Welcome to the Million Dollar Journey February 2012 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). If you would like to follow my journey, you can get my updates sent directly to your email or you can sign up for the Money Tips Newsletter..
In the last net worth update, we had a discussion about additional assets to include in the net worth update. I agree with most of the readers that RESP‘s should not be included because the intention of the money is for helping our kids with their tuition bills. Since we have two young kids, they are both on the family RESP plan anyways, so if even if one doesn’t attend post secondary, it’s likely that the other will.
Another thought was including the after tax value of our corporate investment account. We haven’t setup the investment account yet as I’m waiting to move retained corporate cash over to a holding corp. Once I setup the account, I’ll include the after tax value of the new portfolio.
With that aside, lets move onto this months net worth update. The big news is the stock market which has done most of the heavy lifting in the net worth gain this month. Notable organic growth includes RRSP (+2.06%) and the leveraged Canadian dividend stocks portfolio (+2.59%). You may notice that the non-registered account has grown almost 15% in one month, but that not completely organic. The good part is that half the gain is from my high risk trades with options, the other half of the gain is from moving money into the account. I have some capital losses from previous years to claim against the capital gains, but if these gains keep up, I will be recording them as a tax liability.
All in all, a good couple months to start the year, and a psychological breakthrough to the $600,000’s.
On to the numbers:
Assets: $691,480 (+1.71%)
- Cash: $4,500 (+0.00%)
- Savings: $58,000 (+3.45%)
- Registered/Retirement Investment Accounts (RRSP): $123,900(+2.06%)
- Tax Free Savings Accounts (TFSA): $40,500 (+0.75%)
- Defined Benefit Pension: $37,900 (+0.80%)
- Non-Registered Investment Accounts: $33,180 (+14.49%)
- Smith Manoeuvre Investment Account: $91,000 (+2.59%)
- Principal Residence: $300,500 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $82,200 (+0.24%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $82,200 (+0.24%)
Total Net Worth: ~$609,280 (+1.91%)
- Started 2011 with Net Worth: $585,228
- Year to Date Gain/Loss: +4.11%
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. The commuted value of the pensions are not included in the statements as they are difficult to estimate.
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.