Welcome to the Million Dollar Journey September 2011 Net Worth Update – The Volatility Continues 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.

Before I start with the update, I’d like to take a moment to pay my respects to Fraser Smith.  Mr. Smith, the man who popularized The Smith Manoeuvre, passed away in late Sept 2011.  Although Mr. Smith did not invent the strategy of leveraging your home to invest, he popularized the strategy, and empowered investors who had the risk tolerance.  In fact, the Smith Manoeuvre strategy was one of the first strategies that I wrote about (and implemented) when I started Million Dollar Journey in 2006.  There is no doubt that the Smith Manoeuvre will live on in the personal finance world for many generations to come.

August was the beginning of significant volatility in the market and has continued through September.  It’s kinda painful checking in on portfolios when the markets are in a tail spin, but it’s also helpful for testing risk tolerance.   For me (and a lot of you), there’s quite a few years remaining until retirement, and with a significant drop in portfolio value, all I see are buying opportunities. We have added to the family RESP, added a couple of positions to the leveraged portfolio, and purchased a small amount of a US large cap dividend stock.  For those of you with the same train of thought, what investment opportunities do you have your eye on?

Investment performance really dragged down overall net worth which has resulted the second negative month in a row.  Fortunately, our savings amount buffered the losses a little and we still remain up +10.6% year to date.   Hopefully the last quarter of the year will bring some gains!

On to the numbers:

Assets: $ 640,448.00 (-0.53%)

  • Cash: $4,500 (+0.00%)
  • Savings: $56,000 (+9.80%)
  • Registered/Retirement Investment Accounts (RRSP): $111,000(-3.48%)
  • Tax Free Savings Accounts (TFSA):  $28,500 (-5.00%)
  • Defined Benefit Pension: $36,000 (+1.12%)
  • Non-Registered Investment Accounts: $29,600 (+1.02%)
  • Smith Manoeuvre Investment Account: $83,100 (-4.15%)
  • Principal Residence: $291,748 (+0.00%) (purchase price adjusted for inflation annually)

Liabilities$81,100 (+0.25%)

Total Net Worth: ~$559,348 (-0.64%)

  • Started 2011 with Net Worth: $505,800
  • Year to Date Gain/Loss: +10.59%

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.


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.


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.


  1. NYCer on September 30, 2011 at 9:56 am

    That’s not bad at all.

    2 Questions:

    1) Is there a reason you don’t also include a month over month update as well as YTD and “Since Inception” update?

    2) Where is it most advantageous to hold US large cap divident stock? Registered accounts? Is there no tax holdback thing?

  2. FrugalTrader on September 30, 2011 at 10:36 am

    @NYCer, i typically do a year end graph which shows the progress over the years. Thanks for the reminder though because I forgot about it! :)

    For US large cap dividend stocks, I would say the RRSP is the best bet because of the withholding tax issues with other accounts. That’s where I hold mine.

  3. Money Beagle on September 30, 2011 at 11:00 am

    I’m getting really sick of the investment returns. The reason for my frustration is because the same b.s. causes the markets to go up one day and then down the next: Europe. One day all looks good and the next day it’s gloom and doom. Rinse, lather, and repeat. Someone is getting rich off this business of perceived ‘uncertainty’ but as usual, everyday investors are the ones getting jacked.

  4. NYCer on September 30, 2011 at 1:01 pm

    Thanks FrugalTrader .

    Do you have a post/entry re: witholding taxes for these kind of things and how they work?

  5. S on September 30, 2011 at 1:07 pm

    Why don’t you actually list the content of your portfolios instead of just giving the percentage increase/decrease for the month?

    There’s no data to support your claims; just your say so.

    You could be -3.48% or -13.48% in your RRSP this month. Who knows? There’s nothing to substantiate your numbers which I find very questionable.

    If you really want people to be able to track your record, you need to provide more disclosure.

    Oh by the way everyone, my portfolio is +25% this month!

  6. Al on September 30, 2011 at 1:16 pm

    @ S

    Agree totally. Furthermore I call on FT to please post his birth certificate online for us so as to dispell the vicous rumors that he isn’t actually FT.

  7. DividendMan on September 30, 2011 at 2:35 pm


    I agree! FT is scamming us all!!!…. by giving information for free, that we don’t have to believe, and motivating us to save money as well as some neat tips and analyses of credits cards and stuff….

    What a scam!

  8. FrugalTrader on September 30, 2011 at 4:20 pm

    LOL, thanks for the defence guys!

    @S, I thought I was doing quite a bit of disclosure. My opinion is to take whatever you read on the net with a grain of salt. You can view my SM portfolio here:

  9. FrugalTrader on September 30, 2011 at 4:21 pm

    @NYCer, here you go:

    How withholding taxes work

  10. Sam on September 30, 2011 at 4:28 pm


    I have US Dividend Stock in my RRSP and yet the witholding tax is deducted each time the dividend is paid. My account is with TD Waterhouse. Am I being duped?

