Welcome to the recurring monthly net worth updateThe 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.


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.


  1. MoneyGrubbingLawyer on October 30, 2008 at 9:24 am

    Congrats, FT. I’m impressed that you managed to survive October with a decrease of only 0.26%. I ran my numbers yesterday and I’m down at least 2%, and I thought I was doing quite well with that!

  2. FrugalTrader on October 30, 2008 at 9:33 am

    Thanks for the kind words MGL. As I mentioned in the post, we minimized the damaged due to increased savings and a little stroke of luck with the personal liability being a little less than expected.

  3. David V on October 30, 2008 at 10:08 am

    This may have been brought up before, but how do you deal with the intrinsic loss of value in your two vehicles? I wouldn’t suggest dropping the value each month, but how would one do it properly?

    I heard today that 25% of people who live in Toronto don’t own a car, which I fall into, so it doesn’t matter for my net worth, but I was thinking about the issue.

  4. FrugalTrader on October 30, 2008 at 10:10 am

    David, I use Canada’s Black book each month to determine the value of my vehicles.

  5. Canadian Tax Resource on October 30, 2008 at 10:23 am

    When I value property for the purposes of net worth, I will use MLS and run comps for homes in the area. Since the market is a little flat, you might want to discount the lised prices by 5%.

    This method uses real market data and is more realistic than using inflation.

    The objective of valuation is to determine the amount of money you wuld get if you were to liquidate.

    One other thing. Do you account for accrued tax liabilities or credits? If you have accrued net capital gains or losses these generate into tax savings or liabilities. To provide a truer picture I would recommend including these as assets or liabilities accordingly using your marginal tax rate.

  6. FrugalTrader on October 30, 2008 at 10:37 am

    Great points CTR. Typically, when I valuate my properties (like my first house), I take the lower value of the comps range then subtract the realtor fee.

    With regards to counting for taxation, that would also mean that I should reduce my RRSP value by my MTR at retirement?

  7. Dividend Growth Investor on October 30, 2008 at 12:01 pm


    Your previous post puts your Smith portfolio at 25K, while in your networth you price it at 46K. Am i missing something?

  8. nobleea on October 30, 2008 at 12:20 pm

    The downside of using the MLS comps to value your house is that you have to take a hit when the market goes down. And it will. Then it’s quite painful to watch your networth drop every month by considerable amounts.

  9. Sam Li on October 30, 2008 at 12:25 pm

    MDJ, keep it up you are doing good!
    If I may, offer my thoughts regarding property value… Definitely MLS is a great source for property estimation if you are planning to sell it in a near future. But if we are talking about long term ownership I would stick MPAC reports, as a property owner you should receive them periodically. The value of your property is used to calculate property taxes. This combination is quite important if you don’t have plans to sell it any soon and since the report is behind the market it’s a most conservative estimation. I have more details here http://www.householdstatement.com/post/2008/09/23/First-Entry.aspx
    MDJ, I’m not sure if I can post a link to my blog here but if it’s not common practice please let me know, I will avoid doing it in the future. Tnx.

  10. Deb on October 30, 2008 at 12:31 pm

    Regarding your Smith Manouver portfolio, I’m little bit confused. In your yesterday’s update you stated your total cost base to be $30,500 and today’s post says HELOC Balance is $51,200. Did you buy anything worth $21,000 in between. Just curious. It might not be a bad idea to buy now, but high leaveraging is looking very risky.

  11. Four Pillars on October 30, 2008 at 2:30 pm

    I’ve always thought that real estate was too difficult to appraise to include in a net worth statement.

    I can’t remember if I asked you this before but when you sold your old house – how did the net amount compare to the estimation you were using in your networth calculation?


  12. FrugalTrader on October 30, 2008 at 2:38 pm

    Yes, I can see how yesterday’s post and today’s post regarding the SM portfolio values can seem a bit off. The explanation is simple, yesterdays post just included my equities, but didn’t include cash. I transferred $50k to my discount brokerage from my HELOC at the beginning, which means that I still have a significant amount of cash sitting in my discount brokerage waiting to be deployed.

    Mike, when I sold my house last time it was pretty much spot on as the market at that time was very predictable. Right now though, the markets are in skyrocket mode, so i’m hesitant to use current market values as I feel that they will correct. If I was to use current market values, I could easily add 10% onto my current valuation and still be on the low side. Going forward, I will remain conservative in my primary residence valuations.

  13. nobleea on October 30, 2008 at 2:59 pm

    I know its difficult to include real estate (or primary household) in net worth, but really you have to. would you not include the mortgage against it in the liabilities section, what about a HELOC (that was used for ‘recreation’ or used for investing).

  14. cannon_fodder on October 30, 2008 at 11:38 pm


    How much difference (percentage wise) does your tax assessment value your home from what value you assign it? We recently received our new tax bill and for the first time it assessed it at a value higher than we did (in fact, we had to have our house appraised for renewing our mortgage).

    Usually the tax company came in 5-10% lower but this time they were a good 10% higher. Fortunately, they are “phasing” in the assessment over 4 years. In other words, they put a value on our house beginning Jan 1, 2008 but will only accrue the uplift in 25% increments per year. As a result, we probably will see our property tax decrease again. Nice!

  15. DAvid on October 31, 2008 at 12:27 am

    According to my sister, St. John’s has a very arbitrary means of calculating assessment values which is completely unrelated to expected sale price. As such, it is impossible to use the assessment to calculate the real value of your home. I recall that for many years, Mayor Wells prided himself on keeping the mil rate unchanged — the city adjusted everyone’s assessment values to meet the need for $$$$, regardless of the economic state of the housing market.


  16. Sam Li on October 31, 2008 at 9:06 am

    You always can dispute the assessment, you have legal right to do so.

  17. Dividend Growth Investor on October 31, 2008 at 11:08 am

    Ok that makes sense. I didn’t think about the cash :-) I guess the cash portion has outperformed the market by 20%.. It’s funny to say it but my savings account has outperformed the S&P 500 for the past 10 years :-(

  18. Chris on November 1, 2008 at 3:09 pm

    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?

  19. DAvid on November 1, 2008 at 5:01 pm

    Could you describe the financial advantage you see in taking the steps you have suggested?


  20. MultifolDream$ on November 1, 2008 at 7:59 pm

    Good results in a tough month!

  21. FrugalTrader on November 2, 2008 at 8:38 am

    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.

  22. DAvid on November 2, 2008 at 12:47 pm

    Sorry, I misread your comment. Please disregard my question.


  23. Scott on November 2, 2008 at 12:49 pm

    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.

  24. Julie on November 3, 2008 at 11:12 pm

    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.

  25. Millionaire Acts on November 28, 2008 at 6:33 am

    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. ;)

  26. Jeanette - single mom on December 1, 2008 at 3:46 am

    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.

  27. DAvid on December 1, 2008 at 12:51 pm

    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.


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