How much of your wealth is from capital gains?
I have done a great job saving, but a terrible job investing (I think). I’ve let money sit on the sidelines rather than plowing into the market. I always think valuations are too high, I didn’t go all-in during corona and I’m still sitting on a decent pile of uninvested cash.
I’m 3.5 years out of college with a net worth of around $183k (before my 2020 bonus hits my account, will be $230k after). Only $34k of that $180k can be attributed to capital gains or interest income...
I’m curious if anyone else tracks this number, and if so, how much of your wealth is attributed to capital gains? Any tips on how to be more confident next time there’s a once-in-a-decade buying opportunity? I’m really struggling with the fact that if I bought some tech stocks in April I could have nearly hit a mil at 26
It's not too late to HODL in Bitcoin
Forgot to mention I welcome comments from everyone except for that one guy who buys E-commerce businesses in the Micro-cap PE space
Haha what did he do to you?
He seems like a good guy, just tired of hearing the story of how he made a mil
Not sure how it’s not higher just last 2 years market is up like 50%...
so yea around 40-50%
If market is up 50% over the last two years and 40-50% of your net worth is from capital gains, that would imply that you invested 100% of your net worth two years ago and haven’t saved a penny since.
That’s why I’m asking about the actual dollar number of capital gains as a % of total net worth. It’s a different calculation because you’re contributing money at different times
Lol I was giving a high level response. But it would certainly not imply that. Love when kids try to get quantitative but are woefully wrong. Firstly What you’re saying also implies 0% capital gains prior to the last 2 years. Read what you wrote again. Also if you saved 100% and market is up 50% since, that would only drive 33% from cap gains (100->150, with 100 from savings).
saved some invested some, cap gains up a lot over last 4-5 years, so I’m guessing it’s 50/50
The way to defeat that voice in the back of your head is to get a plan together, and then stick to it. Figure out how much cash you are comfortable having, how much you want invested and then what your risk tolerances are with your investments. That is what will give you the confidence to execute when things happen.
Also - don't do the 'if only' game. It's fun to think that you'd have retired if you bought BTC at $4k in the depths of the march crisis with all your spare cash, and in hindsight it's genius. You always wish your winning positions were larger, and your losing ones smaller. Combat that with process. I'd also be realistic with how much you'd invest in any one thing - I mean, sure, If you just have a massive risk tolerance maybe you'd be retiring but more often than not even a few hundred percent winners won't retire you. I might be MS'd for this, so be it, but comparing your own gains to others is just going to emotionally wear you down to make bad decisions - maybe it's motivating, but more often than not it just pisses you off.
My personal view? 95% of people will do best by simply saving as much as possible and plowing it, consistently, into a diversified portfolio. It's the sad, boring truth. Max everything you can in retirement accounts, HSA's, Roth IRA (most can't on this forum after a few years or even a year or two). Carve out a portion - say 10% or whatever you want - and use that to speculate, trade, whatever. That's the type of money that when you see a massive correction, you take a few flyers and see what happens.
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