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April 2009 Net Worth Update: Bull Market? (+4.12%)

Welcome to the Million Dollar Journey April 2009 Net Worth Update – Is this really a bull market edition.

My last net worth update in March indicated that we just started a market rally.  The rally has continued throughout April and I’ve actually done a little buying within my leveraged portfolio as well as within my RRSP.  I fully intended to play around with covered call options within my RRSP account, but I soon discovered that my account did not have the permission to do so.  After many calls and forms to fill out, my RRSP account now has the ability to write covered calls.  Even though I’m ready to go, I haven’t executed any options trades yet.

The market rally has propped up my portfolios thus the significant (to me) increase in net worth for the month.  You may notice a large gain in my RRSP account (17%).  Although it would be nice if it was organic gains only, more than half of the gain is due to a $5,000 contribution.

On the saving/spending side of things, we managed to keep things in check.  The only big expenses were for window coverings, which is included in the home renovation tax refund.

On the liability side of things, I asked you whether it was the right time for me to go with a fixed rate about a week ago.  From that post, I decided that instead of locking myself in for another 5 years, I’m going to get aggressive and pay off the mortgage before my current term is up in 2 years.  As you can see below, we have approximately $74,000 remaining on the mortgage and we hope to have it conquered by early 2011.  It’s really not that far fetched as we plan on dumping our savings onto the mortgage in the very near future.

Assets: $459,450.00 (+2.73%)

  • Cash: $4,500 (+0.00%)
  • Savings: $37,500 (+8.70%)
  • Registered/Retirement Investment Account: $54,600 (+17.42%)
  • Pension: $22,350 (+0.00%)
  • Non-Registered Investment Account: $14,500.00 (+7.41%)
  • Smith Manoeuvre Investment Account: $41,000 (+2.76%)
  • Investment Property: $ 124,500 (+0.00%)
  • Principal Residence: $275,000 (+0.00%) (purchase price)
  • Vehicles: $10,000 (2 vehicles) (-9.09%)

Liabilities: $128,600.00 (-0.69%)

  • Tax Liability: $3,000 (-0.00%)
  • Investment Property Mortgage: $92,000 (-0.11%)
  • Principal Residence Mortgage (readvanceable): $73,500 (-1.34%)
  • HELOC balance: $52,100 (+0.19%)

Total Net Worth: ~$330,850.00 (+4.12%)

Started 2008 with Net Worth: $309,950.00

Year to Date Gain/Loss: +6.74%

April has turned out to be the most significant net worth gain of 2009 thus far.  Most of the increase is due to bounce in the markets, so unfortunately, it could easily go in the other direction.  However, I am encouraged by the growth and will keep chugging along!

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 all held with PC Financial. We 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 plus a rental property. The value of the principal residence remains valued at the purchase price despite significant appreciation in the real estate market that we’re in.

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30 Comments

  1. Jeff on April 30, 2009 at 10:44 am

    “The value of the principal residence remains valued at the purchase price despite significant appreciation in the real estate market that we’re in.”

    Is this statement still true despite a massive drop in house prices across the US and many Western countries?

  2. InvestAssetWealth on April 30, 2009 at 10:49 am

    Up 6.74% year to date! Now there is some positive news. Well deserved after the wounds from 2008… Glad to hear.

    InvestAssetWealth

  3. Dividend Growth Investor on April 30, 2009 at 11:21 am

    Oh wow, way to go MDJ. You do have a gain in your total net worth, however could tell how much your gain year to date would have been without contributions?

  4. DAvid on April 30, 2009 at 11:56 am

    Jeff,
    There are a few places in Canada that have not been exposed to that market downturn. Newfoundland currently has one of the strongest economies in Canada, Saskatchewan’s still seems strong, and a number of smaller communities across Canada have been far less affected by the real estate downturn, simply because they were not part of the bubble!

    DAvid

  5. FrugalTrader on April 30, 2009 at 12:25 pm

    Jeff, as DAvid mentioned, NL has been immune to the real estate correction happening in North America. At this point, even if we had a fairly significant (15%+) correction, the value of my home would still be above water.

  6. STone on April 30, 2009 at 12:50 pm

    I live in Saskatchewan and the market downturn has definately not hit as hard here as the rest of the country. Real Estate prices have retreated a little over the past six months, but that was to be expected after the way they skyrocketed from the end of 2006 to the middle of 2008 (more than doubled in value).

  7. Canadian Finance on April 30, 2009 at 12:56 pm

    FT, not that I’m suggesting that you should have tried to “time the market”, but couldn’t you have taken out almost $100,000 more under your SM to come up to 80% of your equity? I would have thought that would be pretty tempting a couple months back?

  8. Sampson on April 30, 2009 at 1:07 pm

    Great Job FT!

    Having such a large % swing gets tough when the base amount is so large ;)

  9. FrugalTrader on April 30, 2009 at 1:17 pm

    CF, you are correct. I believe I can take out another $80k or so from my HELOC, and yes it was very tempting to put it on the markets. However, my risk tolerance isn’t quite that high as volatility was extremely high and we really didn’t know how far down the markets would go.

