Where my assets are located

Matt

Matt

Administrator
Staff member


What a great post idea, tell the world where I buried the loot! I read a few posts from around the web recently from these ‘personal finance bloggers’. For those of you who don’t know yet, a personal finance blogger is more likely a person who wants to earn an affiliate check from a finance related product than someone who knows a rats arse about personal finance.

But I do have to admit, these guys post one thing that is super interesting from a voyeuristic perspective: Net Worth updates. These posts show you how much cash they have, and sometimes more, such as where it is coming from or going. I’ve debated doing this in the past myself, but while I’m sure some might be interested, I find it a bit crass overall. Suffice to say, we’re doing OK, but aren’t millionaires yet.

Asset location


Asset location is an interesting thing – it isn’t to be confused with asset allocation. The latter being which asset classes you are invested within a Roth or your 401K etc. Location means whether the money is in taxable, or advantaged and whatnot.

While I’d not like to talk about the amount of net worth, here’s where (roughly) our funds as a family are located:

  • Real Estate 53%
  • Retirement Accounts 32%
  • Cash 6%
  • Investment Accounts 4%
  • Business #1 2%
  • Business #2 2%
  • Automobiles 1%
Why, What, Where?


Very important to understand that when you see another person, you can’t just copy them in parrot fashion, you need to understand the underlying decisions, and the bigger picture. In our case, our asset location reflects the strengths and weaknesses of our broader picture:

  • We’re looking for success from the businesses, but being self employed means that you can go for periods of time without stable income. By putting a lot of money into real estate we get to vastly reduce our monthly expenses.
  • I hate taxes. The retirement accounts have been loaded up because I use them to reduce taxes. By keeping enough cash liquid I can play with annual tax increases as I make partial roth conversions. The goal is to shift 100% of our present traditional IRA/401K holdings into roths. I’m not overly worried about saving for retirement so much as reducing tax, I see the former as almost a side benefit.
The location that I elected creates a more stable foundation from which to take risks. If you listen to some other folk, they might laud the cheapness of debt right now, and the expected returns from the market. There’s truth to that, but also a huge amount of totally unnecessary risk in my opinion.

Incidentally, in the past 12 months or so, I think we have allocated our savings as follows:

  • Retirement 33%
  • Taxable 33%
  • Education 33%
We do get some of the education expense reimbursed, but it is important to note that while others are borrowing to invest in the market, we’d rather save to invest in our own marketability. In doing so we are taking big risks that we can be more useful to people in the future, and see a return on investment.

I’m not suggesting that everyone should open a business (I wish they would but know it is unrealistic) but I am suggesting that when you locate your assets you don’t do it in a way that puts your house underwater, and you don’t forget to keep on improving your skills and marketability through education or training.


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Peridot83

Peridot83

Level 2 Member
When I clicked on this I thought this post would be about tracking your net worth between thousand in VGC, prepaids, Merchant GC, multiple bank accounts, and cash equivalent points, haha. I'm working my way to having a net worth big enough that I can leave more of it out of the float. I'm getting there, though.
 
Matt

Matt

Administrator
Staff member
Barefootwoman said:
Hi Matt,

Do you have any personal finance bloggers to recommend, that do understand PF? thanks
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I generally do not. But the reason I struggle is that often I don't know what personal finance is. Is it only 'the basics' things like budgets at whatnot, or is it something more? What is PF to you?
 
Matt

Matt

Administrator
Staff member
treklectic said:
Maybe you can do a post on your income sources by %, not $? MS, Reselling, job, businesses, etc.
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  • MS = don't track it. I typically just MS a small amount of cash, eg when I happen to be buying groceries I pick up 1 $500 card. The $20 I earn covers a 'quick shop'. I do MS pts for travel.
  • Reselling = don't do it.
  • Job = zero for me, a small amount for the wife (we take out about 50% before it hits our paycheck for her 401K and other bennies)
  • Business 1 (Saverocity) almost nothing. I paid myself about $5000 last year, may do the same this to capture SSI credits.
  • Business 2 - zero, it's starting up now.
I've spent most of the past 1-2 yrs building the new business, in the interim Saverocity was supposed to be a source of somewhat passive income, but in the process I realized that I didn't want to pimp credit cards, so revenue potential dropped significantly. However, I think that it is more important to do things right, and not get wrapped up in the conflicts of interest that come with being a 1099 contractor for these firms.

My hope is that the time and money investment made in building the foundation for the business will create future income sources.
 
Barefootwoman

Barefootwoman

Level 2 Member
What is PF to you?

To me, it covers the basics of managing income vs. spending, understanding the basic rules of credit (cards, mortgages, loans, etc ), taxation issues, issues surrounding different types of insurance, how to grow savings via different types of investments to achieve any number of financial goals, discussing risk vs. reward, etc and includes a discussion of best practices and tips... this is off the top of my head, lol

There's only one I currently follow - the finance buff dot com - always on the lookout for others that are informative.
 
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Matt

Matt

Administrator
Staff member
Barefootwoman said:
What is PF to you?

To me, it covers the basics of managing income vs. spending, understanding the basic rules of credit (cards, mortgages, loans, etc ), taxation issues, issues surrounding different types of insurance, how to grow savings via different types of investments to achieve any number of financial goals, discussing risk vs. reward, etc and includes a discussion of best practices and tips... this is off the top of my head, lol

There's only one I currently follow - the finance buff dot com - always on the lookout for others that are informative.
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Well that's kinda my point.. if you've got one that works, you're good! I've seen that site before, and just glanced at it again now, it looks perfectly fine for achieving the goals you are talking about. I think my issue is that these are pretty much foundational things, so once you cover these basics you describe, where next? This is when you have to go a little further into more technical things.

Personally, I find the posts a little lengthy and sometimes a bit dry, but in terms of technical content - Kitces is excellent: https://www.kitces.com/blog/
 
Barefootwoman

Barefootwoman

Level 2 Member
I subscribe to Kitces by email - some valuable updates, but I skip any articles titled for people in the biz of providing PF advice , thinking they may not be applicable - seems to be his target audience? I've only been subscribed a few months, so not terribly familiar.

I guess when I need to get technical and need help falling asleep :) I pull out any of my Bill Bernstein books.
 
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