Weekend Reading: 75% of Your Net Worth Should Be Invested

Here is some weekend reading that has peaked my interest:

  • 75% of Your Net Worth Should Be Invested - I really like this article that says no more than 20% of your net worth should be tied up in your house and no more than 5% in other stuff. That leaves 75% invested in investments. Maybe these are the rule of thumb measurements I have been looking for on how much we should spend on a house. I am thinking the house equity should be 10-20% of your net worth (less is better in the long run), but given housing prices these days I think the lower end of that range is harder and harder to reach. So for us with a $2million financial freedom goal we should would consider ultimately spending between $200k-$400k on our home.
  • Wachovia Capital Infusion - As we have been loading up on Wachovia over the past couple months, this is timely news for our investments. Wachovia has cut the dividend to raise cash, and added a $6B capital infusion to improve it capital ratios. In my opinion the company is now in better shape to ride out the rest of the housing crisis.
  • RMB vs US Dollar - Sun has posted a graph of the RMB to the USD - highlighting what my wife and I have been previously seeing with the RMB exchange rate while we are on our assignment in China.

Related in Weekend Reading:

Comments (2)

Hey $2Mill. Thanks for the mention! Just keep in mind that the 20% Rule only speaks to your equity in the house. In theory, you could borrow 5 - 10 times as much; but, I'm NOT recommending that you do ;)

For me, I pay 100% cash for my houses and still fit in within the 20% Rule ... I knock back down to 10% by using a HELOC or refinancing for investment purposes later ... why literally 'sit' on all that cash doing nothing?

When Wachovia raised the capital it diluted the ownership stake you acquired. That is not good.

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About 2millionblog.com

A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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