I first saw this post on Free Money Finance together with an interesting piece of information: the median American net worth is not even $69,000, down for the past few years due to the loss in house equity mainly. Most of this relative wealth is kept in the form of retirement accounts, real estate, and crippled by a large chunk of debt.
Today I am sharing how my wealth is divided, since I managed four currencies I have used a recent exchange rate and the quantities may vary, but will at least give you an idea of my foreign currency exposure.
My net worth is spread like this at the moment
Cash EUR 1.02%
Cash USD 1.81%
Cash GPB 3.40%
Cash GTQ (Guatemala) 6.62%
Real estate (4 countries) 45.13%
Debt -29.13%
Other investments EUR 20.1%
Other investments GBP 44%
Other investments USD 7.05%
Retirement 0%
If I were as cool as Mochimac I would have a neat colorful pie chart (and 130 posts queued up, but that is another story..), unfortunately I take too long to put them up!
Debt: I owe a 0% credit card for one more month, rental deposits to my tenants, and mortgage on my UK property.
Cash: I usually never have that much cash on accounts but I just sold some cattle, have made a good little income online and on the blog, and have $10K ready to repay this 0% credit card next month. I also brought some additional money to Guatemala to finance the 90 acres land development. My normal cash reserves are around 1% of NW or under.
Retirement: Since I am already living off my investments, I do not have a targeted retirement fund or pension scheme that I contribute to. I believe in myself more than anyone to have my best interests at heart and moving country so much makes it complicated anyway to determine where to contribute to (real, not early or semi) retirement. Since I have worked in France and the UK I know I will be entitled to a tiny pension, in France today that would be the minimum benefit of 400 euros/month from age 65 if I remember correctly.
Other investments: I put anything non real estate or easy access cash account in here. There are classic investments in index funds, other investment funds, and non traditional investments such as the coconut farm and similar. Those investments are heavily weighted in GBP since the currency was trading around 1.05 EUR when I invested some three years ago, I have unloaded a bit when the London Olympics and other events brought the GBP back to 1.28 EUR and believe in the long term strength of the pound. If it doesn’t happen, I could still pay off my mortgage and invest in some more UK real estate.
Stuff that is not included in here:
After 6 months of daily house improvement, the little house in Guatemala has not seen it value updated.
I don’t include depreciating assets such as my motorcycle, the car and boat we just bought, and assets like old furniture or jewelery that has a certain value but would sell for 30% of its worth if turned into cash.
I also own half of a company that sells energy saving solutions, and once in a while get a check from my partner but do not consider that the company has a resell value worth mentioning in my net worth.
What about you? Where do you keep your wealth?
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My net worth is entirely in the stock market or in cash. I do have some stashed away in retirement accounts, but that’s also invested in the stock market.
Are you considering real estate later on or do you think you’ll stick with stock only?
Real estate is tricky. I like the concept, but I don’t like the local market. I’m not sure that I really want to be a home owner, let alone a landlord.
I will reconsider real estate later on either after I hit financial independence or if I relocate to another area.
If you started considering real estate soon, I would greatly appreciate if you share your experiences here. I’d really like to invest in real estate. Thanks for sharing though!
What wealth? We’re currently underwater on our mortgage, so that would be a negative I suppose. Most of our money is currently in a money market account (emergency fund) and my wife’s 401(k).
You’ve got a pretty diverse investment portfolio from the looks of things. Once our debt is paid off, that’s a main goal for us.
Yes, I try not to put all my eggs in the same basket.
Spread out, but not too much:
Pension
403 (b)
529 for the kids
Vanguard Total Stock Market Fund for the rest
what about real estate? I thought Vermont was yours?
I suppose I should count the real estate, but I don’t. Simply put, the market is fluctuating so much with the real estate I don’t count on it. But yes…I own some. Thanks for the reminder!!
I don’t count on it to liquidate for a cash emergency, but it is part of what I have worked for so it deserves a place in my net worth.
Our wealth is kept in real estate, cash, and retirement accounts at the moment. I haven’t done the exact breakdown, but I think I’m going to have to do that now.
Did I wake up the spreadsheet enthusiast that was sleeping deep down inside you? haha. I never really calculated that but it is interesting to see your exposure, risk and return on each.
