For some months, I had been tracking my net worth, in an effort to manage my finances. While I managed to track for most months, there were some times that I was unable to as I was busy. In the quest for financial independence, it is advisable to keep track of your net worth to see where you are at in your journey. This is a good way for me to check my progress and how much more I need for financial independence.
For privacy reasons, I won’t be posting actual numbers. Will use percentage achieved for criteria I am using to measure myself.
There will be a post soon on how to calculate your net worth, as well as future posts explaining the concepts, criteria, and parameters I use here. Watch out for that.
Here are the keys stats for my September 2017 Net Worth tracking:
1. My net worth in September 2017 increased 224% vs Sep 2016
This is a massive increase from previous year. This was brought about my a decrease in liabilities as well as an increase in assets. The decrease in liabilities was due to a conscious effort to no longer get short-term loans from loansharks, managing my credit cards, and managing my money better. With better money management, I was able to pay off the monthly amortizations due for my real estate investments, and the extra cash was used to open and maintain stock positions in the PH and US stock markets. I also initiated an monthly Easy Investment Plan with BDO that automatically invests my money into UITFs.
2. My savings rate is now 55%
The savings rate determines the speed that the person can reach financial independence. I now have a savings rate of 55%, meaning I save 55% of my salary. On my budget, I track expenses, cost of living, investments and savings. The last two constitute my “savings”. 55% is quite an improvement from my 22% savings rate in Sept 2016 (although this was understandable as we had a family medical situation last year).
3. My FTI index is 81.25
This is up from 32.27 on Sep 2016. This is the popular “F*ck This Index” metric developed by Doug Massey. FTI determines if you are ready for retire. I will have a post explaining this concept. The formula for FTI is:
Age * Net Worth / Annual Spending
You need an FTI of 1000 to retire comfortably. So this shows I have a long way to go!
4. My forecasted annual spending still the same
You calculate this by forecasting the your costs in your life should you retire. This figure is used to calculate FTI and the other metrics below.
5. I am 3.87% away Target NW
How do you calculate Target Net Worth. You take your forecasted annual spending (#4 above) and multiply that my 25 (this assumes 4% withdrawal rate).
As of Sept 2017, I am only at 3.87% of my target net worth. While this is an improvement versus last year (1.16% in 2016), I still have a long way to go. Main thing to do is to eliminate my liabilities (debts), and my net worth will massively increase.
6. My Wet Worth is Negative
Wet Worth is calculated by deducting debts from you Liquid Assets. I understand that this will be negative as majority of my assets are in real estate (not liquid) and only 36% is in equity/cryptocurrency.
Next step is to decrease debts, and increase investments in equity (stocks) and crypto (bitcoin, ethereum).
That’s it for Sept 2017. Here’s hoping there will be improvements next month.
How about you? Have you tracked your net worth this month?