Income & Wealth

2019 Is Nearly Over. Are You Rich Yet?

By Scott Burns / December 13, 2019

You can’t say it hasn’t been a good year. As I write this, things are pretty close to giddy. The folks in charge haven’t taken away the punch bowl.  And just about everything has been reaching for record prices. According to Morningstar, for instance:

  • The U.S. stock market has returned 27.8 percent, year to date.
  • U.S. growth stocks are up 31 percent over the same period.
  • U.S. large stocks have returned 28 percent.

Homes have done well, too.

Of course, not everyone is a stock market investor. But housing, our most widely held asset (other than our cars) has had a great year too. According to the National Association of Realtors, the median sales price of existing single family homes in metropolitan areas rose 5.1 percent from the end of the third quarter of 2018 to the end of the third quarter of this year.

If that sounds paltry compared to stock prices, think again. New homeowners who bought a house with a 20 percent down payment have enjoyed a 25 percent return on their equity. That’s right up there with the stock market. Indeed, if you had bought a median sales price home for $235,500 in 2016 with a 20 percent down payment, the $280,200 price at the end of the third quarter would represent a growth in your equity of 95 percent ($44,700 gain/$47,100 down payment). That’s well beyond the 65 percent gain in the total U.S. stock market.

And that’s not counting some of the hot areas in Texas where houses new to market can get multiple offers over asking price.

So I’ll ask the question again: Are you rich yet?

You may, at least, be way, way better off.

In the past I’ve provided a measure called “The Wealth Scoreboard,” an exercise using the Federal Reserve Survey of Consumer Finances. Done every three years, the data can be parsed to find where you stand relative to other households in the same age range. Below, for instance, you can see the Wealth Scoreboard for 2016.

 

The American Wealth Scoreboard, 2016
This table shows the entry level for net worth for each age bracket rounded to the nearest thousand dollars. The figures include ownership of stocks, bonds, mutual funds, bank and retirement accounts, as well as home equity and consumer durables such as cars. They do not include virtual wealth (income rights) such as Social Security and pensions.
Age Top 1% Top 5% Top 10% Top 25% Median
80+ $11,784 $3,647 $2,183 $714 $271
70-79 $11,674 $3,478 $1,923 $713 $234
60-69 $16,161 $4,729 $2,011 $756 $225
50-59 $14,747 $2,633 $1,138 $415 $138
40-49 $  2,864 $1,372 $   668 $279 $  88
30-39 $     922 $   386 $   256 $103 $  29
18-29 $     977 $     99 $     65 $  17 $    4
Sources: www.dqydj.com from the 2016 Survey of Consumer Finances

Back then, you needed about $2 million to be in the top 10 percent from age 60 onward, but far less — only $256,000 — if you were in your 30s.

Today, those figures would be a good deal higher.

How much higher? Your figure will depend on where you live, whether you rent or own a house or condo, and whether you were investing in financial assets during the period.

Check the calculators on one of my favorite websites.

You can get a bit more precise by using one of my favorite websites, www.dqydj.com. (The initials stand for Don’t-Quit-Your-Day-Job.)  Here is a list of calculators you can doodle with:

Related columns:

Scott Burns, “Our Wealth Scoreboard,” 08/12/2018 https://scottburns.com/wealth-scoreboard/

Sources and References:

Don’t Quit Your Day Job website:  www.dqydj.com

This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.

Photo: Scott Burns, launch of restored New York 30s in Belfast, Maine

(c) Scott Burns, 2019