  11. S on September 30, 2011 at 4:46 pm

    Why the histrionics DividendMan and Al?
    I am not accusing FT of being a scam, fraudster, etc.
    What’s wrong with asking for more portfolio details within the context of net worth analysis?
    Aren’t you interested in gaining some wisdom from FT regarding what stocks he has that can withstand such tumultuous times? Perhaps he has a nice selection of high yielding low betas that we would all benefit from knowing about and discussing within this forum.

  12. BadCaleb on September 30, 2011 at 7:18 pm

    This weekend cannot start fast enough.

  13. Jungle on September 30, 2011 at 7:40 pm

    Agreed. Let’s get this quarter over with and move on. Maybe a couple more drops and the market bottom will be reached.

    Question for Frugal: where are you putting your dividends from your non reg SM stocks?

    We’ll be doing our update tomorrow. (yikes)

  14. FrugalTrader on September 30, 2011 at 10:54 pm

    @Sam, does the line item in your history specifically state withholding tax? Perhaps it’s a forex fee to change from USD to CAD? My understanding is that you should not be paying any withholding tax within an RRSP for US based stocks.

  15. Financial Samurai on October 1, 2011 at 12:05 pm

    Hi Mate,

    Nice progress for the year and thanks for sharing. I just have one main question, and that is regarding liquidity and your cash balance. What is your ideal cash amount, and how comfortable do you feel with your existing cash balance?


    Yakezie Network

  16. The Wealthy Canadian on October 1, 2011 at 12:16 pm

    First off, kudos in paying homage to Fraser Smith in this post FT. Hats off indeed.

    Great job keeping stability this month, especially with all the volatility. If anything, it highlights how you’ve got a well-balanced portfolio; your journey is an interesting one and I look forward to reading more with what lies ahead.

    I checked out your SM holdings; you’ve got a nice basket of stock IMO.

    Keep up the great work and have a good weekend,


  17. FrugalTrader on October 1, 2011 at 12:48 pm

    @Samurai, thanks! We often have a relatively large cash balance for whatever comes up. Could be investment opps, emergency, renovations or even buying another car (we rarely finance).

    @TWC, thanks for the feedback!

  18. Sam on October 1, 2011 at 12:55 pm

    @ FT

    Is it possible to separate your Monthly/YTD returns by Savings (i.e., new money added to the portfolio) v/s Investment Returns.

    When I analyze your portfolio, it appears almost 9.8% is new money (or thereof). Your investments are down -3.48, -5, -4.15. Your non-registered shows a +1.02 and cannot tell how much new money was added to this account.

    I believe, if we take the new money out of the mix, your investment return definitely has not down by just -0.64%. The damage is much more?


    Why accuse DividendMan and Al for Histrionics? What about your claim that the portfolio went up by +25%! What was that?

  19. Gerard on October 1, 2011 at 8:11 pm

    @Sam, I assumed that S’s comment about being up 25% was meant as a joke.

  20. My Own Advisor on October 2, 2011 at 11:28 am

    Nice tribute to Fraser Smith!

    Nice stuff Frugal Trader – certainly with the volatility. Keep up the great work as always.


  21. Engineering Income on October 2, 2011 at 12:03 pm

    Amazingly enough I managed to have a positive change in net worth again this month. The thing that really helped is that all of my investments (excluding pension plans) I have in USD so the drop in the Canadian dollar cushioned the fall in the investment portfolios. And the positive cash flow did the rest.

    I’m with the rest of you guys though, hoping for a ‘nice’ fourth quarter.


  22. MB on October 2, 2011 at 8:43 pm

    Once again, good stuff FT.

    @S: Please read the title. It’s a NET WORTH update – not a portfolio update. FT can disclose as much or as little as he pleases.


  23. Mike on October 3, 2011 at 11:53 am

    What rate of return are you hoping for to turn 660K into 1 million in just over 3 years?

  24. FrugalTrader on October 3, 2011 at 12:57 pm

    @Sam, over the years, it’s been safe to assume that most of my net worth gains have been from savings. We’re a frugal family who has paid off all debt (besides investment loan which pays for itself), so most of our income (salary + business) go to savings.

    @Mike, remember that our net worth return is not the same as investment return. I believe we’ll need in the range of 18%+ net worth return per year going forward. Aggressive, I know!

  25. John Lee on October 5, 2011 at 12:49 am

    @S, while your question certainly might be legitimate, the way you asked it seemed abrupt and rude (even arrogant). Maybe if you had elaborated on why you wanted to know the details, and asked nicely, then you might have received a response and/or some support for your request for a response.

    FT, keep up the good work. I was wondering about the same thing as Mike (re: reaching your 1 mill net worth goal), but you just answered it.

  26. CK on October 5, 2011 at 1:30 am

    Somehow, I am of the opinion that we are here to study closely the investment returns from ONLY the portfolio, rather than taking into consideration the ‘dilution’ effect from new money being poured in. But that’s just me.

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