Net Worth Update May 2010 (+2.67) – Sell in May and Go Away?

Welcome to the Million Dollar Journey May 2010 Net Worth Update – Summer Correction Edition.

For those of you who believe in seasonality, there is a recognizable historic pattern of market performance between the months of October and May, and bearish the remaining months.  That’s where the saying “sell in May and go away” comes from, but what is the reason?  It could be that large institutional traders go on vacation over the summer months, or it could be simply a self fulfilling prophecy.

As with any patterns, they don’t work all the time with 2009 being the prime example.  If someone were to sell in May 2009, they would have missed out on a large portion of the astronomical gains.  However, more importantly, will this mantra hold true for 2010?  It seems that market sentiment expects a correction after the big run up and large volatility has already started.  What do you think, will we see large correction this summer?

It may be time to start hedging your equity position.  For me, I’m still holding my equities, but I also have a large position of cash that’s just waiting for the right opportunity.

Lets talk a bit about the numbers for the month.  With the volatility, my investment accounts have taken a bit of a beating, as indicated by the drop in capital value.  In fact, I’ve picked up a couple new positions in my Smith Manoeuvre portfolio which I’ll detail in future post.

On the other hand, savings has increased dramatically this month.   Even though our cash flow was strong, this wasn’t the main reason for the increase.  I had over estimated my tax owing for 2009 (calculated behind the scenes), and we received a largish tax refund.  In addition this, the $3,000 capital gains tax owning as reported in previous updates was eliminated by selling non-registered equities at a loss.  We took a portion of the extra cash to catch up on our TFSA‘s which are now maxed out.

On to the numbers:

Assets: $ 521,470 (+1.36%)

  • Cash: $4,500 (+0.00%)
  • Savings: $42,000.00 (+20.34%)
  • Registered/Retirement Investment Accounts (RRSP): $75,200.00 (-2.84%)
  • Tax Free Savings Accounts (TFSA):  $19,970 (+33.40%)
  • Defined Benefit Pension: $29,450.00 (+1.73%)
  • Non-Registered Investment Accounts: $13,100.00 (-5.07%)
  • Smith Manoeuvre Investment Account: $54,000.00 (-4.76%)
  • Principal Residence: $283,250 (+0.00%) (purchase price adjusted for inflation)

Liabilities$71,100.00 (-6.20%)

  • Tax Liability: $0 (-100.00%)
  • Principal Residence Mortgage (readvanceable): $17,100.00 (-9.52%)
  • HELOC balance: $54,000 (+0.19%)

Total Net Worth: ~$450,370.00(+2.67%)

  • Started 2010 with Net Worth: $399,600.00
  • Year to Date Gain/Loss: +12.71%

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). 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 can prove 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 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.

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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FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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14 years ago

>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 can prove useful.

Hey FrugalTrader,

Sorry if this has been discussed before, but what is the usefulness of this (relationship with a full service bank) other than financial security? Would you mind sharing? I’m doing all my banking + personal finance through discount institutions/brokers at the moment so I’m very curious as to why this is (and if I’m missing out on something)….

Ms Save Money
14 years ago

Wow! you’re making great progress as always. It’s always a good idea to have a sufficient amount of cash to jump on opportunities that come up.

14 years ago

Nice work. A great month considering the market volatility.

I hit 3% growth this month, all due to debt repayment from savings and a big tax return also, no thanks to the crazy markets!

Keep up the good work.

Mike W
14 years ago

@ #7 (me…): nevermind, found it… actually we’re the same age. Good job on your progress, man.

Mike W
14 years ago

I think it’s fascinating how you share this information, and make yourself publicly accountable to reaching your goal. I saw that your goal is to reach a net worth of $1m by age 35, but am unsure of your current age. Mind to share?

14 years ago

I have a generic net worth calculation question. I noticed you included a future tax liability line item for your non-registered investment capital gains; Why do you not include a similar line item for a future income tax liability associated with your RRSP? My problem stems from valuing $10000 in RRSP assets the same as $10000 in TFSA assets for the purposes of net worth, as unless you plan on a very low RRSP withdrawal rate in retirement the RRSP will almost certainly be subject to income tax. Wouldn’t it be more prudent to include an income tax liability (say 10%-30% of assets depending on your estimated withdrawal rate) against your RRSP? Thanks in advance for your feedback.

14 years ago

Great update on Net Worth, I find it very intersting that again plain old boring savings is what really growing your net worth. Not the smith manover, not tax efficient investment in RRSP’s. Even the 33% gain in the TFSA account, I’m guessing is based on saving being deposited and not from investments in that account growing.

What this really shows to me is again, spend less then you make and your net worth will grow.

14 years ago

You managed to have a positive month despite the awful month of May we got. I don’t know how you do it. Good job.

Financial Cents
14 years ago

Hey Frugal,

Keep up the great work/progress on your net worth. A great gain considering market volatility.

Instead of “sell in may and go away” how about “buy good companies today and hold to make hay”?