The vast majority of my “wealth” is kept in the stock market. I have a fairly decent size amount tied up in my coin collection (I would only count the melt value if I HAD to put a number on it). I have a house that I own, but I don’t include that since I don’t have plans on selling it.
I would like to diversity and possibly buy some foreign property or something along that line, but it would make my taxes a little more complicated and it would make my 5 year periodic background re-investigation for my job much more difficult. So I’ve been holding off on that.
I don’t know much about tax law outside of the US, but do you have to pay taxes to France, Europe, Guatamala and the states? If so, how much of a nightmare are your taxes?
My taxes are not so nightmarish because it is the same every year. For example in Brazil I have declared that I bought a land for coconut farming, then each year I declare $0, until I receive some dividends. It took me about 20 minutes to file online, or the coconut company would have done it for $250. In Europe I add my income so it takes a bit more time, but I’d say no more than 2 hours per country, the complicated part is remembering the close date, France is in June, UK is from April 6th, and so on. Apparently you can put such investments in a self directed IRA, but I don’t know the exact details.
Our wealth is in real estate and farm investment. I believe the appreciation of asset value through real estate investment. On the farm side, we have about 4 hectare of sugar cane farming, still in the break even stage due to poor care from our farmers.
Interesting. I didn’t know sugar cane could be profitable on a relatively small scale. In which country do you produce?
It is located in the central island of Philippines. Yes it is profitable venture, there is a continuous high demand of sugar in the global markets.
I love that you are diversified among various currencies. I personally keep most of my wealth in my 401k and checking account. I do have some equity in our house, though we will probably be at break-even after the sewer repair.
do you deduce everything you spend on the house like the basement reno from equity? The sewer sounds like “lost” money but the basement added value to the house.
Depends. The sewer is certainly “lost” money, but I’m assuming after some of our cosmetic fixes (which were relatively inexpensive and should have been no-brainers to have done BEFORE listing the property) I imagine if we put it on the market now we might be able to break even. Housing prices went up slightly recently around here as well. Keep in mind this is all “guesstimating” and we don’t plan on selling for 10+ years, so it’s not extremely relevant, but still important to have somewhat of an idea where we are at.
Wow, looks like you’ve really diversified your cash into many currencies
yes, it is partly a need because I live abroad and partly an hedge against fluctuations/way to take advantage of a strong currency and move money around.
I love your diversity Pauline! Our wealth is largely in real estate, IRA accounts and cash in our various money market accounts. Thankfully the only debt is the mortgage.
no 529?
Hahah 🙂 I’m a geek for really nice charts.
My money is all liquid and 90% in the stock market in the form of index funds and stocks. The rest is in cash until I get a contract.
0 debt.
so when you get a contract you invest most of your cash and start rebuilding your cushion for the next extended holiday period?
Exactly. I keep a cushion of $30K – $40K at any given time because I have no idea how long it will be in between contracts.
I also don’t invest it in anything because I don’t want to put it in investments and end up being forced to sell them at a low point just to have money to live.
I’d rather keep it in cash, earn interest, and have peace of mind until my next contract.
Takes about 2 months to build up another reserve but at least during the time I am earning money, I am investing it for the 2 months while I wait for the money to come in.
First- any time you comment on my site you end up in spam….Just started happening about a month ago.
Second- We have little wealth given that our primary focus is debt payoff. Having said that we do own real estate and a vehicle. With our newish mortgage and debt load, our networth is negative but in about 5 years it will be significantly better.
strange! I have had my IP blocked on another site too, I guess Guatemala is a spam target.. Am I the only one on your site?
Of regular readers yes, and kike I said it’s only been about a month. Is there anything I can do to unblock your IP?
If you use a spam or blacklist plugin there should be an option to safelist users but it is a plugin thing, not a general wordpress thing.
My of my wealth is in liquid accounts. I have a few retirement accounts and I have real estate. My net worth is low because I just started building it late last year. I have a long way to go.
starting low is exciting, at the beginning you double your nw every year!
We don’t have much wealth. What we do have is in index funds in a 401k and a Roth IRA that needs allocated.. I love how you have so many different investment ideas and current projects. Awesome!
yep, trying to spread the risk around since some are pretty risky investments.
I have stock investments, 401k from my old job, and ING (er capitol one account), and a checking and savings account.
