Wednesday 4 August 2010

Comparing my net worth with that of other PF bloggers

I used to do a monthly summary table of the NW of the various bloggers who posted this data each month. Many of the bloggers were not directly comparible - some were paying off debt/student loan, some were retired, and many were just starting out to accumulate wealth. Although it was a fair bit of work each month, the post was popular - so popular in fact that other bloggers started to do something similar. So I stopped doing the monthly comparison (I think the other blogs then also gave up after a few months...), and now mostly compare my progress against statistical data on income and household net worth (such as from the Australian HILDA reports) and the cut-off for the BRW's annual "rich list". I also compare my NW to that of Moomin, since he is of similar age, income, etc and investment risk tolerance to me, and he tracks his NW each month using NetWorthIQ ;)

I recently did a comparison of my NW over the past decade with that of PFBlog. His NW is currently very similar to mine, although he is younger (~35 vs ~48) and started from a lower base (~$50K in 2002 vs. ~$400K in 2002). I'm not too surprised that his NW is overtaking mine, as he indicates most of the $950K NW accumulated over the past decade is a result of saving around 30% of their gross income each year (he comments that he has had negligible overall investment return during that period). That suggests his household income is around $317K pa, whereas ours is just over $100K.

What is rather disappointing (and shows up clearly in the chart below) is the huge drop in my NW during 2008-9 compared to PFBlog. Clearly using margin loans to gear up my stock portfolio was *not* a good idea in the GFC era. I also had to reduce my gearing levels in the second quarter of 2009 (to avoid margin calls), so the rebound in my NW over the past year has been more subdued than it would have been if I'd been able to retain my level of margin loan debt.

It will be interesting to see how the NW of myself, Moomin and PFBlogs compare during the 2010's - and whether PFBlogs retires by 40 as he originally planned. My target retirement age has slipped from 58 to 67 due to the GFC, but could change again depending on how the economy performs over the next couple of decades.

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