Personal Net Worth Calculation
So, I do a monthly balance sheet to calculate my net worth to keep me on the right track. Now I’ve ran into an accounting problem: how to value my long-term, long-only, passive, index-tracking equity portfolio. I think it doesn’t make sense to value the portfolio on its market value because the volatility of equities renders the net worth calculation nonsensical. (F.ex, If the portfolio decreases in value by 5k during the month, while I save 3k of my after-tax pay, my net worth would decrease by 2k just because of stock market volatility, even though I managed to save 3k…)
Any ideas ?
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