A Net Worth Tracker That Incorporates Your Investments in Real Time
Tracking your net worth can be challenging if you’ve built a diverse investment portfolio. Sure, if you have a money manager, they can take care of it, but what about the rest of us?
We have 401Ks, IRAs, bank accounts, stock accounts, real estate, intangible assets – the list goes on. How can you keep track of the total value of all your different assets?
The solution is automated, real-time net worth tracking software. No need to dig through data and documents just to find out what you’re worth. After a little up-front setup time, you can kick back and let the software take care of it – while you watch your wealth grow over time.
Naturally, we recommend using the net worth tracking features of our Stock Market Eye software. In this article, we’ll look at how to accurately calculate your net worth and how net worth tracking can help optimize your investment activities.
How Do You Calculate Net Worth?
Net worth is the sum of all your assets minus your debts and liabilities. Your net worth is the value of everything you own (and owe) into a single number to let you know where you stand financially.
Defining Your Assets
Assets are what you own. They include real estate, cash, and investments. Also included are non-quotable valuables such as art, jewelry, collectibles, cars, and even clothes or handbags – basically, anything you own that you could convert into cash.
That includes intangible assets like patents, copyrights, trademarks, and other intellectual property. Of course, objectively, it’s more difficult to assign value to these things. Still, they’re an essential component of the total net worth calculation.
Defining You Liabilities
Liabilities are what you owe, including bills, loans, and debt. It also includes business debts, mortgages, student loans for your kids, and anything else that might have you on the hook. These things balance and detract from your assets.
There are intangible liabilities as well. Any open contractual obligations that you’ve made lie here. Let’s look at a landlord of a property, for example. The rental income is offset slightly by an HVAC system that may need replacing down the line.
Net Worth Calculation Formula
Once you have tallied your assets and liabilities, you can easily calculate your net worth using the following formula:
Assets – Liabilities = Total Net Worth
It seems simple, of course, but equations are only as good as the numbers you plug into them. In this case, the challenge is ensuring the numbers for assets and liabilities are accurate and up to date, which we’ll look at next.
Two Ways to Track Your Net Worth
There are two main approaches to net worth tracking: manual and automatic.
Manual Tracking
If you have a lot of free time and love using Excel, manual tracking might be the right approach. In this case, you assemble all your statements and reports, then manually input net worth data into spreadsheets.
Remember, it’s imperative to input your data correctly, so make sure to double-check everything. That might seem tedious, but it’s essential for producing accurate results. If there are errors in your data, the entire process becomes worthless.
Next, you can use the various mathematical functions built into Excel to calculate numbers and generate reports based on your data. Using Excel functions effectively requires research and expertise, but most of that information is freely available online.
Automatic Tracking
The second option, which is the best one for most people, is to use an automatic net worth tracking system. It works better if you lack the time, interest, or expertise to do this process manually.
Here are a few key benefits associated with automatic net worth tracking:
- Automatic trackers keep you organized. Rather than trying to track down reports and statements every month, you just need to set up your tracker to ingest this data automatically. Every month, it will go out and grab all the data you need to keep your calculation up to date.
- Automatic trackers are more accurate. These systems collect data directly from the source – without the opportunity for human error. Some assets (e.g., real estate, jewelry, art, etc.) must be input manually as non-quotable securities, but this happens infrequently. Monthly, weekly, and daily data ingestion events occur automatically after initial setup and account linking.
- Automatic trackers save you time. There is no need to spend hours becoming an Excel wizard or compiling statements and reports late at night. Just set up your system and let it do its job while you do better things with your time.
A Net Worth Tracking App Helps You Grow
So, you know how to calculate your net worth and how to track it effectively. But what’s the value of having a real-time net worth calculation?
First, knowing your net worth is vital for establishing goals. You can’t set a future goal if you don’t have a starting point. Just as you should get a medical check-up before beginning an exercise program, a financial check-up is the first step toward growing wealth.
Next, it’s just nice to know you’re making progress. Progress can be tough to notice for long-term investors in the short term. A net worth calculation can objectively demonstrate that your discipline and sacrifices are inching you closer to your long-term financial goals.
Finally, it can be an important part of a loan application, prenuptial agreement, investor solicitation, or other legal situations. As we pointed out, it can be difficult to generate this figure quickly and accurately. Better to have it ready at all times – just in case.
Start Your Trial of Our Free Net Worth Tracker Today
We hope you have a better idea about how net worth tracking can give you valuable insight into your financial situation. Of course, you can always do this manually, but if you lack the time and inclination to spend time tinkering with spreadsheets, give an automatic tracker a try.
You can automatically import bank accounts, brokerages, and investments from hundreds of places. You can also manually input the value of non-quotable and intangible assets, so you have them all in one place.
If you’re interested in trying out Stock Market Eye’s net worth tracking features, we offer a risk-free trial. Find out if our software is right for you!