  10. M Hawk on April 30, 2009 at 3:20 pm

    Basic question here:

    Your Pension amount that you list, is that your Canadian Pension Plan or a company pension plan? If it’s a CPP, anyone know how to find out how much has been contributed in total?

    On a side note, I’m new to MDJ, and i have to say i’m thoroughly impressed with the quality of this site.

  11. FrugalTrader on April 30, 2009 at 3:32 pm

    M Hawk, thanks for the kind feedback! To answer your question, the pension amount is my wifes government pension, not CPP.

  12. Chuck on April 30, 2009 at 3:47 pm

    @M Hawk

    the Service Canada website allows you to see a statement of contributions.
    http://www.rhdcc-hrsdc.gc.ca/eng/isp/common/proceed/socinfo.shtml

    You will need to register for a service canada online account. Its different from the account you may have with the CRA.

  13. Matt on April 30, 2009 at 4:49 pm

    FT, I agree with your commitment to pay off your home within the next two years. These low interest rates are great right now but it is only a matter of time before someone declares we have a problem, followed immediately by lift-off. This will hopefully not occur for about 2 years as this is the amount of time I need to pay off my mortgage as well. Around this time I would also expect a run-up in commodities so I am positioning myself there now forgetting about current volatility and keeping an eye on 2011-2012.

  14. Canadian Finance on April 30, 2009 at 8:17 pm

    Yeah, I guess it’s easy for me to say when it’s not my money ;)

    When I start my SM in June or July, I’ll only be doing about $500 a month in investments as I’m exactly 80% mortgage to start and $500 is about the initial principle paid in a month… so I’ll be starting nice and slow!

  15. Kevin on May 1, 2009 at 12:25 am

    Can you explain how you account for your vehicles and depreciation?

    I love the monthly statements. I’ve started doing it, even though my wife thinks I’m a bit obsessive.

  16. Victor on May 1, 2009 at 5:46 pm

    Would like to know if you are borrowing money for investing in stocks then in order for the interest to be deductible on your income tax return do you have to own only the stocks that pay dividend or you can buy and hold stocks that do not pay dividend. Thank you.

    • FrugalTrader on May 1, 2009 at 5:57 pm

      Victor, providing that the stock has the “potential” to pay a dividend, it will qualify for an investment loan.

  17. Victor on May 1, 2009 at 8:07 pm

    So you mean stocks that do not pay dividend and never have paid dividend in the past will not qualify for a deduction on income tax return for its interest cost?

    • FrugalTrader on May 1, 2009 at 8:11 pm

      Sorry, I should have been more clear. Basically any company on the stock exchange could “potentiallly” pay a dividend. An exemption would be the ETF that tracks gold or any other commodity.

  18. Phinance on May 1, 2009 at 8:40 pm

    Hopefully this bull market will continue up. Next month will probably see the announcement of a GM bankruptcy, which a lot of analysts believe is already priced in. I say if we can hold onto this current 8k trend all other investments will do fine in the long run. You’re not in bad shape! Good job. :)

  19. cannon_fodder on May 2, 2009 at 11:20 am

    MikeM,

    Thanks for that link. I’ll check out my CPP contributions since I can’t remember the last time the government sent me a hard copy.

  20. cannon_fodder on May 2, 2009 at 11:21 am

    Victor/FT,

    I think other EFTs such as the ProShares Bear and Bull that are 2x leveraged also would not qualify because they use derivatives to track the index and they explicitly state that they will not pay out dividends because they don’t purchase the underlying stocks.

  21. Georumble on May 3, 2009 at 10:59 am

    FT, I am working on my Net Worth statement and wanted to find out what do you mean by is TAX LIABILITY?

    Are these the taxes you owe to CRA?

  22. FrugalTrader on May 3, 2009 at 11:11 am

    Georumble, yes that is the cap gains tax we will owe (tax yr 2009) for selliing our rental prop.

  23. Georumble on May 3, 2009 at 11:31 am

    FT, would you include RESP in your networth?

  24. FrugalTrader on May 3, 2009 at 12:00 pm

    Technically, the capital put into an RESP can be withdrawn tax free when it comes time for tuition and the growth/grants taxed in the childs hands. Therefore, I could count our contributions to date, however, I’m leaving it out of our net worth b/c all of the money will go towards our kids tuition when the time comes. Thus far, we have about $5k contributed and $1k from government grants.

  25. Ms Save Money on May 5, 2009 at 6:17 pm

    That’s pretty cool how you broke down the assets and liabilities. You know technically you can just pay off your mortgage already.

  26. Mockingbird on May 5, 2009 at 8:02 pm

    Well done, FT!!
    Is paying off mortgage early a part of your inflation measure??

  27. FrugalTrader on May 5, 2009 at 8:11 pm

    Mockingbird, I figure instead of worrying about what kind of rate we can get upon renewal, we decided that we’ll avoid all that by paying it off completely before the term is up.

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