What do I look for in a net worth tracker app?
Anyone wishing to track their net worth will ask at least one of the following:
Lots of financial apps focus on budgeting or investment tooling and provide a “net worth” feature; however, it does not truly cover all the above aspects/questions. Let’s have a look at them with more details.
What is my net worth and how can I track it?
Net worth math is simple: we need to sum up everything you own (assets: property, investments, bank accounts, etc.) and subtract everything you owe (liabilities: mortgage, debts, loans, etc.); the resulting number is your net worth.
If we categorize assets by convertibility (how easily assets can be turned into cash) it will fall into 2 categories:
- Fixed assets that are generally held long term (more than a year)
- Liquid assets that can be converted to cash relatively quickly and easily
To calculate your current net worth, you will have to evaluate both liquid and fixed assets as well as all your liabilities. One off calculation can be done manually, but if you wish to track net worth periodically – some tooling will be needed.
There are no net worth tracking apps that can fully automate tracking all your assets and liabilities without manual input for updates. For mobile users the most convenient approach will likely be to use two mobile apps:
- net worth tracker app with manual updates
- all-in-one portfolio tracker app that updates values automatically
All-in-one portfolio tracker apps (for liquid assets)
To track all your liquid assets, you could use all-in-one portfolio tracker apps (find apps comparison table here). This suits perfectly for summary valuation updates of your investments like cash in different currencies, cryptos, ETFs, mutual funds, bonds, commodities, etc.
The value of these assets could change quickly and substantially, so a portfolio tracking app will alleviate you from the need to re-calculate net worth’s liquid assets bit manually. Also, you could get extra features like benchmarking, monitoring, news, analysis, and others which might be very useful if you want to optimize your net worth growth.
Our own TotFin iPhone app is created exactly for that purpose:
Net worth tracker apps
Technically you could also use simple Google Sheets template where you’d need to do only once-in-while updates based on your portfolio tracker summary and latest fixed assets and liabilities values.
Note: there are also quite a few budgeting apps that claim to provide net worth functionality. These apps track expenses transactions and monthly income which might be useful tool to discipline yourself with spending and save money, however, in pure net worth context we consider that as dismissible.
How do I compare with others in my age group?
For whatever reason sometimes this question is an elephant in the room. We believe there is nothing wrong with it and the answer depends on your residency. Here is an interesting net worth comparison data for different countries:
- US: median and average net worth by age
- UK: household net worth by age
- Euro area: household wealth
- Canada: median net worth by age and family
- Australia: household wealth
- Global: median and average wealth per adult by country
How can apps help me optimize my net worth growth?
As covered previously, your net worth consists of liquid assets, fixed assets, and liabilities.
Net worth tracker apps help you to visualize your current financial situation and could influence or even motivate you to execute a net worth growth strategy.
Depending on your personal situation you might decide to:
- Utilize your liquid assets – increase return from your investments. Portfolio tracker apps or dedicated investment analysis and screening apps are there to the rescue. If you haven’t yet started investing – ETFs are the perfect instrument to do so (unlike mutual funds it doesn’t incur management fees, are diversified, traded in stock exchanges, and do not require any special investing knowledge like fundamental or technical analysis).
- Reduce liabilities – pay off your debt. Low interest rate mortgage might make sense, but as a rule of thumb loans and credit should be targeted to be paid off as early as possible. A number of budgeting apps can help planning for that.
- Fixed assets strategy – plan for longer term investments. For larger net worth distribution, real estate generating passive income might shield some of the investment risk exposure (real estate vs stocks). If you decide to explore real estate investment, these apps might be helpful.
What net worth do I need to retire?
535,134.92 Euros! Sorry, it’s just a made-up number 🙂
You will have to determine what is your required retirement income which in turn depends on your personal needs and residency.
Retirement calculators could help you to establish more tangible numbers (what retirement income product are you considering, what are your other sources of income, what are your state and private pensions, etc.).
Worth noting that net worth does not directly translate to retirement income, however it can serve as an indicator. For example, what annual income you could get through annuity products if non-essential portion of your net worth is used for that.