Retirement accounts, short and medium term investments (GIC’s, REIT’s), small investments in friends start-ups, etc. I just try to be as diverse as possible between low-medium-and high risk investments. Stick to what works. Try not to move money around too often. Read, a lot.
same here, trying to diversify. Great point about not moving money too often, it gets costly and eats up returns
I did also just see a neat quote that caught my eye from Warren Buffett “Wide diversification is only required when investors do not understand what they are doing.” – I guess it can be argued that few investments work well too!
In the grand scheme of things, I honestly have no idea what I am doing. And even if I do and put 100% of my money into company X, I am not inside to know they will fire their CEO or reduce their operations because they are tired of working and want to play golf instead.
We’re a lot more traditional with an almost 50/50 split between RE and cash/retirement accounts.
Just out of curiosity – how does health insurance/care work for you? If you were to get sick, what kind of treatment could/would you get in Guatemala. What would your health benefits be like if you moved back to France since you’re (presumably) not paying a whole lot in French taxes?
Health insurance is definitely on the list of things we need to work out for our early retirement plans…
I don’t have health insurance here and have only had dental treatment with a dentist who studied in the US and charges more than a dentist in France. My credit card has a travel insurance for big health emergencies, and the French social security covers an emergency in Guatemala as well, at the level of cover you would get in France. It is weird and awesome.
I do pay a lot of French taxes because I declare some income there and I am fully covered by SS, that I would even without paying taxes, healthcare is universal. A GP visit is 20 euros, 70% refunded by SS so it costs 6 euros. If I have an emergency in Guatemala, I would also get 14 euros off my doctor’s visit, but not for a regular checkup.
Mine is in the stock market and real estate.
Hmmmm no “wealth” for me yet. Maybe in 4-5 years 😛 I do think it’s awesome that your portfolio is so diverse Pauline!
I try not to be too exposed to one or the other, since some investments are pretty risky, can’t risk it all!
Looking good, Pauline, looking good. Well, you already know that our only debt is the mortgage. And, when I last did this net-worth thing we were worth rather a lot (seven digits a lot). All of it is in real estate (non-income generating) and pension funds (this follows the UK pattern perfectly). Am I happy about it? Noooo…This is why I am trying to correct this structural problem of our wealth.
I hope you manage to sell the assets you want and correct, you should be able to generate a nice passive income at that level!
What is the energy saving solutions company called, that sounds really interesting!
It is called Savenergia, we deal mainly with hotels, campings and other business structures to help them reduce they water and energy usage. My associate is still part time on the business but with the construction crisis in Spain the past two years were hard and apart from the occasional deal we don’t actively promote and look for new business.
Most of it is in a Nut Thins box in the pantry, but we do have retirement funds to which we occasionally keep upping our contributions.
Don’t tell anyone about the Nut Thins box, Pauline! We are climbing out of debt slowly but surely. We get an $89 check from the insurance company because we smartened up a bit, and we’re dancing around the kitchen. In the meantime, can we buy some of your cattle?
I know what to look for if I visit your house! I am sad the cattle deal is over, but if there is enough room to jump in between several I’ll let you know! I was told some of the Guatemalan cattle is smuggled into Mexico and then the US, what a long trip for the poor animals, but that sounds just as profitable as it is illegal and dangerous!
I have secretly dreamed of discovering one such box when I bought my house and loads of things were left behind, but no such luck haha!
Thinking of myself as having wealth is still weird, but I guess we are getting close. We are spread between retirement, real estate, and my business which will soon be an owner financed loan. I’ll be like a bank! We have a bit in non-retirement investments, 529, a Roth IRA for our daughter, and some cash savings.
you meant 529 for your daughter or is she already funding her Roth IRA? She sure is on track to financial excellence!
I’m a little late to the game here, but I’ll throw in roundish numbers to the pile.
C&CE 4%
RE (all free & clear) 39%
Index funds 26%
Note receivable from partial sale of company 14%
Stock in founded company (based on sale EBITDA valuation) 17%
No retirement account either? I want to go back to the stock market but still hesitating between index and having a go at dividend stocks.
Some of the index funds are in retirement accounts; we do maximize our contributions every year. If you’re looking to reach financial independence before retirement age, then stuffing retirement accounts will give you a big gap to bridge before you can access them. That’s why I didn’t seed the initial seed investment in my company (all $400 of it) from a self-directed IRA. I have a case study about that coming out later this week.
