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Net Worth Update Nov 2011 (+0.93%) – Santa Claus Rally?

Welcome to the Million Dollar Journey November 2011 Net Worth Update – Santa Claus Rally Edition. 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..

First, I’d like to apologize for the delay in this post –  my writing schedule got a bit thrown off due to the 5 year anniversary giveaway and life in general!  Between my full time career, online business, and raising two kids under age four with my wife, the schedule can get a bit hectic.

Regardless of how busy things get, I always make time for my favorite hobby – personal finance and investing.  On the tune of investing, the second half of the year was dominated by the bears.  This has brought a ridiculous amount of volatility to any portfolio that has held onto stocks.  Despite how queasy the swings can make even the most seasoned investor feel, it is important to keep perspective of the long term goals.  For me, one financial goal is to build a strong dividend income stream.  Having that goal helps me focus on buying strong dividend stocks when their valuations are attractive, which is why I have been adding positions to that account.

With volatility, there are violent market moves in both directions.  Since the end of November, the TSX has bounced with a gap up that some traders are calling Santa Claus rally.  With the never ending bad news coming from Europe, it is difficult to imagine any sustained rally but there’s always hope for market strength until the end of the year.

What do you think?  Do you think we’ve hit a sustainable rally?  Or perhaps a short term rally followed by a continuation of the down trend?

On to the numbers:

Assets: $ 661,248.00 (+0.85%)

  • Cash: $4,500 (+0.00%)
  • Savings: $65,000 (+8.33%)
  • Registered/Retirement Investment Accounts (RRSP): $117,900(+1.64%)
  • Tax Free Savings Accounts (TFSA):  $29,300 (-0.68%)
  • Defined Benefit Pension: $36,800 (+1.10%)
  • Non-Registered Investment Accounts: $29,700 (-1.00%)
  • Smith Manoeuvre Investment Account: $86,300 (-1.37%)
  • Principal Residence: $291,748 (+0.00%) (purchase price adjusted for inflation annually)

Liabilities$81,650 (+0.31%)

Total Net Worth: ~$579,598.00 (+0.93%)

  • Started 2011 with Net Worth: $505,800
  • Year to Date Gain/Loss: +14.59%

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.

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.

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.

If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).

13 Comments

  1. Jungle on December 12, 2011 at 10:11 am

    At this point, I don’t see this rally going too crazy. In fact I think it lost steam this morning. Funny the US markets have been outperforming the tsx and international index this year.

    I hope it goes down a little more as I want to purchase some index funds.

    Good job on the net worth update. We managed to increase as well.

  2. DavidV on December 12, 2011 at 11:28 am

    I do my net worth check on the first of every month too, and so this was my year end (at least on my excel spreadsheet). I had done it on about November 27 and didn’t meet my yearly goal this year.

    I noticed the market was up big the next few days, so I did it again on December 1 and hit my target. It’s amazing the swing on your net worth the market does. Understandable, but I think I went from .4% increase that month to 1.26% increase, enough to let me exceed my yearly target!

    I didn’t beat your yearly return, but I had 14.15% year gain, which I’m happy with after this year!

  3. Jungle on December 12, 2011 at 4:31 pm

    Well if you noticed stocks went up 4% in one day on Nov 30. That always helps the update.

    But the rest of the markets have been unflattering, but let’s take this as a gift and keep loading up.

    Up 16.2% for the year, one month left.

  4. Liquid Independence on December 12, 2011 at 6:03 pm

    Nice gain. I’m pretty happy with the market in 2011. Hope it does better next year though.

  5. youngandthrifty on December 12, 2011 at 6:25 pm

    Great gains for 2011! I am confident you’ll reach your goal of $1,000,000 by 2014 for sure :)

  6. DividendMan on December 13, 2011 at 9:52 pm

    Hrm… FT, aren’t you afraid of getting to 1M? Seems like you are heading there quickly.

    And by afraid, of course, I mean that you’ll have to rename your blog!! :)

    Maybe I should quickly register fivemilliondollarjourney :)

  7. My Own Advisor on December 13, 2011 at 9:58 pm

    I’m always so pumped to read these posts. Well done FT.

    Will definitely include this post in my Weekend Reading roundup!

  8. FrugalTrader on December 14, 2011 at 9:10 am

    @DividendMan – LOL, not exactly afraid, it’s still quite a while away!

  9. Jungle on December 15, 2011 at 3:38 am

    Frugal jinxed the santa clause rally. lol

  10. On Demand on December 15, 2011 at 3:35 pm

    Do you employ any hedging tool against the downturn of the market? Cause we focus on dividends. would hedging help stabling the whole portfolio? I used FAZ and it seems work well with my portfolio.

  11. Miiockm on December 19, 2011 at 2:38 am

    Question: If you post a net worth update in December, shouldn’t it be “Net Worth Update Dec 2011”, instead of November? My thinking is that it should reflect the month that you are giving the update and not the past month. I understand the gain is from the last month but the “update” was given in this month, December.

    If you think in years instead of months and were writing a yearly update in January 2012, wouldn’t you call it a 2012 update and not 2011?

    I only bring it up because I’ve begun doing monthly net worth updates myself and it looks like I’m a month ahead now.

  12. Slacker on December 19, 2011 at 4:33 am

    On future tax liabilities on RRSP’s:

    I just started estimating the deferred tax liability on my RRSP, and it’s a sizable sum.

    In the worst case scenario of “cashing in”, you could be owing about $50,000 in taxes. In a more reasonable scenario of orderly withdrawal, it could still cost you about $25k to $30k.

    I think it’s reasonable to keep track of significant future liabilities if one bothers to track networth at all.

  13. FrugalTrader on December 19, 2011 at 9:23 am

    @Miiockm, this update was a bit off schedule. I usually do the update near the last day of the month.

    @Slacker, I think it depends on your personal situation. If we end up retiring a bit earlier than traditinoal age, then we’ll likely draw on RRSPs during low income years which will result in a very low tax payable. But you are right, I probably should include something as a tax liability.

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