Page 12 - Trading #101 Course – Part THREE: SETTING UP YOUR BUSINESS – www.traderscoach.com

TRADING #101 COURSE – PART THREE: SETTING UP YOUR BUSINESS – WWW.TRADERSCOACH.COM

Most likely, it would reflect whether you were moving forward, falling backward, or
standing in place. Much like the financial markets, our net worth is a chart and a graph,
and it has meaning for us. Our net worth has bull runs, bear runs, and bracketed or
sideways runs, just like the financial markets. It shows what is happening in our life.

Here is an example of one net worth scenario: Your parents may give you money
before you begin college, and your net worth goes up. During college, you may spend
the funds you were given and then need additional funds; your net worth will fall
backward. When you get out of college and are paying off student loans, your net worth
will be negative, but it will slowly begin to go forward. Then when you get your first great
job and your salary does more than cover the essential food, shelter, and clothing
expenses, your net worth will go forward more quickly. Sometimes you will have an
illness or lose a job, and the family will dip into savings to pay for everyday expenses to
compensate. Other factors will nudge your net worth up or down such as inheriting
money, landing a super job, or paying for your own children’s college.

Your goal should be to consistently move forward in building your net worth. Look at
Figure 13.1 You can also look at Table13.3 to see the actual numbers in this example
and how they move up and down throughout the years.

This is a hypothetical net worth curve to show you how this number is constantly
changing and reflects what is happening in your life. With some planning, you will be
able to anticipate the direction and, more effectively control the direction of your net
worth curve.

Table 13.3 Hypothetical Net Worth Progression from Age 15 to Age 75.

Age Net Worth
15 +$ 45,000
20 –$ 15,000
25 –$ 75,000
30 +$ 15,000
35 +$ 78,000
40 +$268,000
45 +$458,000
50 +$416,000
55 +$528,000

60 +$568,000
65 +$515,000
70 +$498,000
75 +$458,000

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