I personally have tried (and failed) at picking the winners in stocks, and there is tons of academic research to suggest that I’m not the only one. Therefore, I don’t even try anymore. I have better things to do with my time than to shoot for limited upside and a higher downside.
As mentioned, here’s the case study on when it’s not wise to use a self-directed IRA for the seed investment of your startup. I could have been account rich and cash poor. http://www.hullfinancialplanning.com/the-case-against-self-directed-ira-investments/
Nice! Thanks for sharing. Our wealth is spread out over real estate, retirement funds, cash like you in different currencies and accounts. If anyone wants to be real nosey they can see all the numbers on the blog when I post them monthly 😉 . One thing I learned is numbers are just numbers and I’m always more interested in how people made their wealth rather than what they have.
Once we pay our house off next month and are 100% debt free from everything we can diversify our portfolio a bit. It gives us more options and we will see where it takes us.
That is really impressive, no debt at all! Can’t wait to see what you choose to do.
Stocks and cash have been a big part of things for me. Getting into some alternatives now. I do think that diversification is vital, and one must practice good asset allocation. It’s something I plan to work on more.
Diversification is indeed important, even if you have only stocks, you can have a wide portfolio. I am careful with stocks since you never entirely know what can happen to a company, everything moves so fast.
About a third of my assets are in cash and two thirds in retirement funds. Which would sound a lot more impressive if the total wasn’t just $14,000. For debts, 79% is my student loans. My old credit card makes up 9% and the rest is mostly medical-related debts, plus a loan car payment left!
Sounds like a smart move to limit the cash and get rid of the debt first. Once the car payment is gone and the card paid this year you should improve quickly.
Hi, I would like to mention that every month I put aside a considerable portion of my wealth as post retirement savings. Do you think its worthy to put in real estate further as I was considering that option as well?
Hi Tom, I like real estate because you can generate a passive income based on the value of the house and not only on your deposit. If you can buy a $100,000 house with $20,000 down and a $400 mortgage but rent it for $600 for example, you have $200/month on $20,000 invested. That is a better return than most stocks because you leverage your money. It has its risks obviously (damages, vacancy…) but it is a great way to build wealth faster.
My assets are in my condo, my RRSP/TFSAs, other stock investments and some cash. I have no idea what the breakdown is but most of it is locked up in my condo.
that is usually how it goes under 40, then it weights more towards retirement.
This is really helpful! I will definitely look at my own breakout in July, after I have paid all my consumer debt. Right now, almost all of my assets are in my retirement accounts. I will be changing that this summer as I take on new ventures.
It is an interesting exercise, at least to determine goals and not have all your eggs in the same basket.
Investment in real estate has to be done after taking sufficient expert opinion. Whether is it a good time or a good location take an informed decision.
Pauline, our wealth is in (without proportions but will summarise these at the end): the house we live in, apartment in Sofia, cash ISA, HouseCrowd investment (real estate), saving account, retirements funds. Four years ago when I looked at that, I found we suffer from the British malady – all out money was in non-income generating property and pensions. Have been changing this ever since so now we also have quite a bit of liquidity (for opportunities).
I was a little bit surprised that you have 0% for retirement but then your explanation about it really made sense…Thinking bout adjusting my plans now about it…haha
Most of our net worth is in the stock market, split up between retirement and non-retirement accounts. We also have equity in my wife’s house. My house, which is a rental is underwater. I’m hoping to turn positive later this year on it.
When I was a kid Pauline, I kept my money in an envelope taped to the bottom of a kitchen shelf, or in an envelope at the bottom of my toybox, inside of an old sock in the bottom of your sock drawer. Now my wealth is in stock market, emergency fund, and banks.
Real estate is something I’d like to get into as an investment. Sure I have my home but thats not an investment it’s only to avoid expenses like rent etc. My wife and I have been thinking about buying a student rental house. We’d need a bit more cash and a lot more research but its an interesting option for building wealth.
Real estate for me is next. Three years ago I decided to play it safe and stay at home, what happened? The market in the GTA (Toronto) took a $400,000 house and made it $600,000. Needless to say, I need to get out fast before I’m spending a million.
I’m assuming this is liquid wealth. We don’t have any debt, so we own our house outright, two cars, and a motorhome.
Aside from that, we keep about 6 months of living expenses in cash and the rest is invested in the stock market.
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