Welcome to the Million Dollar Journey January 2012 Net Worth Update – The first update for 2012! 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..

With a new year comes a fresh start, new goals, and the financial checklist of accounts to fund.

  • TFSA contribution?  Check!  Deposited $5,000 in each account for $10,000 total.
  • RRSP contribution? TODO – I typically wait for our Notice of Assessment as we contribute to pension plans which affects our RRSP contribution room.
  • RESP contribution? Check!  Deposited $2,500 for each child for $5,000 total.

Besides the contributions, not a big change from the last update.  Similar to previous years, I adjusted our home value up to match historical inflation even though the real market value is likely much higher due to the local real estate boom.  I tend to stick to the conservative side for valuations as it keeps me motivated to keep my numbers growing and it helps buffer any down turn in market values if that were to happen.

Readers have made a few suggestions for changes to this balance sheet update.   First, with the cash balance building on the corporate balance sheet, readers have mentioned that the value of the corporation should be included in these updates somehow.  After giving it some thought, when I move some cash to a corporate trading account, then I may consider including the after tax value of the account in these updates.

In addition to that, some readers think that RESP values should be included in my net worth but  the problem is that I consider the RESP to be my children’s money.  I can see their point as “technically” the contributions are mine until my kids withdraw it to pay for post secondary institution.  What do you think?  Should I include the RESP my net worth?  Do you count it as part of yours?

On to the numbers:

Assets: $679,880 (+1.94%)

  • Cash: $4,500 (+0.00%)
  • Savings: $58,000 (-15.94%)
  • Registered/Retirement Investment Accounts (RRSP): $121,400(+2.36%)
  • Tax Free Savings Accounts (TFSA):  $40,200 (+35.35%)
  • Defined Benefit Pension: $37,600 (+1.08%)
  • Non-Registered Investment Accounts: $28,980 (+1.05%)
  • Smith Manoeuvre Investment Account: $88,700 (+1.37%)
  • Principal Residence: $300,500 (+3.00%) (purchase price adjusted for inflation annually)

Liabilities$82,000 (+0.37%)

Total Net Worth: ~$597,880 (+2.16%)

  • Started 2011 with Net Worth: $585,228
  • Year to Date Gain/Loss: +2.16%

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 – 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.

Real Estate

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.

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Nice! Looks like markets are opening down today, so you picked a good time to do the update!

I would not incude the resp and not sure about the corperation. However the cash flow from your business is probably reflected in your updates anyway.

No problem if you put RESP under asset, but you then must also put in the cost of educating your children under liabilities.

Or you can just not include RESP and keep it simple.

I still wish that future tax liabilities like capital gains and RRSP withdrawals should somehow be accounted for.

Actually now I see that you have allocated some cash to handle future tax liabilities, but you put that as an asset, without simultaneously putting in any numbers on the liability side. So your networth maybe slightly inflated.

You could include in your assets the annual contribution to the RESP (2X2500$/year), not the govt subsidy nor annual gains, as the annual contributions are technically yours (at least with CST or Universitas, I guess it’s the same for all plans?)

I don’t include my kids RESP funds in my net worth. I track it, and that’s about it. Would you include the money sitting in their savings accounts? Or the piggy bank at home? I know I wouldn’t, so I don’t include the RESP.

As for the RESPs, what happens if your kids don’t end up going to college? (No offence to you or your wife.) Then would you gift the money to your kids at some point? Or would you withdraw it from RESPs and gift it to yourselves?

Putting a value on a defined benefit plan is always difficult. I have always done it the same way you have but I wonder there is a different way? Could you do a basic time value of money calculation using the CPI as the discount rate? What is more accurate; value of contributions or value of future cash flow?

Q on how to add in Defined Benefit Plan to Net Worth. I only add in the amount I contribute towards the plan as I assume that money is mine in case the crap hits the fan. I am a Provincial employee.

Is that the right way to do this?

Hey FrugalTrader,

Can I ask you why you keep a balance on your Smith HELOC? I’m sure it’s been answered so feel free to link me to a blog post. I understand that you can write off the interest you pay on it, but is that really worth it in terms of a tax break?

