Unless your house is fully paid for, and unless you can access your retirement accounts today, your net worth is an illusion. Although we’ve recovered quite a long way over the past 18 months, I don’t think we can really count on property, stocks, and private equity investments to be there when we need them. The recent market volatility reminds us to get realistic!
The only thing we can really count on is cold, hard cash. I find it very misleading, as well as a little disingenuous that some say they are millionaires, when 70% of their net worth is tied up in an illiquid asset called “home equity.” Your home is only worth as much as someone is willing to pay for it. Even your 401K and IRA are suspect because those accounts can easily collapse.
A TYPICAL ASSET SIDE OF A NET WORTH CALCULATION: