Employment income, passive income, dividend income etc. I am not against home ownership. I just think people place way too much of their net worth on one asset.
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The house. How many people earn this amount, not many. Real estate is the best investment possible, yielding the highest rate of return. The terrible financial position is wasting money on rent. So are you going to sell your house and buy the one next door that costs the same amount and be in the hole after realator fees? Then live on the bus bench out front? They never mentioned to try to flip just to avoid paying rent. I would know as a landlord of multiple properties… the rate of return is unbeatable!! We all have different situations, one finance blogger has millions invested which would make me financially independent 3 times over, but for him he needs more to live.
These are great guidelines to follow. Oh yah, if you have a pension you can definitely slack on the retirement savings… but I still think a healthy net worth is a worthy goal, regardless of what might be coming to you later! There is some flux there but it would give you a reasonable swag and of course the downside is that your inheritors get nothing when you die vs passing on an asset that cash and investments would offer. How drastically do these numbers change if you remove your primary residence from the Net Worth Targets?
Just seems like it may be better to exclude them entirely versus adding an asterisk to the volatile fluctuations in property value in the short-term. I am so disenchanted with the home ownership dream. I certainly do not include it in my calculations. For many reasons cited in many studies, it is still one of the biggest factors in wealth accumulation. Great guide Bridget!
I was fortunate to enjoy some privilege I feel guilt admitting that , but I also take pride in my independence and making saving a priority with no input from anyone else. This is valuable info! Interesting to see the numbers and the different scenarios.
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On track to have 50K by 30, and hopefully even more! There are days where everything seems right on track and the next is a complete left turn. But knowing that there is a high and low number to keep in mind is the way to go. Ah this is a nice little reminder. One or two expensive handbags is usually enough in my experience… I still have the two I bought in my twenties and they still look great with everything.
I came from a very middle class household. I still drive the car for which I took out the aforementioned loan, and we share the one vehicle. So yes, on a societal level, inherited wealth and privilege are important indicators of your ability to grow your wealth. A disservice?
She is absolutely correct. We both got the exact same job after.
His student loan balance may not have looked that large compared to his starting salary, but the damage was already done at that point. We both work hard. That sole difference was our differences in financial privilege. I would estimate that our net worth differences at 30 will be over half a million dollars. We have the same savings rates. We both dislike debt. But I had far more financial privilege than him. Despite having student loan debt, he will still have a great net worth at 30 because he has had the financial privilege of having a six figure plus job since he graduated from undergrad.
Not everyone whose parents pay for undergrad come out with assets — that was from a series of decisions that I made. Not everyone with the financial privilege of high paying jobs will accumulate a high net worth at 30 — you have to choose to do that, choose to save your income. But financial privilege gives you those choices. I struggle with including my house within my net worth for the exact reasons that you mention. We have diversified our investments so we have about an equal split between money sitting in investments love those dividends as we do in home equity.
Living just north of Toronto I see the pressure to purchase and the lack of options as well as the crazy returns people are getting. At the same time we are aggressively paying off the house trying to get mortgage free so that has to count for something.
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To me what is more important is to just save regularly and make sure you have more at the end of the year then when you started. These guidelines are great — thanks for sharing. Like you mentioned, it just depends on your lifestyle. I think my greatest concerns are different than net worth, but instead cost of health in the future — like how much will I need to save for when an unexpected illness arises? Should I keep a separate emergency fund for this, and at what age? Saving is important, but insurance is easier.
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Make sure you have critical illness and disability insurance. It gives you more protection sooner than saving for the same thing will. I think that one of the challenges is where to gauge net worth for a family. My wife and I are recently married and have fully combined our finances, but its difficult to say if most financial posts are directed to one individual or to a family unit.
You make some excellent points here I think. To me, the single biggest variable—which we all control, mostly—in retirement planning is deciding how and where one wants to live in retirement. Cost of living varies hugely in different parts of the US and even more so across the globe, as of course do lifestyle choices. IMO, I already live the lifestyle most people hope to secure in retirement, which is I decide what I want to do each day.
We shall see how we compare 10 years from now! To reach the articles stated net worths is impossible. To reach the articles stated net worths is impossible for over half of Canadians. Also, having been in the workforce 25 years longer than you — I can positvely state your figures are too high to be realistic. We purchased a house so that one salary could pay the mortgage in case one of us got lay off. It can be done with an average salary. It just takes PLANNING, living below your means, paying yourself first, purchasing no load index funds, and going to the library to read up on personal finance.
Did you get divorced? Did you have kids? The average post-secondary graduate who divorced and raised kids can accomplish this. They are for Canadians with Bachelors degrees or higher. I was making more than that by age 29 at which time I had only 3 years of professional work experience. I agree that a lot of cash should be liquid but one can also invest in a house and make great returns. The power of leverage allows an owner to generates tons of money off a small investment i. On top of that, if the property is rented, the owner is earning cash on top of leveraged home appreciation which is a two-for-one benefit that converts into tons of money when all is said and done.
Real estate is the safest place to park money. Too risky. Other people get rich off your investing. Your broker or the brokerage firm. If you want to retire with a million dollars, you better put aside one million. Each quote sums up each decade perfectly…20 somethings just need to start, so many go through it buying dumb shit and not saving a thing usually to impress people …. A million by 60 would make me really set by Thank god! However, not doable for the average person. Did you inherit money?
What was your average income.?
For those of you who like to actually crunch numbers, do the math. You were given money or a big helping hand, had a much larger than average income, or had no kids. Your circumstances are certainly not average. No one who has been divorced will retire with these numbers. I want to tell you the end result will be a product of your own ambition and fiscal responsibility, but in reality, the biggest determinant of whether or not you finish the decade in the black will be how much money your parents donated to your cause.
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So yeah crunch the numbers, find the truth. FWIW , not many work harder, save hard than me. My income is almost double the average Canadian income. My husband and I both put our selves through university and paid off our student loans within one year. In the early s our loans were a lot less than now but our interest rates were double digit! After we paid off our student loans we started to maximize our RRSPs and save for a down payment.
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