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Net worth

What is the net worth of CFA candidates or charterholders … defined as financial assets (excluding residence) minus liabilities ? Wud $1.5 million net worth be considered high?

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very high

Thanks for defining net worth.

Are you looking for the mean, median, mode, minimum, maximum … ?

Simplify the complicated side; don't complify the simplicated side.

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Huh? This depends on age, job, location, and so many other things…

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- Everyone

        Are you looking for the mean, median, mode, minimum, maximum … ?

Median or mode due to skewness of distribution. 

Why would you exclude most people’s largest asset?

Why do you care? Go get a hobby bro

I gender Identify as a Chair. People say to me that I’m ****ing retarded but I don’t care, I’m beautiful. If you can’t accept me you’re a Furniturephobe and need to check your furniture privilege. Thank you for being so understanding.

lord of pensions and pilsner wrote:
Are you looking for the mean, median, mode, minimum, maximum … ?

Median or mode due to skewness of distribution.

In that case, USD1.5 million is way too low.

If that’s all you’re worth, perhaps the CFA designation isn’t for you.

wink

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

current goal is to hit $1m by 35.

my lifetime goal  is to hit top 1% of the us. prolly $10m, which coincidentally is where the estate tax is when married.

I love my cheese. I got to have my cheddar.

im at 1.3 mm and Im 33. come at me bros.

i would be so happy if I could get my net worth up to zero…

Is $1.3 million supposed to be good or bad? I seriously don’t know. 

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- Everyone

ohai wrote:

Is $1.3 million supposed to be good or bad? I seriously don’t know. 

The average american earns something like 1.6 over a lifetime. So that would be high.

I gender Identify as a Chair. People say to me that I’m ****ing retarded but I don’t care, I’m beautiful. If you can’t accept me you’re a Furniturephobe and need to check your furniture privilege. Thank you for being so understanding.

ohai wrote:

Is $1.3 million supposed to be good or bad? I seriously don’t know. 

It totally depends on age. If you’re asking how much wealth does the average Charterholder die with, or have in late retirement, for sure it would be multiples of $1.3M. I’ll guess … $4M. But that’s median. A few will be $1B, and many will be $10-$100M. But I think there’s a long tail of folks who just plowed away making $200k their whole life, and spent most of it on family stuff, but have a $1-2M house.

For 30-something Charterholders globally, I’ll guess net worth is under $250k US.  Not everyone is a NYC I Banker. 

cj4g wrote:

Why would you exclude most people’s largest asset?

Because it’s most people’s largest liability.

And both are very significant parts of people’s net worth. Usually the most significant.

^The actual answer: It’s a huge outlier for the average person so it skews results. You could almost think of a person’s net worth being like a company’s Quick Ratio. You take cash and marketable securities (and accounts receivable, but that just makes the metaphor more confusing) and divide it by short term liabilities. A house wouldn’t fall into either the nominator or denominator. It’s illiquid so not immediately marketable. Or, it’s a long-term liability. 

By removing it entirely, you get a pretty clear picture of that person’s current financial well-being.

If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

^agreed with ohai. house counts.

I love my cheese. I got to have my cheddar.

ohai wrote:

If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.

..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.

Gone fishing...

It is also good to have a big gold chain around the neck. If something happen you can sell it and pay an attorney. This chain (about 2-3 kg) is also a liquid asset.

Gone fishing...

Yes, if you have a large gold object with significant value, you should include that in your net worth. What are you saying?

“Visit the Water Cooler forum on Analyst Forum. It is the best forum.”
- Everyone

ohai wrote:

Yes, if you have a large gold object with significant value, you should include that in your net worth. What are you saying?

Net worth of ohai < Mr. T

Hold liquid assets only, easy portable especially if you live in turbulent area. Otherwise, your net worth in the form of RE may suddenly deteriorate. If something happens, cut & run away. And it’s good to have a supply of canned food and water, may be worth more than everything under some circumstances.

Gone fishing...

