Welcome to the Million Dollar Journey June 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 May to October unfavourable period for the stock market.  Perhaps the markets were too lofty prior to entering this period, but they certainly have corrected in June.  The TSX dropped 3.8% including dividends (via XIU) while the SP500 fared better dropping 1.6% including dividends (via SPY).

I suspect that volatility will continue until early fall but that’s not to say that I’m not buying.  I’ll keep buying as long as valuations are reasonable.  What helps is to have an investment strategy and sticking with it.  For me, it’s buying long term dividend stocks that have a history of increasing their dividends.  Here is a more detailed post on when to buy dividend stocks.   Most recently, I have added to my REIT, utility and telecom positions.

With my RRSP containing mostly U.S dividend stocks, the drop seemed to match the SP500 drop for June.  Along the same lines, I expected my leveraged Canadian dividend portfolio to drop significantly alongside the TSX, however, it was pretty resilient this month only dropping 0.8%.  Having said that, it appears that as the portfolios get larger, the more they affect net worth growth.  Overall though, I’m grateful for the positive month.

On to the numbers:

Assets: $872,200 (+0.18%)

  • Cash: $4,500 (+0.00%)
  • Savings: $20,000 (+0.00%)
  • Registered/Retirement Investment Accounts (RRSP): $152,500(-1.74%)
  • Tax Free Savings Accounts (TFSA):  $51,500 (-1.90%)
  • Defined Benefit Pension: $45,400 (+0.66%)
  • Non-Registered Investment Accounts: $165,000 (+3.77%)
  • Smith Manoeuvre Investment Account: $123,500 (-0.80%)
  • Principal Residence: $309,500 (+0.00%) (purchase price adjusted for inflation annually)

Liabilities$105,900 (+0.28%)

Total Net Worth: ~$766,300 (+0.17%)

  • Started 2013 with Net Worth: $690,400
  • Year to Date Gain/Loss: +10.99%

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.

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.

Savings

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.

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.

Pension

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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