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America Rebuilding Wealth

December 9th, 2010 Leave a comment Go to comments

I caught an interesting headline today: A Look at Americans’ Journey to Rebuild Wealth. The story is a brief summary of some statistics compiled by the Federal Reserve. It looks at the aggregate change in Americans’ net worth (defined as the value of homes, investments, and checking accounts, minus debts like mortgages and credit cards) since the recession hit. Being an avid Quicken user, I had our net worth numbers easily at hand, and decided to run a comparison. Here’s what I found:

Period Change in Personal Net Worth Change in National Net Worth
Q1, 2009 7.6% -5%
Q2, 2009 7.2% 3.6%
Q3, 2009 10.8% 4.9%
Q4, 2009 5.5% 1.2%
Q1, 2010 6.3% 2.5%
Q2, 2010 -3.5% -2.6%
Q3, 2010 6.2% 2.2%
Annualized Growth Rate 24.6% 3.7%

As you can see, we were fortunate to have our net worth grow at a much faster rate than the average American. This is due to the heavy allocation to equities (both domestic and international) in our investment accounts. Equities posted a nearly 20% gain for 2009, and were basically flat for the first 3 quarters of 2010. Foreign equities performed even stronger in both 2009 and 2010. Of course, given the same equity allocation the previous quarters would probably prove to be much more devastating if compared to the American average.

How did things work out for you relative to the average?

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