Net Worth Update - Q2 2022

Net Worth Update - Q2 2022

While cash flow is more important when it comes to financial independence, it's still good to look at the balance sheet too, which is why I provide these net worth updates.  Since more and more of my net worth is tied to the markets, there's a larger correlation between my net worth and the markets, but in the long run as I continue to save and invest the net worth trend should be higher even though short term fluctuations can vary wildly.  As a dividend growth investor I'm not overly concerned with the short-term gyrations as long as the dividend stream remains in tact, but the markets' effect is noticeable.

The markets, by way of the S&P 500, were down 16.5% during the second quarter.  My net worth fared slightly better thanks to continued savings each month and some opportune purchases.

During 2Q my net worth decreased $121,893.88.  

Total Assets: $1,045,995.68
Liquid Assets: $425,256.54
Total Liabilities: -$146,238.24

Net Worth: $899,757.44

During the second quarter my net worth declined 11.9%.  Ouch!  Luckily though year-to-date is not that bad at just a 12.6% decline.

I do believe this downturn in my net worth will just be temporary.  The question though is how long and how deep that temporary period becomes.  Even uglier is that each month during Q2 saw a decline.  We're back to levels not seen since February 2021 for our net worth.

With our non-mortgage debt officially gone as of February 2021 we don't have much of a goal as far as the balance sheet.  So it's stock pile cash for a possible down payment on some land/house or a business venture and continue funneling savings into the brokerage account.

At this time I don't believe it makes sense to pay extra on the mortgage given our relatively low interest rate as well as the tax break on mortgage payments and think we'll come out much further ahead investing the extra cash flow.  So the liabilities side of the net worth equation will be slow moving.  However, once the FI portfolio is able to get to a self-sustaining level of dividends then the plan is to aggressively pay down the mortgage.

As of the end of June we have 33.1% equity in our house based on our purchase price from 2013.  According to Zillow our house has increased in value around $166k from our purchase price which is a nice bonus, although I keep the purchase price as the value in the net worth equations.  I'm not holding my breath on being able to get that kind of sale price in the market though.  Based on Zillow's estimate the equity in our house jumps to 62.0%.

The following chart shows my assets and liabilities, as well as my net worth, since January 2012.  While I have accurate records for my net worth dating back to July 2010, I didn't keep track of my assets and liabilities on a monthly basis until the start of 2012.

In order to give you a general idea of the breakdown of my net worth I include a % breakdown of our net worth with each monthly update.  The assets are broken down into cash, taxable investments, tax advantaged investments (401k, Traditional & Roth IRAs), house (using our purchase price) and other which covers things like our cars and various collectibles from when I was a kid and deeply discounted (they don't really move the needle at all but I have them in my spreadsheet because I was bored).

Since I write so much (or at least try to) about investigating companies as an investment I figured it'd be fun to see how our balance sheet looks.  At the end of June our debt to equity ratio is 16% and our debt to total capitalization is 14%.  

Going forward I plan to only update my net worth after each quarter barring any substantial changes to the balance sheet.

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How did your net worth fare during the market downturn during Q2?  

Please share your thoughts below!