I always find this interesting and there’s not statistics on this. Obviously these results will be above average since this is an investing forum! Everything is anonymous. Doing one for the the platform as a whole and one for each age group.
Net Worth = Total Assets (things you own- cash, investments, current property value) - Total Liabilities (debts e.g. mortgage, student loans, credit cards)
Net worth includes absolutely everything, home equity is asset, mortgage and student loans are liabilities etc. It usually isn’t too hard to calculate unless you have money and debts scattered everywhere, I’ve started tracking my own net worth recently which I think everyone should do as it makes an amazing graph!
I’d assume a lot of people would be negative, surely it’s normal to be on debt up until 30? I’m -£20,000 right now, and haven’t even got a mortgage yet.
I would do this as what is the total of net assets. So if you have 100k in a house but 300k mortgage on it I would say net worth is 100k as the loan could be easily repaid if property sold. Otherwise most people with decent houses will have big negative numbers as I might have 1m cash but 1.5m mortgage on a house making me negative 500k which seems a bit weird. These are all made up numbers obviously haha
Are some people including debt, or mistaking the negative for an approximate squiggle, probably because the numbers are the wrong way round if negative?
most people will be negative to some tune, due just to mortgage/rent and student loans. then there is also all the liabilities of “assets” like the family car, car2/car3. anyone who is new to owning a nice home and fresh out of uni/college will almost certainly be in the heavy negatives. my mortgage alone puts a hefty dent into my net worth calcs, it hasn’t been re-evaluated and about £20k has gone into home refurbs, my student debt is about £24k as well.
People may enjoy reading this FCA report from 2019. It contains many surprising bits of data. Such as
For under 50-year olds, average net financial wealth is less than £1,000, with the top quartile having wealth of £15,000. Net financial wealth peaks in the late 60s, with average wealth of £22,500 (or £74,000 for the top quartile), but the bottom quartile having less than £2,500.
Wow! I did not expect this … I would expect a lot of people in their 20’s to have less than £1,000 of net worth but not someone as old as 30’s or 40’s.
I guess a lot of it comes down to how socially acceptable it is to be in mass amount of debt now and how easy it is to over leverage yourself … I remember in 2007 when I bought my first house there were mortgage companies offering up to 110% LTV which is just mental! Also no wonder the housing market crashed with antics like that!
Isn’t the assessment of mortgages vs equity incorrect as you’re ignoring the asset value?
If I’ve read it right you’re counting equity but not asset value so say £100k mortgage with £20k equity then you’re saying that is net worth of -£80k which ignores that the property value might be worth £80k, £100k or even £120k. The asset value makes quite a difference!
£80k property value gives a net worth of 0
£100k gives net worth of £20k (not -80k)
£120k gives net worth of £40k
I wouldn’t consider student loan as a liability though, they’re a bit different to traditional loan, here in the UK you only pay them back after you exceed certain income threshold, and they get written off after 30 years. But I still considered them when doing the poll since they’re the guideline
just include how much everything you own is worth and take away everything you owe.