The graph has networth (blue) and the split into retirement accounts (green) and non-retirement (brown). The record starts when I first arrived in the US in 1990. The early years I was a grad student and then a post-doc and visiting assistant professor and in debt. Then I got a better job as a researcher in the late 1990s and savings began to accumulate. Unemployment and a stock market crash lead to a decline in 2002. Then an even better job in the mid 2000's followed by our move to Australia, merger of finances with Snork Maiden and a worse financial crisis saw net worth plummeting from near $500k to less than $200k. Since then the market rebounded and I've had a couple of jobs where we have largely saved my salary and we are now at a new high in US Dollar terms. The path seems a little smoother when measured in Australian Dollars:
I don't know whether this stuff might be useful to people just starting out to give an idea of how things might look in your future. If you don't dramatically expand your standard of living, higher paying jobs in the future can have a big effect on savings (countering the idea of the importance of starting early). And there can be some big deviations along the path. This one charts spending versus total income including market returns:
The big bumps are usually associated with international moves. Now with two of us in expensive Australia, our spending has bumped up to a new plateau but this graph isn't adjusted at all for inflation so the escalation in living costs is not so great, really. This is very roughly the inflation adjusted numbers (2008 US Dollars):
5 comments:
Interesting to look at - there has been a lot of volatility, and some evident periods with elevated expenses or income. Out of interest, have you compared this with the contribution of your savings - i.e. how would it look if you were just stuffing cash in a mattress, or if you had it in a basic interest earning account? I have much less data (being 29), but found the comparison of my actual net worth to those scenarios enlightening.
I have got profit data back to 1996 and compared the returns to the stock market. We have done better than mattress stuffing and a little worse than the stock market. The latter really depends on the time frame though and some of the largest amounts for saving have come when the market was quite strong which means we underperformed the stock market quite a lot as a result of that.
First of all thank you for a simple and detailed blog.
This is a rare treat in my opinion. There is a lot of content generating sites , lacking of specifics of their road to financial independence.
I have got two questions:
- Spikes on 200 K - first in red, and than black. What does it mean?
- You net worth does not have a house nor mortgage neither in the USA nor in Australia. Is it an intentional move and why?
I assume that you are referring to the third chart. Income in the chart includes all capital gains whether realised or not. In the financial crisis we had big year on year losses in stocks. Enough to push our comprehensive net income down to negative $200k. In the rebound from the GFC the same thing happened on the upside.
As far as buying a house goes, I would be better off if I had bought one here in Australia back in 1997-98 rather than beginning to invest in stocks. Average hosue prices in this city have risen from less than AUD 200k to more than AUD 500k. But I thought housing wasn't as good an investment as stocks and also I planned on moving soon. The former was not true over this time interval and I could have rented the house out when I moved to the US. I didn't buy in the US despite living somewhere cheap because again I intended to move and I didn't even have a green card. Now back here in Australia we really can't afford to buy given our uncertain income and the tremendously high prices.
I assume that you are referring to the third chart. Income in the chart includes all capital gains whether realised or not. In the financial crisis we had big year on year losses in stocks. Enough to push our comprehensive net income down to negative $200k. In the rebound from the GFC the same thing happened on the upside.
As far as buying a house goes, I would be better off if I had bought one here in Australia back in 1997-98 rather than beginning to invest in stocks. Average hosue prices in this city have risen from less than AUD 200k to more than AUD 500k. But I thought housing wasn't as good an investment as stocks and also I planned on moving soon. The former was not true over this time interval and I could have rented the house out when I moved to the US. I didn't buy in the US despite living somewhere cheap because again I intended to move and I didn't even have a green card. Now back here in Australia we really can't afford to buy given our uncertain income and the tremendously high prices.
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