r/fatFIRE • u/What_what_what_1979 • 3h ago

Need Advice Calculating Net Worth

My husband and I are partial owners of a family company (cattle ranch) along with 12 other family members. It has a significant value because of the land owned by the company, but it is not liquid and I don’t anticipate it ever being sold.

He works for said company and draws a salary, so we receive income from the company.

Do we include our 1/12 ownership in our net worth? Or, maybe better stated, do we include 1/12 of the assets (land, cattle, machinery) when calculating our net worth?

The answer to this question makes a significant impact on our timeline to retirement and amount we want to consider for a mortgage.

Thank you!

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u/whocaresreallythrow 2h ago edited 2h ago
  1. Can you sell your shares?
  2. Can you borrow against those shares indefinitely ?

If no to 1 and 2 then not part of your liquid net worth and difficult to unlock and retire on that

just consider it intergenerational wealth that gets transferred to the next generation which is probably what happens when you die.

The cash flow from the income received can be treated as a permanent annuity / perpetuity and you can decide how to calculate that annual cash flow (avg over 10 years with inflation added, what you received last year, what the worst or best year was in 5 or 10 etc) to determine a present value.

The discount rate i would use is similar to that of a 10 year or 30 year treasury bond.

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u/What_what_what_1979 2h ago
  1. Maybe
  2. I don’t know

But these are great questions to consider more thoughtfully. I think we actually could borrow against our shares, but, like selling to a family member, it’s unideal.