Net worth

“forced to sell with a big discount”

This is another home owner self delusion. Even if they don’t sell the house, the fact is the house has already decreased in value. They are selling it for what it is worth at the time! Just because people don’t list their houses when they don’t think they can get a good price, doesn’t mean they didn’t already lose money.

I am currently forced to sell non attractive land yard for a big discount. Otherwise I will continue with negative cash flows in a form of taxes and maintenance costs. This land was inherited. This situation would be completely opposite if I inherited land on attractive location 300 km to the South. Capital gains would cover all costs even if I would wait for long time. Unfortunately my location isn’t attractive and will never be and yet is classified as agricultural.

Agree. There are also costs of lost opportunities for capital locked in non-profit real estate holdings.

sorry to hear that. I usually go for places that are center of attention and/or with the following:

Great school district

Demographics - don’t want to come out as racist so I will let you guys decide on this

Income in the area - higher the better. Don’t mind being the only owner of Audi in a garage full of Cayenne Turbos and Range Rovers.

$/Sq Ft - usually aim for higher end. I’d rather live in a mediocre home in the best neighborhood rather than best house in a mediocre neighborhood.

My choice back in 2012 was UWS - prices have doubled in 5 years. I down paid just over half so I am up almost 200% on my money.

I do agree, buying is not for everyone and there are risks to buying a house but in most cases, most cases, backed by economists and social scientists, buying is infinitely better than renting.


RE investment may be a jackpot and on the other hand might be a pain in the ass, especially if you need quickly convert it back to cash.

It’s popular in my homeland, especially to build up a house with swimming pool near the sea shore and rent it to tourists, a gold mine for some. But greed and leveraged investment has driven many into bankruptcy.

Yes, i 100% agree. People get into trouble when they pour all their money into their down payment and get maximum amount loan possible because well we are all greedy and want the best from little we have. Diversification goes out the window here. 100% of net worth into real estate and leveraged even more (mortgage) in real estate. This real estate itself is one residence. So not only is it not diversified among asset classes but also not diversified within real estate “sector.”

I just did a tax return for a girl who’s worth about $200 million, and she’s only 7.

Apples and oranges: she’s probably not a charterholder nor a candidate.

I exclude my primary residence when calculating net worth even tho I own it outright (no mortgage). This is more consistent with actual wealth. My investment portfolio of mainly equities (and some other investments and a vacation home), is actual wealth.

Primary residence is consumption, not wealth. To the many who feel their home value is additive to real wealth: you’re wrong.

I do include my vacation home’s value (which I also own outright), however, when tallying up my net worth. This method is consistent with the CFA level 3 curriculum.

If this concept eludes you now, wait until your financial assets exceed your aspirational human capital. Then you’ll get it.

The concept certainly seems to be eluding me now. I would love to be corrected on wherever my thinking is wrong here:

From my perspective, of course anything you own is part of your net worth. The fact that you live in it doesn’t take away from its ability to be liquidated. Excluding it would also allow for significantly less wealthy individuals to appear significantly more wealthy than people who are wealthier than they are.

Let’s say I have two random people: Person A and Person B. Both of them retire with $50,000,000 in assets and no debt. One of them buys a $10,000,000 house with cash. One of them rents an identical property for $50,000 per month.

At the time each person moves into their new home:

Person A now has $10,000,000 in home equity and $40,000,000 in other assets, so a net worth of $40,000,000 according to you (I believe).

Person B now has $50,000,000 in assets. So a net worth of $50,000,000.

Is Person B actually worth $10,000,000 more than Person A? To me it’s an obvious “no.” At the very least, the $10,000,000 represents a prepaid rent asset that will last the rest of his life (minus property taxes and upkeep, of course). If we aren’t going to count that $10,000,000 in his net worth because his home represents something he will be using, wouldn’t we need to somehow adjust Person B’s net worth to account for the fact that he doesn’t own a home and will have to spend more of his money on living expenses?

To use an even more extreme example: if Person A has $15 million in home equity and $5 million in other assets, while Person B has $1 million in home equity and $7 million in other assets, of course Person A has a far higher net worth than Person B. And of course his home equity contributes to his real wealth. He has the power to downsize to a home worth the same as Person B’s and be left with nearly 3 times the spending power Person B has.

To me it seems that the only way to justify leaving home value out of net worth is to make a lot of assumptions that aren’t reasonable to make.

Where have I gone wrong here?

What is your net worth (go ahead and include your home equity if you must, just break it out from financial assets).

The reason I ask is because only someone who has virtually no net worth (or a negative net worth) would frame it the way you do.

I’m surprised a financial professional and candidate would be so hung up on this widely accepted definition of net worth.

that is bold statement there. His example was 100% paid cash. Net worth is by definition everything you own with value (assets) minus what you owe in debts (liabilities).

In Cj4g’s example, 100% paid so the net worth is 50mm not 40mm.

i like cj4g’s definition. assets - liabilities = equity. pretty sure this is widely accepted.

the only time i ever saw your house excluded from your net worth was in fafsa. lol

By far the largest part of my net worth is in home equity, but I also just turned 30. Even not including my home my net worth is very much positive though. I have no debt outside of my mortgage and a car loan.

I’m not trying to argue. I was looking for an actual explanation of where I went wrong (I assumed you actually knew better than me and I was going to learn something). Is this you saying you don’t have an explanation? So far all you have managed to do is tell people that if they don’t see it your way they either will eventually or they are poor. You’re not exactly making a cogent case.

What kind of car do you drive and how much is your loan?

Why do you drive something you cannot afford? Why not drive an older one you can pay for with cash and direct the savings to investing and paying down your mortgage debt?

None of this seems particularly relevant to the discussion at hand. Additionally, you are making more incorrect assumptions.

You seem to be mentally incapable of both civil discussion and making coherent arguments, so I’m going to go ahead and accept that there’s no reason to bother continuing to converse with you.

Cars, like homes, represent consumption. You may not like it, but you don’t get to choose the world you live in. Only once you understand what wealth is will you ever have a shot at it. I’m helping you BTW…but I understand it’s hard for you.

If you had any interest in helping anyone, you would have been polite enough to explain where I was wrong.

I have very strong doubts that you are capable of it though. No doubt you bombed the written portion of level 3. Hopefully you made up for it in PM.

RU Canadian?


Are you just saying the most random things you can think of to see if I’ll keep biting? Kudos if so. This last one cracked me up.