I run two balance sheets for tracking out net worth and progress towards our eventual retirement:
1. personal balance sheet: this balance sheet tracks just my personal position and only marks to market tradeable investments such as shares, bonds, derivatives etc. Real estate is held at gross cost (purchase price + transaction costs). While this is artificial, it makes it easier to monitor my savings rate and the performance of the more actively managed part of my portfolio. I update this balance sheet once a month;
2. combined household balance sheet: this balance sheet tracks all our investments (including our home) - both those which I hold and those which my wife holds. I also include properties at the most recently available mortgagee valuation posted on HSBC's web site. This balance sheet tends to get updated every two or three months (although changes to entries on the personal balance sheet flow through automatically).
The net worth on our combined balance sheet peaked in April 2008 - after which it fell 19%. Following the rebound in property prices being reflected in HSBC's valuations, our net worth has now exceeded the previous high water mark (although not by much).
Of course, a large part of the recovery in net worth is due to cashing out a long service benefit when I left my old job. Investment performance also helped significantly following my decision to aggressively redeploy cash into equities. A lesser part is due to savings. However our properties are still below peak valuations and some of our funds and commodities purchased before the bear market are still worth less than we paid for them (Vietnam and lean hogs being the worst).
In any event, its nice to know that our finances are still moving in the right direction.
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