When I walk into a client’s office, I tell them, “I don’t care if your assets are worth $100 million, we need to know how much you have in liquid assets.”
Many executive compensation programs include stock, restricted stock, options, or other long-term incentives. Until they vest, you’re better off not including them in your calculations of wealth—I’ve seen a lot of people get hurt by counting on stock and options that they didn’t have yet. I’ve also been through it myself with my own nest egg.
You can have a stratospheric net worth on paper if you have a lot of stock options at a big company, but there are often restrictions on how and when you can sell that stock—and that can impact how much you really earn from it.
I’ve learned this lesson over and over: Until it’s liquid, it’s not yours.