I’m just curious what the logic is in the calculation of how long to reach £1m net worth. Does it look at income and expenses or is it just an extrapolation of net asset recent history (if so, how long)?
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It takes into account how much you have currently in cash, debt and investments and how much you’re saving annually (income minus spending). It also makes some simple assumptions such as the fact that money in investment accounts grows x% y/y, the opposite happens to loans due to interest (can’t remember the exact parameters off the top of my head, something in the 5-8% range) and that you are not gonna keep all your savings in cash besides a small emergency fund.
Tip if you think your value is very far from what it should be: check that your transfers between own accounts are marked as “excluded”. Our “annual savings” calculation depends on it.
Interesting, seems like a sensible approach to me. I was just curious, I think mine is probably in the right ball park based on what the app knows and if my income and expenses stayed the same (I’m assuming my income will continue to rise above inflation for a while). It seems it ignores entirely increases/decreases in net worth that happen outside income/expenses transactions? E.g. pension contributions that are just done as an update to the account balance.
I’ve got a mortgage under ‘loans’ that it seems you’re assuming is at a personal loan rate, but that probably counterbalances the fact that I’ve put my pensions under ‘other’ where I guess you’re not assuming an investment level return on those assets?
Probably another reason to [add a pensions category](https://community.emma-app.com/t/add-pensions-as-separate-item/3727). Maybe also separate mortgages and personal loans into their own categories. I’d like to have a subtotal for real estate + mortgages to show me equity in the property.