I’m purchasing my first condo soon and am looking into doing the same technique (after I read up on the fine details, anyone got a good updated book?)

Look forward to your answer.

Congatulations on another positive month, and for getting all your TFSA contributions done already. I really like how you post this and it has kind of motivated me to make my net worth public to keep me accountable too.

@Slacker – If he includes his RRSP and pension money under assets, does he also have to include his retirement costs under liabilities? ;)

Amazing stuff.

When I calculate my net worth, I don’t include my DB pension. I probably should, for many reasons.

These posts inspire me to keep working hard, investing and paying down debt.

Keep up the great work! Will include later this week in my Weekend Reading roundup.


Yea, this is what people need to focus on..

Focus on your net worth – not your wages..

@Mile Holman: Good point. I just want people to start paying attention to future liabilities. A promise to the bank that you’ll pay back the mortgage is somewhat similar to a promise to your children that you will fund their education.

Networth = assets – liabilities

I rarely see this information posted publicly like this from a blogger. I must say I am surprised and somewhat impressed. Keep up the great work! It must be very relieving to have that mortgage paid off.

To me, net worth is what I could walk away with tomorrow. Therefore the RESPs are included (but not including the grants which would have to be paid back). The future expense for schooling is just that, a future expense that will be paid for through future revenues.

As for DB pensions, I simply use the transfer value on my annual pension statement in my net worth calculation, minus taxes payable. If I quit tomorrow, about $90K could be transferred to a registered plan, and another $70K would have to be cashed out since it’s above the allowable limits. I ballpark the total value around $120K and add to net worth.

Question about your TFSA. I noticed you have 40200 in there, between you and your lady.

Does that mean you have only made 200 bucks in there since 2009? Sitting in a savings account at 1.5%-2%?

Isn’t the point of this account to take huge risks for huge profit so the govt can’t get their fat fingers on your capital gains?

I ask this question to everybody. What’s in your TFSA?

Congrats! That is awesome and keep up the good work!

Very good! Many people would relax where you are, as obviously are mortgage free at the age of 35 : -)

Can I ask you a question – why do you count your prime residence as an asset on your way to financial independence? You still need a place to live.

Have you tried to calculate what is more beneficial – rent or own your own place?

If he didn’t count his home as part of his net worth, his net worth would be half of what it is, maybe even less. So obviously, he has to count it.

Uh oh.
The ol’ “My house is an asset” argument!

Each to their own on this one, I guess.

Accordingly, institutes which conduct wealth studies do NOT take into account principal residence when calculating the net worth of individuals.

Just sayin’.

Institutes or individuals that obay to accounting law, divorce court or death disposition surely consider real estate on the balance sheet.. bankruptcy too, tax man you name it.

So why not include it on your net worth?

PS networth up more than double our conbined monthly income! Let’s go markets!

Let’s not go markets!! I’d much rather keep buying cheap.

@ Frugal:
I don’t think that the “institutes which conduct wealth studies” SST is talking about would consider a car either. To me it makes sense, since to increase your wealth in any meaningful way, you would need to sell the house and (a) start renting or (b) buy something giving a lesser standard of living.

So I personally would not include it. But we are not talking as the truly rich here anyway, so who cares…

: I guess I’m part of the ‘asset = positive cash flow (or at least not negative)’ camp as opposed to the ‘asset = anything than can be owned’ camp. I wouldn’t lump an automobile or a house in with equities, precious metals, real estate, etc. For one thing, do you have to pay taxes every single year on the stocks you HOLD (not sell) in your portfolio? A car/house requires monetary input above and beyond initial outlay just to maintain the value, if the input ceases, the value of the “asset” will eventually degrade quite substantially, if not to zero. I can buy one share of Facebook now, never spend another penny towards that entity, and sell it in 50 years for (hopefully) a profit.

I guess one could make the argument of proximity of cost vs. gain. Mr. Z has to assume 100% of the costs to keep my one share of Facebook afloat for the next 50 years, in return I will make an infinitesimal fraction of his gain. Where as with a principle residence (or car), I the owner, assume 100% of the costs for the duration of ownership and will reap 100% of the reward.

