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.

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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?

Posted by AJC @ 7million7years | April 21, 2008 1:47 PM

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

Posted by CPA1298 | April 25, 2008 10:01 PM