Jan 24, 2011

Calculating Your Personal Net Worth

My New Year's resolution was to tidy up my financial matters. So far, I've been making good progress. Among other things, I reviewed my insurance policies; closed two useless bank accounts; switched to a better online funds distributor; switched to a better mortgage package charging lower interest; engaged a financial adviser; opened a trading account; rebalanced my wife's investment portfolio and redeemed all my credit card points.

I realise that financial planning is not exactly the most exciting topic in the world. However, it is a highly practical topic and therefore it's very much worth knowing something about it.

Today, just for general educational purposes, I'm going to explain how to calculate your personal net worth (that really means - how rich or poor you are).

If you want to be very exact, this could be a rather tedious exercise. However, for most people, it works fine if you just want a "big picture" snapshot of your current financial condition.

Step 1. List your biggest fixed assets, such as your apartment and your car, at their current market value.

Step 2. List all of your financial assets, such as your cash savings, fixed deposits, shares, unit trusts, CPF balances etc.

Step 3. List any other possessions which you might conceivably be able to sell, if you needed the money. Gold and other jewelry, for instance.

Step 4. Add together all of the above, and you get your total assets.

Step 5. Subtract all of your debts, such as your mortgage, car loan and credit card balances, from your total assets.

And there, the result is your net worth. An instant snapshot of how rich or poor you are, today.

That should start you thinking about how you can improve your financial condition. Sometimes there are ridiculously easy ways to cut a few expenses or make a bit more money.

Keep your spreadsheet or that piece of paper somewhere safe. One year later, do this exercise again. Hopefully, you'll find that you've grown richer. Good luck.


Laremy said...

Hey man, out of curiosity, which online funds distributor did you switch to and why?

Wayne K said...

I would set a value of 0 for my primary house, vehicle against my mortgage loan/car loan, which is a bit more realistic IMO.

Anonymous said...

I think it would be more meaningful to compare Personal Net Worth vs Your Age.

If one is close to retirement eg late 40s or early 50s and still not have enough hard cash to last for a few years of no income, then it is a real cause for worry.

Especially for the singles or those who cannot rely too much on their children.

But if one just started work or is still young, a more meaningful measurement will be amount of savings per month rather than total net worth. Because you still have time to accumulate.

So it all depends.

Artxy said...

just stumbled across your blog again and am selfishly glad that you're writing again.
all the best

Anonymous said...

I think one should also consider amongst the assets, how much are fixed or liquid. Having a high percentage of your net worth locked up in fixed assets e.g, house, may not be necessarily a good thing when you consider that it may not be easy to sell if off, more so when it's where you house your family.
I keep a spreadsheet of my net worth, plus keeping separate sums for cash and near-cash assets to see that I keep a relatively comfortable level.

Rey Abisan said...

Last year was kinda a bizarre year for the mortgage market. In the first half of the year, you had a decent number of home sales keeping mortgages for purchases stable, thanks to the home buyer credit. In the second half of the year, that changed as demand crumbled when the credit was withdrawn. At the same time, you had very low mortgage interest rates throughout much of the year cause a mini-refinancing boom. 2011 will look very different, as the housing demand continues to struggle and mortgage interest rates have begun rising.

mr wang said...

Hi Laremy,

I switched from Finatiq to Dollardex.

Finatiq is quite inferior now, compared to its competitors. I feel that OCBC (the parent company behind Finatiq) is no longer interested in the online distribution business.

Finatiq's sales charges are higher ... they no longer accept fixed deposits ....

Whereas Dollardex has incentives like these:

the larger your portfolio, the cheaper your sales charge;

you can also invest via credit cards, and collect points that way;

wider range of funds.

Anonymous said...

is there any meaningful benchmark of what would be a reasonable net worth for different age group? I know it depends on future expectation of lifestyle, but if there are some reference points, it would help a lot. anyone?

mr wang said...

Okay, some of these tools may interest you:



Anonymous said...


In above report,
Average net worth is US$255488 per adult.
Median net worth is US$30K per adult. Meaning at least half the people are far below the average net worth.

Why like that?

Possible and likely scenario:

1. The top end may have some, but not necessarily many, ultra and super rich foreigners.

2. The bottom end may have lots of very low wage, hence low net worth people, maybe also foreigners or at most PRs only (cannot vote). They also don't mind the low wages.

