Net Worth Update January 2011 (+3.61)

Welcome to the Million Dollar Journey January 2011 Net Worth Update – The first update of the year. For those of you new to Million Dollar Journey, a monthly net worth update is typically posted near the end of the month (or beginning of the next) to track the progress of my journey to one million in net worth.  If you would like to follow my journey, you can get my updates sent directly to your email.

In 2010, we finally managed to break the $500,000 net worth barrier which means we are just over the half way mark to the net worth goal of $1M.  Up to this point, net worth growth was heavily dependent on savings growth.  Going forward though, with all of our bad debt paid off, portfolio increases (or decreases) are soon going to lead the way. On the same note, as mentioned in my financial goals for this year, I’m hoping to simplify our portfolios by indexing a larger portion.  Specifically, my wife’s RRSP account.

Another one of our goals was to max out all of our registered accounts.  We’ve thus far deposited $5k into our TFSA with the remaining $5k deposited in the next month or so.

Real Estate returns in my city has been very strong over the past few years.  However, to be conservative and to keep things simple, instead of adjusting our home value up and down every month, we adjust it annually to align with historical inflation (3.0%).

On to the numbers:

Assets: $ 579,748.00 (+3.31%)

• Cash: $4,500 (+0.00%)
• Savings: $46,500 (+3.33%)
• Registered/Retirement Investment Accounts (RRSP): $105,500(+2.43%)
• Tax Free Savings Accounts (TFSA):  $26,300 (+25.54%)
• Defined Benefit Pension: $32,800 (+1.23%)
• Non-Registered Investment Accounts: $12,700 (-0.78%)
• Smith Manoeuvre Investment Account: $59,700 (+0.67%)
• Principal Residence: $291,748 (+3.00%) (purchase price adjusted for inflation)

Liabilities: $55,700 (0.54%)

• Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
• Investment LOC balance: $55,700 (+0.54%)

Total Net Worth: ~$524,048 (+3.61%)

• Started 2011 with Net Worth: $505,800
• Year to Date Gain/Loss: +3.61%

Some quick notes and explanations to net worth questions I get often:

The Cash

The $4,500 cash are held in chequing accounts to meet the minimum balance so that we pay no fees (accounting for regular bill payments). Yes, we do hold no fee accounts also, but I find value in having an account with a full service bank as the relationship with a banker can prove useful.

Savings

Our savings accounts are held with PC Financial and ING Direct. We usually hold a fair bit of cash in case “something” comes up. The “something” can be anything that requires cash such as an investment opportunity that requires quick cash or maybe an emergency car/home repair.  We also need cash to cover any future tax liabilities.

Real Estate

Our real estate holdings consist of a primary residence and REITs plus a rental property. The value of the principal residence remains valued at the purchase price (+inflation) despite significant appreciation in the local real estate market.

Pension

The pension amount listed above is the value of both of our defined benefit pension plans.  I basically take the semi annual statement and add the contribution amounts (not including employer matching) on a monthly basis.

Stock Broker Accounts

Another common question is which discount broker do I use?   We actually have accounts with multiple institutions.  I’m hoping to reduce the number of accounts that we hold in the near future.  Here is a review of some of the more popular online stock brokers.