Sweep the Leg wrote:

^The actual answer: It’s a huge outlier for the average person so it skews results. You could almost think of a person’s net worth being like a company’s Quick Ratio. You take cash and marketable securities (and accounts receivable, but that just makes the metaphor more confusing) and divide it by short term liabilities. A house wouldn’t fall into either the nominator or denominator. It’s illiquid so not immediately marketable. Or, it’s a long-term liability. 

By removing it entirely, you get a pretty clear picture of that person’s current financial well-being.

You’re basically saying that all other things being equal, renters are worth more than homeowners. While I agree that they are certainly more liquid, I disagree with the idea that buying a house hurts your net worth and hurts your financial well being. 

yea i dont understand why people continue paying an underwater asset. at that point, i would stop paying, and live for 1 year free of rent. lol. 

some people may say this is immoral. but the banks know whats up. we’re all willing players. the banks know what collateral means, they shoulda asked for more dp. charged a higher rate, etc.

Flashback wrote:

ohai wrote:

If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.

..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.

I love my cheese. I got to have my cheddar.

Flashback wrote:

ohai wrote:

If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.

..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.

Well if you’re not counting home related assets or liabilities then you’d never know that the guy who is upside down on his mortgage has a -$4 million net worth.

cj4g wrote:

Sweep the Leg wrote:

^The actual answer: It’s a huge outlier for the average person so it skews results. You could almost think of a person’s net worth being like a company’s Quick Ratio. You take cash and marketable securities (and accounts receivable, but that just makes the metaphor more confusing) and divide it by short term liabilities. A house wouldn’t fall into either the nominator or denominator. It’s illiquid so not immediately marketable. Or, it’s a long-term liability. 

By removing it entirely, you get a pretty clear picture of that person’s current financial well-being.

You’re basically saying that all other things being equal, renters are worth more than homeowners. While I agree that they are certainly more liquid, I disagree with the idea that buying a house hurts your net worth and hurts your financial well being. 

That’s not at all what I was saying. I was just explaining why homes are left out of many net worth calculations. 

I’d add the home equity to all other (assets - liabilities) to calculate net worth.

#ButThatsMe

Flashback wrote:

ohai wrote:

If I have a $20 million house and $1 million cash, that is a lot better than having $1 million without the house.

..and $25 M mortgage liability. Net worth = negative. If you don’t have a family, rather hold cash and liquid assets and rent a house or an apartment. You may also easy transfer your wealth and run away from current location if necessary.

If anyone has a 25MM mortgage then at 4% rate the person is paying $1.4MM a year on mortgage which means he is making a bank.  Anyone who makes over $2MM a year on a consistent basis to secure a loan like that is worth millions and definitely in the top 1%.

If you actually build a “model” that compares “rent vs ownership’ it becomes very very clear that hands down owning a home is infinitely beneficial compared to renting.

Be yourself. The world worships the original.

infinitybenzo wrote:

If anyone has a 25MM mortgage then at 4% rate the person is paying $1.4MM a year on mortgage which means he is making a bank.  Anyone who makes over $2MM a year on a consistent basis to secure a loan like that is worth millions and definitely in the top 1%.

That’s normal situation in many countries maybe is not usual in yours. It is not easy to get mortgage loan on some emerging markets and it is expensive source of financing and is often overcoraterallized. It is often situation for mortgage borrowers on emergings that must enter into loan in currency other than domicile and are exposed to currency and floating IR risk over long term. There are mortgage with expiration of 20-30 years.

infinitybenzo wrote:

If you actually build a “model” that compares “rent vs ownership’ it becomes very very clear that hands down owning a home is infinitely beneficial compared to renting.

Maybe if you have family thus home would be an inheritance for your children. Or your home is in attractive area, has its residual value which may appreciate as time passes.

What if you purchased home in not so attractive area which cannot be easily sold and you changed your mind but still have an expensive mortgage debt?

What about property taxes? What about maintenance costs which may be partially covered by some rent contracts.

What if your job description consider frequent migration, even outside of your domicile country. 

Owning home is still attractive vs renting in each situation?

Gone fishing...