What Are You Worth?

chucknorris

somethingcorporate wrote: »

It's a tricky one because it is also a liability compared to renting as you have the upkeep.

I think it's fine to not consider it as an asset as produces no income when considering "the number" but also when considering net worth it really should be included.

There is nothing 'tricky' about it at all, of course it is an asset! It doesn't produce an income but:

1. It can produce an income if you decide to downsize (or even move in with a partner if circumstances allow) and rent it out or sell it and invest the money.

2. If you don't own outright you either have to pay rent or a mortgage, saving on outgoings can be just as important as income.

ozzage

somethingcorporate wrote: »

It's a tricky one because it is also a liability compared to renting as you have the upkeep.

I think it's fine to not consider it as an asset as produces no income when considering "the number" but also when considering net worth it really should be included.

I think you should consider it producing an income equivalent to whatever you'd pay in rent to live otherwise. That's the reality.

As somebody paying rent, I find excluding a paid-off home from your figures a bit illogical!

gadgetmind

I don't include my house as I want to have a retirement plan that doesn't require me to downsize. If I choose to do this some time, so be it, but I want to decide whether and when.

Doshwaster

Age 40-ish
Salary: £42k
House: £90k owing on property worth £160k (47%)
Pension: £55k (37%)
Cash ISAs: £10k (7%)
Shares ISAs: £14k (9%)

chucknorris

gadgetmind wrote: »

I don't include my house as I want to have a retirement plan that doesn't require me to downsize. If I choose to do this some time, so be it, but I want to decide whether and when.

Whilst I understand what you are saying, the thread title is 'What are you worth' and owning your home outright is part of your worth (as is any equity after allowing for disposal costs).

It is of course up to you decide what you want to count in, but you can't argue that all your equity is not worth anything.

ozzage

gadgetmind wrote: »

I don't include my house as I want to have a retirement plan that doesn't require me to downsize. If I choose to do this some time, so be it, but I want to decide whether and when.

To me, it's about how much more you'd need without it. If you would otherwise need to pay £1000 per month in rent then you'd need another £300,000 in your pot!

You obviously have a good handle on what you're doing, but I think more generally people should include this in their calculations to get the most accurate idea of their circumstances.

gadgetmind

ozzage wrote: »

To me, it's about how much more you'd need without it. If you would otherwise need to pay £1000 per month in rent then you'd need another £300,000 in your pot!

Agreed, but by not including house in assets, and not including rent in outgoings, it all balances out.

I guess people could include house as part of investment pot and drop in a hypothetical rent, or maybe just include the part of the house value that they are confident they could achieve when downsizing.

As long as you're consistent, I guess all of these can work.

What doesn't work is including your entire house as a retirement assets; where are you going to live, in a box?

vectistim

I didn't include chattels (car, furniture, stuff, etc), but I did include the net value of mortgaged properties - but then I don't live in them.

Doshwaster

You can be sure that if you were ever in financial trouble and with a big bill to pay a court would certainly count your property as one of your "assets".

atush

60% property
31% pension
5.5% cash
3.5% investments