The middle part may be our local Singaporeans plus some foreigners So not really that bad, hahaha.

The middle and top end (if they are new citizens) will provide PAP the 66% mandate at elections.

So maybe overall not really that bad for PAP, despite the wide wealth gap between median and average.

Heard this joke? When Bill Gates walks into a party, everybody become millionaires based on average wealth! But what's the big deal? Same for the average wealth of Singaporeans lah.

The said...

/// mr wang said...
Finatiq is quite inferior now, compared to its competitors. I feel that OCBC (the parent company behind Finatiq) is no longer interested in the online distribution business. ///

Yup, last I heard, OCBC was trying to sell off Finatiq, if not already sold to a third party.

Anonymous said...

If there are not too many guests, and Bill Gates walks in, everyone could become a billionaire, based on average wealth. Haha.

Did you read? Jet Li has officially confirmed that he is now a Singaporean. Our average wealth has shot up again!

Anonymous said...

mr wang,
regarding the recent divorce case of a high society tai tai, do you have any thoughts to share? I mean legally, financially point of view.
In theory, the money of these filthy rich can last a lifetime, but in reality , may not. Pls share some insight.

Anonymous said...

Maybe Jet Li got citizenship so that he could buy a GCB

Laremy said...


FYI I'm using FSM and thinking of switching.

I've been told POEMS is good too but like you, I've got to force myself to figuratively sit down and sort this out.

Anonymous said...

If you know how, plus some luck,
Singapore is a good place to make good or big money.

Many people of calibre have done it and more will succeed. Of course when they first started they were poor but later they succeed.

This is one reason why our society is so peaceful and stable and the opposition not strong.

Because people of calibre made lots of money so of course they don't want to be the opposition. So the opposition is not strong due to not enough people of calibre to support it and also not enough money.

Quite a vicious cycle for the opposition because it is difficult to break it. That this has been so for the past 45 years is testimony to this.

Anonymous said...

But Francis Seow was the Attorney-General of Singapore. That's the second highest position in the civil service, after the Chief Justice's position.

Anonymous said...

Well, obviously he was a man of calibre, but he still didn't make money.

Men of calibre who join the Opposition are dangerous. They must be bankrupted through PAP defamation courts, so as to weaken their ability.

Anonymous said...

Men of calibre who don't make money means they do not really use their talent in a practical way. Which means they are also not really smart by being street wise.

In Singapore context you are even viewed as of not much talent, unfair though it may be for some but most likely actually true too, for many.

For instance, what is the chance of an ordinary Joe earning $2K or even $3K per month being selected as a PAP candidate, notwithstanding what other talents that he may have?

Also it will be a headache to choose one because the pool of such people will obviously be very large so there is a need to narrow down by using income as one of the important means to do so. Which is what the PAP did. And the opposition did not, but probably also due to not having much choice.

This partly contributes to the state of politics that we have.

Anonymous said...

Yeah, we are very unfortunate. Lucky Tan recently wrote this:

"Warren Buffett once said that if people are not doing what you want them to do, you do not want them to be motivated or highly talented, you rather have them lazy, incompetent and unmotivated. Do you want leaders who are highly talented at making you cheaper, better and faster? ...highly talented and motivated at increasing the influx of foreigners...highly talented at finding ways like increasing the GST to increase the govt surplus. What is more important to voters is whether their interests will be served by the men they vote into parliament."

Unfortunately, the PAP actually has people of calibre. That is why they have been so effective in hurting Singaporeans.

SMS said...

Personally I think accumulating your person worth is of no use unless you know why you are accumulating them.

Some aim to retire early - say 45 years old.

Anonymous said...

Can retire early is not enough. Must also specify what retirement lifestyle you want.

So if still can make money, continue to make. Then can have more chances of a better retirement lifestyle although maybe just shorter span.

But then that's life. You can't have your cake and eat it too. There is a trade off for all things.

Winking Doll said...

I would prefer to calculate the "Usable Personal Net Worth" rather than the usual "Personal Net Worth" that financial advisors use.

By "usable PNW", I mean the wealth under one's control. E.g. I would exclude CPF monies and any portion of the property value for which I have to return to CPF upon sale. My 2 cents in the url below.

I think that the difference between my modified calculation and the usual PNW calculation methods may partly explain why some Singaporeans seem to be wealthy on paper but they do not feel it.