokerage accounts all online. Every receipt is a new transaction that updates NW.
@66
Cool. I had no idea the investment pages had forecasting tools. Six of one, half dozen of another, we are doing the same thing each in a way that works for us. You are right. No need to do it every day or week. I forecast once or twice a year, as you mentioned you do. Yup.
Sounds like a hobby you enjoy more than a necessity. My online brokerage keeps track of my basis quite well. I chose not to reinvent what they do in a spreadsheet.
As far as kids and teachable moments, make it interesting and fun for them. Help them set up a Roth IRA at a young age and teach them about compounding.
https://www.bogleheads.org/wiki/Using_a_spreadsheet_to_maintain_a_portfolio
You Excel folks might find some of these sample spreadsheets useful. I wish I knew enough about how to use Excel to be able to understand everything they describe. I’m going to start trying to learn, though - I’ve been relying on Quicken to track investments, net worth, etc. for the past 20 years but it sounds like Intuit might be moving to a subscription-based model and cutting off manual entry access for those who don’t subscribe.