Lol actually a good example would be like bitcoin. For example say you had 100k and it rose to 1.5 million. You could be worth 1.5m but you are capped to a weekly sale of 20k a week. So you couldn’t even liquidate it fast enough to recognize your net worth before it tanked in less than a year.
This is dumb. Volatility of assets isn’t a variable in net worth calc… If you don’t like its effect on month-to-month calcs then only update portfolio value quarterly/annually.
It looks like the answer is to liquidate your long-term investments in index funds and convert to cash - this would greatly increase the “informational value” of your personal balance sheet.
Thank you for your 2 cents!
Maybe you can move all your index funds into a SPE and then you can buy and sell it to yourself before any mark. If the value drops sharply, just book goodwill.
just to double down on ohai’s comment, you should be adjusting your risk allocation to match your risk tolerance. if net worth volatility bothers you and you can achieve your goals by investing in fixed income securities instead and experience a smoother balance sheet experience over time, maybe that is better suited to you. if you have a high risk tolerance and you meet your goals, you can either decide to lock in the certainty or adjust your goals higher. pretty simple. CFA level 3 covers this in entirety.
I just trying to figure out how to track my asset accumulation so that month-to-month volatility doesn’t make the month-end calculation pointless.This has nothing to do with risk tolerance. I really couldn’t care less what my portfolio is worth in 2-3 years. I’m actually hoping that my index tracking portfolio will tank massively this year so that I can deploy the war chest I’ve been accumulating.
Anyways thanks for the input fellas!
Then just use a rolling 6M or 12M average…
I mean, it kind of seems dumb. Tracking your net worth on a monthly basis but whining because its noisy or volatile on a monthly basis. Maybe just not track in on a monthly basis? 
i track my net worth religiously. but i should have been storing monthly data to chart it (would have been cool to see the fluctuations) as of right now i just keep the end of the year net worth calc. but i may change that up! might req too much work tbh though lol. plus it isnt as pretty in data form!
I track my net worth monthly. The monthly move mostly depends on how the market is doing so I guess if you wanted you could also track details of the movement i.e. Unrealized gains = xxxx Contributions = xxxx or like some people have mentioned price the investments quarterly, semi-annually etc
I receive broker quotes on my home on a quarterly basis and third-party appraisal annually. Also, my entire portfolio (stocks, bonds, house, rental properties, kids) is audited by big four annually, rotating providers every three years. It’s really the only way my net worth can have any credibility to outsiders.
brahs, I think you current net worth calculation should include the net present value of future earnings potential based on your career trajectory up to date, outlook for your industry, etc. I wouldn’t go overboard by running simulations or contingent scenarios - just a static actuarial model calibrated to current economic data would do.
My preferred method is to count the value of my parents’ rental properties, and then add the value of my BMW 7 Series based on AutoTrader quotes. When making future projections, don’t forget to subtract $2k/month carry for golddigger gf and clubbing costs for bottle service with the fuckboy entourage.
for realz tho, gotta add $750 back into that $2k for tax savings, ninja…
dang brosefs. you guys are totes forgetting about the intangible assets like experiences and such and such. a trip to vegas is easily seen as a negative but it is potentially worth 100k if say you meet a new rich friend.
lol but in all seriousness, life is like a game. and your net worth is like your score. we are not art people. we are finance people hence we should really look at this in a linear status obsessed dick measuring way!
bros, what ratio do i use to include my Xbox achievement points in my net worth? also, monthly volatility in my toejam collection is bothering me! should i stick to using cost basis to track toejam accumulation or should i just learn to deal with the volatility that toejam growth brings? fml.
NPV took a big hit last year on parent loan impairment T.T
No problem, just borrow $50k from your 401k and recognize a positive asset balance. Don’t know about you, but I assume 30% return on loans I make to my mom, and then record the future value on my personal balance sheet.
ohai we all know you just put all your money in levered etfs. why lie?
how big was teh loan/gift? make sure to give cash and not depreciated ge stock. save the tax loss for yourself, ish big money.