personal finance ratios

liquidity

liquid assets / monthly expenses

current

liquid assets / current liabilities

Consumer debt (debt payments)

monthly consumer debt payments / monthly take home pay

housing/front-end

monthly PITI / monthly gross income

total debt/back-end

(PITI + all other debt payments) / monthly gross income

debt-to-asset

total liabilities / total assets

debt ratio (leverage)

total liabilities / net worth

savings

monthly savings / monthly gross income

net worth-to-income

net worth / annual gross income

investment-to-income

total investments / annual gross income

solvency

total assets / total long term debt

emergency fund target

6 x monthly expenses

investment allocation

investment assets / net worth

retirement savings rule

25 x annual income (or annual need)

liquidity benchmark

3 months

current benchmark

1.0

consumer debt benchmark

less than or equal to 20%

housing benchmark

less than or equal to 28%

total debt benchmark

less than or equal to 36%

debt to asset benchmark

< 50%; about 10% is a great goal

debt ratio benchmark

low

savings benchmark

15-20%

net worth to income benchmark

1x by 30, 2x by 35, 4x by 45, 6x by 60

investment to income benchmark

1× by 30, 3× by 40, 6× by 50, 8× by 60

solvency benchmark

higher

emergency fund target benchmark

3-6 months

investment allocation benchmark

greater than or equal to 25%

retirement savings rule benchmark

100,000 income → $2.5M

dividend yield

Annual dividend per share / current price per share

holding period total return

(Ending price - beginning price + cash dividends) / beginning price

portfolio return

Sum of (beginning weight x asset return); weights must total 100%

rebalancing

Target weight x current total portfolio = target dollar holding

course no debt current

Liquid assets / annual expenses = years covered

real return

(1 + nominal return)/(1 + inflation) - 1