March 2008 Net Worth Update: (+1.17%)
Time for another net worth update: The March 2008 Edition!
There is a saying in Newfoundland that would describe the markets perfectly.. “The arse has fallin out of her.” When will the markets find a bottom? Are we there yet? In terms of market returns, the only reason my retirement accounts are showing positive relative to last month are due to a $3,000 contribution.
My non-registered accounts are still mostly cash and I’m waiting for my opportunity to buy more over sold dividend paying stocks. To me, those dividend yields are looking pretty attractive, especially big bank stocks. In fact, I’ve already started dabbling in a couple stocks in my Questrade investment account. More on this in my upcoming Smith Manoeuvre Portfolio updates.
In other parts of the net worth statement, there was quite a shakeup this month as we finally closed on our new house. The large $100k+ savings that we had was deployed into a readvanceable mortgage which is indicated below.
Here are the numbers:
Assets: $570,750 (+46.76%)
- Cash: $4,500 (+0.00%)
- Savings: $ 35,400 (-71.08%)
- Registered/Retirement Investment Account: $ 50,000 (+2.46%)
- Pension: $ 22,350 (+0.68%)
- Non-Registered Investment Account: $18,000 (-60.44%)
- Smith Manoeuvre Investment Account: $25,000 (+100%)
- Investment Property: $ 124,500 (+0.00%)
- Principle Residence: $275,000 (+100%)
- Vehicles: $16,000 (2 vehicles) (-0.00%)
Liabilities: $280,600 (+275%)
- Investment Property Mortgage: $93,900 (-0.21%)
- Principle Residence Mortgage (readvanceable): $153,700 (+100%)
- HELOC balance: $25,000 (+100%)
- Other Liabilities: $8,000 (-0.00%)
Total Net Worth: ~$ 290,150 (+1.17%)
Started 2008 with Net Worth: $279,300
Year to Date Gain/Loss: +3.88%
2008 has started off at a slow pace but any gains are good in this market environment.
In addition to buying dividend paying stocks, I’m thinking about using my HELOC to purchase another rental property should the opportunity come up. I’m still up in the air about that one. The only issue is the cash flow risk involved as we are currently living on 25% reduced income. Actually, until the maternity benefits come in (30 days), we are living on 50% income.
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First impression on your net worth mix is that it is messy and that your investment property unless it is producing positive cash flow should be dumped.
In my experience investment properties should be highly leveraged 100% if possible and should always produce positive cash flow at 90% occupancy.
Next the RRSP, what kind of return/risk is this giving you?
RRSP’s are a great tool when used properly for cash flow and investing when used properly, and IMO should be melted down every year. Assuming you dont have the cash to do this, but have an HELOC to draw on, one example assuming you can max, is to put half of your available RRSP entitlement in on December 29, then withdraw whatever you put, is to put in $5k increments on January 2nd, then either put that back onto the RRSP again, or wait for the tax return then put it into SFTS such as what Mineral fields offers
I agree that you need a certain amount of cash on hand, generally 2-months at the level of your living expenses, no-more
Non-registered investments should include a minimum, non speculative guaranteed return that after capital gains and any interest carrying charge would net you upper of 20%
On the SM, doing the T-SWP, well, thereare several other options, since MutFunds are not always flat and have high management fees. There are other choices, either inside or outside of the RRSP. One example if you are using an HELOC is to do pick of the many good stable income trusts, and there are many that would yield 13-15%.
A twist to this is doing it on the big boards (US market) and keep buying the stock (units) for averaging, then to sell an option (CC) deep in the money (ditm) as far out in the calendar that you can go to minimize the risk and maximize the return by reinvesting the call money received.
This way you will own the stock and get monthly distributions that you can use to pay down the mortgage (SM-rule) or reinvest, or take the cash out to put into a RRSP combo with SFTS.
For those that feel comfortable with RRSP and want to do a combo SM & HELOC, why not, once the RRSP is built up far enough, simply hold the mortgage on the house within the RRSP and pay yourself. But as I said before, Iam not a holder of RRSPs, I just like to use the advantage of the loophole and leverage to get the tax back and to use the money during the 12-months along with the tax return.
[…] Million Dollar Journey […]
FT quoted: “The arse has fallin out of her.”
I believe “The arse is gone right clean out of ‘er” is a similar quote, and the whole skit which uses the line can be found here [ http://www.buddywasisname.com/l_awful.htm ], and well describes the current market:
For those of you who are unfamiliar with Buddy Whasisname & the Other Fellers, they are a renowned trio of Newfoundland entertainers who compile a wealth of original material based on the Newfoundland vernacular. This piece is well worth a read.
[…] Tracking net worth Money Smart Life meticulously tracks his net worth. It is an intriguing concept, but I’m not sure if I have the patience or discipline for it. Tags: finances […]
Geoff, I’ve tried using MACD as a technical indicator but with very little luck. I had some luck with MACD divergence analysis, but I find the best indicators are price/volume analysis (for traders).
Otherwise, my income investments are for the long term, and I simply buy them when their yields are a bit higher than normal.
Do you mean you consider the MACD for the stocks you’re interested in?
Do you have a blog entry on any technical indicators you may use during your stock considerations?
If I were investing in dividend achievers or aristocrats I would not be concentrated too much in a single sector of the market. Traditionally we have had financials ,utilities, real estate trusts and some oil and gas trusts ( in US) that have paid the most dividends.
You should also try to own at least 20-30 dividend stocks from a variety of sectors for diversification; you should also own a blend of high-yield stocks as well as high-dividend growth ones with average yields. You could see my watchlist here:(sorry to post an outside link)
Good luck with your investments and the with the baby.
Hey DG, thanks for the tips. My plan is to diversify through the sectors as you mentioned. I basically have favorites in each sector that I watch and wait for them to be oversold.
Hey Geoff! If I could tell where the bottom was for stocks, I would be a very very wealthy man. :)
For me though, since i’m primarily investing in “income/dividend” producing stocks, I wait for higher than normal yields from the strong dividend payers. Ie. banks are a prime candidate these days.
Great update – thanks!
How do you determine where the bottom is for your stocks? Do you consider technical or fundamentals?
Are you considering agriculture or commodity stocks – or are you only considering predominantly mainstream S&P/TSX index stocks?