Does this outfit make me look fat? Do you want the truth, or do you want me to lie so you can feel good? I’ve never been good at lying to make people feel good, and truth be told, that has cost me in some ways, but you can let that failure of mine serve to your gain.

You can find plenty of opinions on the internet claiming that financial advisors are just bad guys selling you things you don’t need for their own benefit. Maybe sometimes that’s true. I think in any field, you can find honest people trying to do right by their customers, and you can find selfish people only seeking their own personal gain. It may be refreshing to know that in my field, you can sometimes find financial advisors getting together to engage in healthy debate over what is the best advice they can give to their clients. How can they genuinely provide the best help? I was in one such debate last week, and the topic up for debate was whether clients should be advised to include the equity in their primary residence when calculating their net worth. We came to the conclusion that there are times when including it is necessary, like when you need to qualify for a 2nd mortgage, but the majority of the time, it’s only making your portfolio look fat.

Most of the time, people are only calculating their net worth to evaluate how well they are doing or gauge their progress toward their financial goals. In this scenario, the winning argument in our debate was the key point that including your equity would be artificially inflating your progress toward your goal if your goal is to be able to afford to live comfortably in retirement when you no longer work for a paycheck. Including your equity in your progress is painting a misleading picture for yourself. It’s not like you’re going to sell your shelter in order to afford to live, at least that’s not a position you want to put yourself in, and if that’s not a position you want to put yourself in, then don’t over exaggerate your net worth.

For example, let’s pretend you have 400k in your investment portfolio and 600k in equity in your home. You’re a millionaire. Believing you’re a millionaire can put you in a dangerous headspace where you start to think you’re doing better than you actually are, and you don’t have to save so hard anymore. Maybe you can afford a fancy car or some luxuries. You know, start living like the rich do. Many of those so-called rich can afford to retire comfortably because they’ve kept their living expenses low. They don’t waste money on extravagant lifestyles, luxury cars, or being seen on Instagram in places they can’t afford to be. Prioritizing financial responsibility afforded them what mattered most, and that was security, not showboating.

But back to our calculation, you really only have 400k in your investment portfolio, and that’s a far cry from a million, and you have a lot of work to do. It’s not the time to glorify your financial position in life; it’s time to focus hard on saving, investing, and seeking growth opportunities for your portfolio. Looking at it differently is only selling yourself short or undercutting your potential. It’s a disservice to your future self, and the future you deserves better from the current you, so don’t overinflate your net worth and start thinking you’re a millionaire. And I’m sorry to cut you down even further, but a million dollars isn’t what it used to be. My generation grew up thinking being a millionaire meant something, but it doesn’t anymore. You’re going to need a lot more than a million in your portfolio, so pull your overinflated head out of the clouds and get back to work.

Here’s the tricky part. Your home equity position does matter when you’re considering finding a new shelter. Perhaps you’ll one day be considering downsizing to a 1-bedroom condo with lower maintenance in a warmer climate after your kids are grown. Perhaps you do have enough equity to anticipate having some left over to add to your retirement income base. Perhaps you’re moving into a retirement home, and you need to calculate how many months of assisted living services you can afford by liquidating the equity in your current shelter. Until then, you put that equity position on a shelf and don’t let it lead you toward complacency. Walk the line between being aware of your home equity position, but not being led astray by it.

If you’re still in the wealth-building stage of your life, then you need to be working hard on saving hard, studying the best way to capitalize on growth opportunities, or hiring someone who can do that for you. I’ll take this opportunity to shamelessly plug Northshore Wealth Management’s Mainsail Equity Model and point out that investors who are allocated in this pure focused growth model have achieved a 33.28% return so far this year – double the return of the S&P 500.

For those of you asking if doubling the return means doubling your risk, the answer is no. While we can’t eliminate risk, the fundamental analysis that goes into our stock selection process eliminates exposure to all of the unhealthy stock positions polluting and diluting the returns of the 500 stocks in the index. No one analyzes those 500 stocks to be sure they’re all worth investing in. I mean, no one who is investing in the index is. If they were, they wouldn’t invest in the index.

Look, I’m aware this tone doesn’t sound perfectly polite and polished, like it was AI-generated, and that’s by design. I write with authenticity from the heart to prove I’m not a robot and I’m not offering fake or scripted advice that I read off a brochure. My work is my own, and my best work is standing in my client’s corner and making sure their gloves stay up, and they fight like a champion, and win the fight purse.

Too cheesy?

Do I charge you for my help? Yes. What would you pay for a good lawyer? A good surgeon? A good mechanic?  What would you pay for someone to analyze stocks and eliminate the bad ones from your portfolio? Do I actually want to provide you with meaningful help for the fee I charge? Yes, so much so that I engage in debates with other advisors over what the right kind of help looks like. It looks like the honest truth, even if the truth hurts. So if you’re not a millionaire without your home equity position, then you’re not a millionaire, but we already determined that being a millionaire doesn’t really mean anything anyway, so get over it and get back on track. Make sure your goals are set high enough and make sure you’re doing everything to achieve them.

Also, please don’t post this article in a FinTwit comment to counter an opposing argument you found there. I appreciate the compliment, but I don’t need FinTwit coming after me. Most of them disagree with me, and they’re committed to fighting hard to defend the opposing argument, and now you know why. You don’t have to fight on the internet. You can just read two points of view, decide for yourself which one you agree with, and then go find something better to do.

Live long and live well,

Alyse