Welcome to the Million Dollar Journey March 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..
Lets start off with one of my favorite topics, the stock market! There is a divergence between the TSX and the SP500, where the SP500 is on fire and the TSX has been flat. It seems that commodities have cooled down significantly and the big money is flowing into big dividend paying blue chips. Overall though, my investments remained relatively flat for the month.
With my leveraged Canadian dividend stock portfolio being non-registered, I’m slowly converting my RRSP into US and international holdings. Thus far, I’ve sold off some duplicate Canadian positions, and I’ve started to bulk up on strong US dividend stocks, and an ETF for international exposure. Slowly I’m starting to practice what I preach in tax efficiency which is all outlined in my article about portfolio tax allocation.
Even with the flat markets, we managed to squeeze a small gain this month due to an increase in savings from increased income. Besides savings from regular salary, we paid ourselves a dividend (via dividend sprinkling), from our private corporation. You may be thinking about the tax liability associated with the dividend payout, but we only dividend out enough in the year to offset our expected tax refund to a net tax payable as close to $0 as possible.
On to the numbers:
Assets: $697,651 (+0.89%)
- Cash: $4,500 (+0.00%)
- Savings: $66,000 (+10.00%)
- Registered/Retirement Investment Accounts (RRSP): $123,300(-0.48%)
- Tax Free Savings Accounts (TFSA): $40,600 (+0.25%)
- Defined Benefit Pension: $38,100 (+0.53%)
- Non-Registered Investment Accounts: $32,651 (-1.59%)
- Smith Manoeuvre Investment Account: $92,000 (+1.10%)
- Principal Residence: $300,500 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $82,400 (+0.24%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $82,400 (+0.24%)
Total Net Worth: ~$615,251 (+0.98%)
- Started 2012 with Net Worth: $585,228
- Year to Date Gain/Loss: +5.13%
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.