October 2008 Net Worth Update (-0.26%)
Welcome to the recurring monthly net worth update – The October 2008 edition.
Before I started writing this update, I was actually quite nervous about the result as my portfolios are deep in the red for the year. This dramatic correction is the largest of my investing career and it comes with mixed feelings. The good is that it gives me an opportunity to deploy some idle cash sitting in my investment accounts to buy low priced stocks. The bad being that my existing positions are taking a severe beating and the losses seem to grow daily.
Even with major losses to the portfolio, the savior this month was a combination of increased household income, and keeping our expenses in check (no TV’s this month). Without this, the loss this month would have been significantly greater.
Here are the assets/liabilities result for the month of October:
Assets: $583,490.00 (-1.60%)
- Cash: $4,500 (+0.00%)
- Savings: $32,740 (+3.94%)
- Registered/Retirement Investment Account: $45,000 (-14.61%)
- Pension: $22,350 (+0.00%)
- Non-Registered Investment Account: $18,500 (+2.78%)
- Smith Manoeuvre Investment Account: $46,900 (-6.94%)
- Investment Property: $ 124,500 (+0.00%)
- Principal Residence: $275,000 (+0.00%) (purchase price)
- Vehicles: $14,000 (2 vehicles) (+0.00%)
Liabilities: $267,100.00 (-3.13%)
- Investment Property Mortgage: $92,500 (-0.22%)
- Principal Residence Mortgage (readvanceable): $123,400 (-0.52%)
- HELOC balance: $51,200 (+0.43%)
Total Net Worth: ~$316,390 (-0.26%)
Started 2008 with Net Worth: $279,300
Year to Date Gain/Loss: +13.28%
For those of you who have been watching my updates every month, you may be wondering where my “other liabilities” went. That personal liability was covered this month and fortunately it was over estimated. The amount owed was covered by cash savings.
Well, it’s official. For the first time since I started reporting my net worth at the end of 2006, I am reporting negative net worth growth for the month. The bear market has got a death grip on my portfolio which resulted in paper losses greater than my savings could cover. If we reach a bottom soon, I’m optimistic about my portfolio growth going forward.
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. 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 all held with PC Financial. We hold a fair bit of cash due to a cash liability coming in the near future along with the fact that we typically have some cash on hand 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.
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 despite significant appreciation in the real estate market that we’re in. The rental property value was it’s appraised value in 2006. I’m considering raising the reported values of the homes at the rate of inflation starting January 2009.
I've Completed My Million Dollar Journey. Let Me Guide You Through Yours!
Sign up below to get a copy of our free eBook: Can I Retire Yet?
Jeanette,
You may wish to drop by Canadian Capitalist’s site, and review the comments there about the use of portfolios based on index funds, an less expensive alternative to actively managed funds.
DAvid
I am fortunate to have worked hard in real estate and saved a substantial amount of my own money before I found myself a single mom. Watching how fast money can disappear is rather frightening. My portfolio to date has decreased by almost $350,000 …not just from this dramatic correction…but from poor choices in brokers and investments throughout the years. I was always able to ‘earn’ money…but unable to manage and invest it. While I understand a great deal about the investment process and tax consequences and seek advice ongoingly…I still find myself overwhelmed. I obviously do not have the aptitude to understand this arena even after taking college courses and attending seminars. I always hoped to have a partner that could shore up my weaknesses…but that may not be real life…so I end up having to hand my portfolio over to strangers who take even less care…motivated by commissions perhaps. Having said that…I still own my home $400K, have about 150K in savings and a few stocks, what is left of 60K in mutual funds (down to about 45 I think), 60K in second mortgages, 23K in RRSP and few dollars here and there. I would like to know what program you use to track your investments…and keep your books up to date…and what action you would take to get help on investment decisions and management…without giving away the farm! I’m ready for a fresh approach and have signed up for your blog…committing to read everything possible…what are the logical steps to take to invest safely. I have some ideas…but would love some support.
Wow! I think I will imitate you with the way you update your networth. By the way, I thought of registering this domain when I was about to start my blog. ;)
I’m looking at your $4500 in cash in chequing accounts. I agree that a good relationship with a real banker is important, but I balk at the notion of keeping so much money tied up doing nothing. If you look at the big banks, many of them offer “no fee” accounts – where you pay per transaction. Since you use PCF, you don’t need to make many transactions at a real bank. I’m sure you’ve done your homework, and perhaps there are other considerations, but $4500 seems like a high balance to maintain.
Didn’t know where else to post this, but when FT says “For the first time since I started reporting my net worth…I am reporting negative net worth growth” (remember, his first name is FRUGAL!), I would say anyone who has contact with money will feel the bite of the economic crisis.
I read this article — http://ca.news.finance.yahoo.com/s/01112008/24/f-afp-iceland-protestors-seek-government-resignation-crisis.html — and am completely baffled as to why NO Americans have taken a similar stance in their own country where this mess originated? Are American citizens that complacent towards the “criminal” actions of their government and banks, even in the face of loosing 50% of their life savings and/or their home and/or their job? Bizarre.
Chris,
Sorry, I misread your comment. Please disregard my question.
DAvid
Chris, before I started the SM, I sold off the majority of my non-reg account. I was planning on selling off the remaining soon, but with the current market, it may be a while before I sell them off. However, if I have any capital gains payable this year, I may sell some of them off to claim the loss.
Good results in a tough month!
Chris,
Could you describe the financial advantage you see in taking the steps you have suggested?
DAvid
Hey FT – I was wondering if you ever planned to liquidate your non-registered portfolio, put the cash against your mortgage, and then buy back the stocks in your Smith Manoeuvre account?