My net worth increased from $883,575.44 to $1,174,539.92 from 12/31/16 to 12/31/17. In 2017, my net cash inflow (from active income less expenses) was $103,752.82.
Organic growth = ($1,174,539.92 - $103,752.82) / $883,575.44 -1 = 21.19%.
Inorganic growth = $103,752.82 / $883,575.44 = 11.74%.
Total net worth growth = 21.19% + 11.74% = 32.93%.
Total net worth growth = 21.19% + 11.74% = 32.93%.
Organic growth corresponds to growth in my net worth from interest and dividends (passive income) and capital appreciation without infusion of new money; inorganic growth corresponds to growth due to new money infusion.
Ideally, I would like to see my net worth increase primarily from organic growth, to be sustainable in the event I no longer have earned income. My return was satisfactory in 2017, with organic growth significantly exceeding inorganic growth, which is a good sign of better things to come. When organic growth far exceeds inorganic growth, my money would be working for me instead of myself working for money. In fact, if it ever comes to a point that inorganic growth contributes less than 1% to my total net worth growth, it might not be worthwhile to work for money anymore.
My liquid net worth of $977,987.46 is currently 83% of my net worth. My net worth is comprised of 3.3% cash, 1.3% bonds, 72.3% stocks, 16.7% tax-deferred retirement account (essentially all invested in stocks), 6.6% in Roth IRA (mostly in stocks), 1.2% gold, and -1.4% debt. My retirement accounts make up 23.3% of my net worth. My leverage is 101%, which is extremely conservative. This will give me some flexibility to increase leverage when the next bear market comes.
The chart below shows the growth of my net worth since 2011 (when I began tracking).
The chart below shows the growth of my net worth since 2011 (when I began tracking).
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