I get the whole net worth concept, but hear me out

I wanted someone to chime in on my viewpoint on having a net worth;

Yes, net worth is important and the reason we invest is because of that word as it ties to wealth, not being rich. However, as a real estate investor, what’s the point of net worth if you never see it in your account as compared to cashflow that can be reinvested? Although your net worth increases over time, you won’t tap into your equity until you refinance or sell (even if you sell it will be exchanged) which is most likely never so it can be passed on to my kids, so my question is, what is the true value of net worth and how can we make it tangible to further grow our portfolio?

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@Jeremy @vivitron Just wanted to know your input on this as well! Love this platform!

I’m certainly no Jeremy or Vivi, but here is my take. I love your question because it’s interesting to think about. I don’t necessarily view it as either net worth or cash flowing assets. If you accumulate a lot of income producing assets, your net worth will likely be going up at a steady pace. To your point on “reinvested” and further growing your portfolio, as your net worth grows it is implicitly always being reinvested since future returns are calculated on a larger balance.

The only downside of income producing assets, is you have to pay tax (often times ordinary income tax) on income every year (unless using a tax advantaged account).

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Most real estate investors in the FI space keep some form of retirement accounts. Even if only 10% of their entire portfolio as that grows over time. There is a point where you could max retirement accounts with your REI gains and be a millionaire by 30 years later with X number of paid off real estate properties. Possibly selling them down over time?

So net worth may look different on a REI portfolio.

But I’m also a low income renter and haven’t thought much of it either.

@ShaneSideris I read your background on Jeremy’s Instagram post and it’s damn impressive. Don’t sell yourself short.

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Thank you, Chad :pray: I appreciate you saying that :smiley:

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