Welcome to the Million Dollar Journey April 2014 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, hopefully by the time I’m 35 years old (end of 2014 – yes this year!). If you would like to follow my journey, you can get my updates sent directly to your email, via twitter (where I have been more active lately) and/or you can sign up for the Money Tips Newsletter.
The S&P500 took a little breather at the beginning of April, but has returned to form by approaching new highs once again. As of April 30th, including dividends, the S&P500 and MSCI EAFE (international index) were both relatively flat with a 0.7% gain month over month. The TSX, on the other hand, is on an aggressive uptrend returning 2.2% in April. With all the chatter about “Sell in May and Go Away”, there is more volatility in the market, especially in the technology sector. My view? If you are invested for the long term, then stay invested and forget all the noise. Personally, I like to keep some dry powder (cash) ready to be deployed in case market opportunities come up.
How did my portfolio do this month? As I’ve been cleaning up my RRSP to contain mostly US and foreign equities, it is starting to track the US market a bit better where our combined RRSPs returned +1%. Our leveraged Canadian dividend portfolio organically gained 2.32% (ie. no cash transfers into the account) and managed to keep ahead of the Canadian index by a very slight margin. The corporate investment account sat in cash again this month and will remain so until I find some value opportunities.
In the big picture, for the April 2014 update we are up 0.81% for the month and 17.29% for the year thus far. We are up to $1,197,685 in assets for a total of $970k in total net worth. With the deadline looming, there is about $30k left to go until the big $1,000,000 financial milestone!
On to the net worth numbers:
Assets: $1,197,685 (+0.78%)
- Cash: $4,500 (+0.00%)
- Savings: $20,000 (+0.00%)
- Registered/Retirement Investment Accounts (RRSP): $182,500 (+1.00%)
- Tax Free Savings Accounts (TFSA): $65,000 (+1.56%)
- Defined Benefit Pension: $48,800 (+0.83%)
- Non-Registered Investment Accounts: $199,500 (+1.27%)
- Smith Manoeuvre Investment Account: $158,600 (+2.32%)
- Corporate Investment Account: $200,000 (+0.00%)
- Principal Residence: $318,785 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $227,350 (+0.66%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $118,600 (+0.25%)
- Future Tax Liability: $108,750 (+1.12%)
Total Net Worth: ~$970,335 (+0.81%)
- Started 2014 with Net Worth: $827,300
- Year to Date Gain/Loss: +17.29%
Readers suggested to chart my net worth progress over time. Below are the net worth values since Dec 2006 with data points taken semi annually. If you cannot see the chart, please click here.
- December 2006: $198,500
- June 2007: $254,695
- December 2007: $279,300
- June 2008: $310,483
- December 2008: $309,950 (rough second half)
- June 2009: $355,850
- December 2009: $399,600
- June 2010: $456,910
- December 2010: $505,800
- June 2011: $558,713
- December 2011: $585,228
- June 2012: $631,400
- December 2012: $690,400
- June 2013: $766,300
- December 2013: $827,300
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.
Where Does the Savings Come From?
We don’t live a lavish lifestyle (how we save money), and we do not carry a mortgage or any other bad debt. The only debt we have is an investment loan (which pays for itself), so we end up pocketing a majority of our earnings. Our earnings come from salaries, private business income (via dividends to shareholders), and eligible dividends from publicly traded companies.
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. The commuted value of the pensions are not included in the statements as they are difficult to estimate.
Updated 2013 – My wife has recently changed her job position which has resulted in switching from a defined benefit plan to a defined contribution plan. This amount will be added to the RRSP totals going forward.
The Corporate Investment Account
In February 2014, I introduced the “Corporate investment account” in the net worth statement. A number of readers asked about this account, so I wrote a full post on it here.
The Tax Liability
Also in February 2014, I introduced a tax liability to my net worth statement. The tax liability is basically the amount of tax owing based on non-registered and corporate accounts and amount tax owing from future RRSP withdrawals. More information on the tax liabilities here.
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.