Welcome to the Million Dollar Journey July 2013 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 – soon!). 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.
Lets start off with one of the favorite topics here on MDJ – the stock market! Last month I wrote about the volatility in June which is expected to last until October. However, July has been very kind to investors with a strong move upward in the TSX, S&P500 and the MSCI EAFE (international) index. The TSX gained 4%, S&P500 gained 4.9% and the MSCI EAFE advancing 3%. These gains contributed significantly towards the 1.89% net worth gain this month with my RRSP jumping 3.83% and leveraged dividend portfolio gaining 2.83%.
We also gained some lucky money this month. I rebalanced my daughters RESP in late June to purchase more international exposure due to the market decline. I must have clicked on the wrong button, but I realized a month later that I purchased 511 units (ie. all the cash in the money market account) of the international index instead of $500 worth. Lucky for me is that the index jumped about 10% during that time period! I have since rebalanced back to normal ratios and crystallized about $500 in capital gains. We also had some luck with earnings this month and had a pop in some of our smaller holdings – Facebook, Apple and Baidu.
How did your portfolio perform this month? I suspect that you had a good month as well?
On to the numbers:
Assets: $887,000 (+1.70%)
- Cash: $4,500 (+0.00%)
- Savings: $20,000 (+0.00%)
- Registered/Retirement Investment Accounts (RRSP): $158,500(+3.93%)
- Tax Free Savings Accounts (TFSA): $52,500 (+1.94%)
- Defined Benefit Pension: $46,000 (+0.66%)
- Non-Registered Investment Accounts: $169,000 (+2.42%)
- Smith Manoeuvre Investment Account: $127,000 (+2.83%)
- Principal Residence: $309,500 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $106,200 (+0.28%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $106,200 (+0.28%)
Total Net Worth: ~$780,800 (+1.89%)
- Started 2013 with Net Worth: $690,400
- Year to Date Gain/Loss: +13.09%
In my last update, 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
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 do not carry any 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.
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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