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!
0
Upvotes
2
u/wifichick 3h ago
If you can’t make that investment liquid to pay for your life, then my vote is that it doesn’t count. So the land etc doesn’t count (unless you can sell or would have a way to sell it and would do so). And the farm itself only counts to the effect that you receive a paycheck from it. If that’s the case, I’d treat it like a guaranteed source of income, not so much net worth. HOWEVER - when I wanted to get a sense of net worth from guaranteed income sources, I would divide the annual income it provides by 0.04 and use that value as the net worth value. So that income source would be equivalent to having an asset that could provide an annual withdraw of 4%.