Here's a thought; your investments don't really matter. Your debts don't really matter, nor does your latest stock pick, your truck loan, your mortgage, or your cash on hand...
What it really boils down to... the only thing that actually matters; is your net worth.
When you think about it, your debts will cross out your assets, your loans will cross out your investments... the only thing that actually shows your true financial situation at any point in time, is your bottom line - your net worth. The only number that truly gauges your financial picture.
Do you know what your net worth is? Sadly; mostly people don't. I have an amazing financial mentor who reminds me to update my financial scorecard and monitor my net worth every few months.
I can tell you what mine is right now, 3 months ago, or at this time in 2005. And I can gladly report that it is moving up because of some simple strategies I've implemented.
You see; there is only 2 ways to improve your net worth; that's to either reduce debt, or increase assets. If you focus on doing both those things, then you are increasing your net worth.
Every month, pay down some debt or some of your mortgage, and invest some money. That's creating good cash-flow habits that will inevitably bump up your worth. Some people feel rich because they have $10,000 rotting in their savings account at the bank. Yet they have a $20,000 loan. If that person has no other assets or debts, then their net worth is negative $10,000. They may have the perceived notion that they are 'rich' with their cash in the bank, when in fact they are not only broke, but in debt $10,000 once they calculate their net worth.
Be an intelligent investor. Know your net worth, be aware of it and know how to increase it. Financial statements mean nothing. Making $xxxx means nothing. Losing $xxxx means nothing. I know that's a big statement, but these are simply 'things' and are only a small part of the bigger picture. Don't worry about the small parts of the plan; worry about the plan itself.
-B
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