Welcome to the Million Dollar Journey April 2011 Net Worth Update. 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.
It looks like the TSX decided to take a break this past month which lead to a small correction. It’s interesting to see how these corrections affect our overall net worth. With low debt, when markets perform poorly, net worth growth can be challenging! Fortunately, our savings rate remained strong so we managed to squeak out a small gain in April. In the near future, we’ll be making another $5,000 TFSA contribution, and a $2,500 RESP contribution.
Net worth aside, I read an article in the Financial Post that I thought I would share. The article was written by Jonathan Chevreau and based on a letter from a reader defining what middle class really means. Here are some snippets that really hit home with me:
I have colleagues who drive nicer cars, live in fancier homes and take more trips than me. They are members in good standing of the “All show no dough” club. They don’t seem content because there is always more to want. Consumerism really never puts one on a path to happiness.
And the true meaning of middle class:
So, what is middle class? Middle class is being able to meet your reasonable needs such as shelter, food and clothing in a reasonably comfortable way … and finding a way to be happy and self-fulfilled. The rest is just people confusing what they want for what they need.
In other words, middle class is more a state of mind than it is a dollar amount. Millions of Canadians have proved that much.
Back to you, what does middle class mean to you?
Quick reminder, the income tax deadline is typically the end of April, but since April 30th is a Saturday, the deadline is pushed to the next business day which is May 2, 2011.
On to the numbers:
Assets: $ 609,248.00 (+0.63%)
- Cash: $4,500 (+0.00%)
- Savings: $59,000 (+7.27%)
- Registered/Retirement Investment Accounts (RRSP): $108,700(-0.64%)
- Tax Free Savings Accounts (TFSA): $27,000 (+0.37%)
- Defined Benefit Pension: $34,000 (+1.19%)
- Non-Registered Investment Accounts: $11,300 (-4.24%)
- Smith Manoeuvre Investment Account: $73,000 (+0.69%)
- Principal Residence: $291,748 (+0.00%) (purchase price adjusted for inflation)
Liabilities: $65,000 (+16.18%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $65,208 (+0.32%)
Total Net Worth: ~$544,040 (+0.66%)
- Started 2011 with Net Worth: $505,800
- Year to Date Gain/Loss: +7.56%
Some quick notes and explanations to net worth questions I get often:
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 – ie. our credit card bill). 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 has proven useful.
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.
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.
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.