Why is Our Net Worth Falling?

As you'll see from Net Worth IQ, our net worth has been falling in the last few months, despite a small bounce this month in US Dollar terms. Are we spending too much? Or is it due to poor performance in the financial markets? Let's look at the numbers:



These numbers breakdown our net worth into cumulative retirement contributions and non-retirement savings (current savings) as well as retirement and non-retirement account profits. I've posted a a chart of these data before, when things were heading in a very positive direction. Here's a chart of the current data:



Net worth reached a peak of almost $US478k in October and declined by $40k from then till last month. Looking at retirement contributions - I added about $10k in the last few months of my job in the US. Since October, Snork Maiden's employer has contributed about $3,000. So we are doing OK there. I made almost no net non-retirement savings, however, in the first half of 2007. Savings jumped by $10k in August due to merging my finances with Snork Maiden's and beginning to spend on the move to Australia. We spent down another $10k in September on the move. Since then we have begun to rebuild savings to $148k last month and this month $155k with the addition of the inheritance.

Of course if we add Snork Maiden's net worth in August to my savings in July we would come to $158k. The move to Australia probably cost us about a net $12k.

Both retirement and current profits peaked in October 2007. The Australian Dollar reached its peak in that month and the reversal in November partly reflects the weakening of the Aussie. Since then net returns on retirement accounts have been zero. But non-retirement accounts have lost $26k since November. Our retirement accounts are currently more conservatively than our non-retirement accounts.

So the fall in net worth since October is entirely due to some retracement in the Australian Dollar since that month and poor investment performance in our non-retirement accounts. We are living approximately within our means since settling down in Australia.