Your Financial Freedom Starts with 8FIGURES

Do you know your net worth? It’s equal to the sum of all your assets (that you own) minus all your liabilities (that you owe). You can’t improve what you don’t track.

Net Worth is equal to the sum of all your assets (that you own) minus all your liabilities (that you owe).

On the asset side, you might have some of the following exposures in your portfolio:

  • Cash
  • Stocks
  • ETFs
  • Mutual Funds
  • Bonds
  • Crypto
  • Real Estate
  • Startups
  • Employee Stock Options (ESOP / LTIP)
  • VC / PE Funds
  • Cars / Vehicles
  • Private loans

On the liabilities side of your portfolio, you might have:

  • Mortgage
  • Consumer Loans
  • Accrued Taxes
  • Charity Allocations

Many investors argue whether your primary residence should be treated as an investment and therefore included in your net worth calculation. Since the nomad lifestyle has become more popular recently, more people than ever move to a new city or even a new country and sell or rent out their real estate.

Therefore, not including your primary residence in your net worth calculation will lead to a material underestimation of your net worth and a lack of clarity on your net worth performance towards your financial goals.

Consider the following example: your stock portfolio is up 30%, but at the same time the value of your home is down 10%. Despite the stock gains, your net worth might be down due to a significant share of your home value in your portfolio and the leverage effect via a mortgage (please see a blog post on real estate leverage).

It’s important to separate the impact of net portfolio gains vs savings (salary minus living expenses) on your net worth growth. Consider $1m net worth growing to $1.2m within a year. If there were no savings added throughout the year, the true portfolio performance was 20%. However, if savings during the year amounted to $50k, then the true portfolio gain was only ca.15% (assuming for simplicity that $50k savings were added to the portfolio at the year-end).

You can’t improve what you don’t track. As with other goals, achieving financial freedom requires a long-term plan, annual targets, and progress tracking.

NetWorth_graph_in_8FIGURES_App

8FIGURES app enables you to track your net worth towards your financial goals. Once you link your accounts and add all other assets and liabilities into the app, your net worth will update automatically each time there are price/value movements in your portfolio.

You can add your historical net worth and savings progression to see the chart with your true portfolio performance historically (excluding the effect of savings) which could then be compared to market benchmarks (e.g. S&P).

You can also build a simple forecast to understand what target portfolio returns and regular savings are required to achieve your financial goals.

Financial freedom is accessible to everyone. Set your net worth goal and start tracking your progress in the 8FIGURES app.

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