Net Worth Update October 2010 (+1.78%)

Welcome to the Million Dollar Journey October 2010 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.  If you scroll down below, you’ll see that the net worth is getting close to the $500k mark with a little over 4 years to go.  If you would like to follow my journey, you can get updates sent directly to your email.

With the markets still heading in the upward direction, my portfolios are still gaining month over month.  In particular, my leveraged dividend portfolio has been seeing gains as of late as dividend stocks are the current media darling.  Why?  With interest rates at record lows, many investors are looking for a decent income, so anything with a reasonable yield is targeted.  For example, dividend stocks, bonds, preferred shares are all being bought up, which is why their values are relatively high.   My portfolios still have a high percentage of cash, but I’ve been actively looking and purchasing equities that look undervalued.  I still have some ways to go before I’m fully invested, but moving in the right direction none the less.

In addition to the strong markets, our savings remain strong.  We did not have any significant expenses in September, so in combination with our relatively low expenses, it equates to more cash in the bank (how we save money).

During my last update, a few readers suggested that I take some of the cash I have sitting around doing nothing, and simply pay off the mortgage.  The reason I’ve been holding off is because of my ridiculously low rate (P-0.85%), but as one of my goals for the year is to pay off the mortgage, now is a better time than never right?  I’m committed to paying the remaining balance this month so that I’ll be mortgage free in 2010!

For those of you who track your net worth, how did it turn out for October?

On to the numbers:

Assets: $ 552,300 (+1.24%)

• Cash: $4,500 (+0.00%)
• Savings: $43,500.00 (+11.52%)
• Registered/Retirement Investment Accounts (RRSP): $100,300.00 (+1.11%)
• Tax Free Savings Accounts (TFSA):  $20,450 (+0.25%)
• Defined Benefit Pension: $31,600.00 (+1.28%)
• Non-Registered Investment Accounts: $12,200.00 (+1.67%)
• Smith Manoeuvre Investment Account: $57,000.00 (+1.79%)
• Principal Residence: $283,250 (+0.00%) (purchase price adjusted for inflation)

Liabilities: $64,900.00 (-2.26%)

• Principal Residence Mortgage (readvanceable): $8,600.00 (-14.85%)
• Investment LOC balance: $55,000 (+0.36%)

Total Net Worth: ~$489,200.00(+1.78%)

• Started 2010 with Net Worth: $399,600.00
• Year to Date Gain/Loss: +22.42%

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.

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.

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.