Net Worth Tracking, 1 year in.
Updated: Feb 22, 2019
2018 was the first year I tracked my net worth. I did it right around when it crossed $100,000 for the first time, January 27, 2018, and then every quarter after that. There's good news and bad news.
The Good News
It's going up! This is proof that if I stay disciplined and have a good savings rate, my net worth will increase. Even with the market going bonkers, and being down 6% for the year, my net worth did what it should do. Good boy, net worth, good boy. It helped that my savings rate for the year was 52%, and I didn't have any crazy emergencies. Overall, my Net Worth increased 27% in one year! That's awesome! I would love to see $150,000 by the end of the year, so I need to stay disciplined to make that happen.
The Bad News
Investing didn't help, it actually hurt this year. I saved around $34,000 from January 2018 to January 2019, and my net worth only went up $27,000. Which means that the market cost me $7,000, which is around 5.5%. I know that, on average, the stock market has up years 75% of the time, and this was after an 8 year bull run, so I can't really complain. But the headwind was annoying, especially as this is the first year I've been really tracking my net worth and paying close attention.
The Lessons
1. Stick to my savings and spending target. If I keep saving like this, I should be ok. Considering I was only expecting my net worth to increase by $20,000, a $27,000 increase is good!
2. Market volatility sucks when you're tracking your net worth. I found it pretty discouraging that I would save $6,000 in a quarter and my net worth would only go up $2,000. But that's life. This will be especially annoying when my net worth is higher and there's a bigger drop in the market, because I won't be able to save enough to stay moving in a positive direction. I just have to remember that when the market dips, it's a chance to buy index funds on sale, which is a good silver lining. As Andrew Hallam argues, with retirement over a decade away, a market crash is great for investors that stay the course.
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