@Jungle: would you consider your post-secondary education (at whatever level) a net-worth asset as well? Why not? You paid for it, it’s now your intellectual property.

As for your other examples pertaining to ‘principle residence’ — divorce court, death disposition, bankruptcy, tax man — these consider a “home” to be an asset simply because there is a change in ownership. And we all know that no transaction in Canada shall go unpilfered!

We don’t put the value of our education on our net worth statement, so no, I do not consider it a hard asset I could sell. But as you said intellectual assest, sure. I could sell my self a job with that education. Going to school is an asset in that expression, but it’s not really a hard asset.

Paying taxes is not my favorite past time, but I understand what they are for and what they do. Interesting that at least your property taxes are paying for services such as garbage pick up, emergency, snow removal, parks maintenance, public schooling. All of that stuff is not free! And really the costly services associate with it are really for those services, not costs that do anything for your house.

Unless you have tfsa, you do have to pay taxes on gains from stocksmutual fund investments too. They are not exactly tax free.

There are a lot of things I pay for that I don’t consider an hard asset that I own and can sell. Food, heating, electricity, etc. These are just expenses.

Ah, the Wide World of Economics!
So fuzzy! :)


“Asset” is an accounting term, not an economic term.It refers to an item of economic value that you own, and usually that you could exchange for cash.

My father always said a car was a liability :) , but technically a house or a car are definitely assets.

If you look at retirement planning, then a house is not an asset, unless you plan to sell it when you retire. In fact, any asset that is not intended for retirement is not an asset for retirement planning purposes, including RESPs or investments for other purposes.

An education is valuable, but is not technically an asset. It is not something that you can exchange for cash (except possibly indirectly). Accountants would have a lot of trouble valuing and depreciating a university degree. :)


Hi FT,

The one question I have is: Why do you include your defined benefit pension as an asset? From an accounting or financial planning view, we would not normally count it.

A pension is a life annuity. You can buy one by giving cash irrevocably to an insurance company, who will then pay you an income for life.

Your pension is more like a car lease. Normally, we do not show a car lease as a debt. It is more like a fixed required payment. Similarly, you do not actually own the car, just like your pension is actually owned by the insurance company.

A pension is an entitlement. For example, I will get OAS every year after I turn 65, but I do not count that as an asset.

You also cannot exchange your pension for cash.

The one exception where we count a pension as an asset is when you intend to commute it. If that is your intent, then you will get a large lump sum of investments and/or cash, instead of the future payments. In that case, it is probably reasonable to include it as an asset.

Why do you include it, FT?


To not take the pension into account seems a bit superficial. For instance, a 35-year government secretary with no assets other than her pension and earning 50K a year will retire at 60 with a 35K pension, indexed to inflation. A private sector worker with no pension would have to put away at least 600K to buy an annuity matching that. So on paper our gvt secretary is dirt poor by the conventional asset standards, while in reality she is relatively well off. To ignore the value of the pension plan is to obscure true net worth, including the value of choosing a job with a DB plan. Net worth is what my wife and I could walk away with tomorrow, and that includes around $230K from our pensions if we commuted part of it and cashed out the rest (according to gvt rules).

Hi FT – Off topic, but wouldn’t it be better (from a dollar cost averaging perspective) to invest in RESPs and TFSAs regularly throughout the year rather than a lump sum at the beginning of each year?

This is a great site. I found it while googling for financial information.

I have about $15,000 I’d like to put in short term 6 month investment with near zero risk.

…… anyone have suggestion on best investment vehicle?

If someone sues you I guess they know how much to go after.

Siddha, you could put it into ING Direct TFSA account TFSA 90 day GIC at 2.5%. If you haven’t already used up your contribution limit.
Or open up a child account with ING for 2% and no restrictions on withdrawals.

Why do you adjust your house value by 3% up from purchase price for inflation? This is not correct. This asset is only worth what you can SELL for TODAY. And next year that will likely be a lot less!

FT – Great site. When you adjust your house for inflation annually, do you compound it or adjust the same amount every year based on the original purchase price?