Good luck in 2010.

Thanks for the info on the Smith Manoeuvre.

I will try and send you some information early Feb – OK?

Mark

It is not so much the NW number that is of interest – it is just how much closer we’ve moved towards financial independence.

In spite of the many mistakes I made, we’ve done very well for ourselves. Believe me, your comment about hindsight is one I’ve tried to banish from my thinking. If I instead of buying in the latter part of 2008 I instead shorted, and then sold and went long in March…. well, we could have been financially independent right now.

I also think that if you go to the detail you are, you should try to create a more accurate picture of your house value. You track your investments down to the dollar – one can’t expect you to do the same with the house, but at least some semblance of current status would be a good thing.

Our net worth picture is quite humbling and staggering at the same time. We saw our NW increase by just over 90% in 2009. In absolute terms we saw it increase by more than $500k.

We embarked on the Smith Manoeuvre in August of 2008 and I aggressively moved to tap into all of the equity available in our house to invest in dividend paying stocks. Unfortunately, I got in too early – a mistake I hope not to repeat again.

As a result, we saw our SM portfolio increase by 63%. That sounds more impressive than it is because it was waaaay down at the beginning of the year (and, of course, got worse by March).

**For all of those people who say that they are aggressive, the 2008/2009 period was a true test of just who can walk the walk. There were some very tough days and nights as I thought I had done major damage to our retirement plans. When you see $300k in net worth disappear in just a few months and yet you still stay the course, then you know what kind of investor you are. I started to think about how I might just have delayed retirement by 5 years for my wife and I. I didn’t feel too smart then.**

Our RRSP’s rebounded as well. They were up 47% although that includes contributions.

We eliminated $58k from our SM mortgage / LOC combo.

And, the kids RESP’s went up 65% (or $23k) even though we only added $3k to them.

I put our house appreciating by 5.5% based on a house that is very much like ours which sold in the fall and the prices of other homes in the immediate area. That pegs it at a little less than 4% CAGR since we purchased it in 2003 which includes interior and exterior improvements.

Was it all good? No. My TFSA lost $1k as I used it to play some Betapro 2x ETFs. And, my wife and I worked for a company that declined to pay raises near the end of 2009. We don’t know when they will implement them for 2010 and whether they will be retroactive.

In 2005 I forecasted we would be mortgage free by 2019. Then, in 2008 I learned about the SM and thought we would be mortgage free in 2013. (In 2006 and 2007 I had some good earning years where we put almost all of the unanticipated earnings against the mortgage). Now, we could eliminate it this year.

In summary, 2009 has been a very difficult year and very good year. If I could do anything differently I would definitely have waited until after early March before I plowed into the markets. The year 2010 won’t prove nearly as beneficial to our finances as 2009 – perhaps a 15% improvement to NW is our best expectation.

Caitlin, no need to feel discouraged, I basically started calculating my net worth when I started this blog 3 years ago (around 27).

Yesterday was the best time to start, but the next best time is today!

@FrugalTrader – Holy crap, you’re only 30? Now I feel somewhat discouraged. I’m 28 and I haven’t even successfully calculated my net worth, let alone engineered a 30% increase. *sigh*

Happy New Year and well done!

We’ve managed to increase our net worth 30% over last year as well, closing-in on $500 K. I think it’s great you post your net worth, a great way to track, monitor and report your own success story!!

All the best for 2010 net worth growth!

I haven’t run the official numbers yet, but I think that our net worth is up about 30% for 2009. The market was very kind indeed. Happy New Year!

Jared, yes, it probably would be more accurate to account for the tax liability, however, it’s hard to say what that liability would be. Say that I withdraw from my RRSP’s in future low income years … then there would be very little tax paid.

One thing I was wondering about, is if it would be more accurate to include a tax liability for capital gains (and possibly RRSP). It seems to me that if you are counting the increased values of the investments (assuming your investment accounts are up) then the tax should be counted as a liability as well.

This would give you a much more real value of what your net worth is on liquidation.

Our household only had a 24% increase in net worth. But you know percentages can be misleading ;)

Have you decided what you’ll do with the free cash flow after your mortgage is paid off? Pay off HELOC? or invest it straight up? Maybe time to finally buy that SUV?

Great year of posts, best luck next year!!

Yeah that’s a good idea – my friends have told me the same thing – I have enough to pay off the entire loan on my car I bought this year. I’m afraid that if I pay it all off I might not have enough money if something should come up. But then again I can pay half of it now and then pay the other half later. Thanks for the advice :).

@FT,

Yes it is interesting to see others opinions – If your’s is high – then mine is uber high :)

Adam, they may have peaked in other major cities in 2008, but not here in St. John’s where there has been a steady increase since.

Tim, yes we have increased our payments and plan to pay off our mortgage in 2010.

Thanks for the comments guys!

Just wondering,
Tim

I believe he mentions above that he is valuing his home at the 2008 purchase price. 2008 would have been the peak of the market, so if anything it may be valued slightly on the liberal side. Property tax assessments are not always conservative. IMHO the tax assessments jumped on board with the froth in 2007 realizing that the revenue generated from those values would be substantial. (In BC anyways) They didn’t correct downwards in 2008, as they should have, but rather stated they would maintain 2007 values – which were still to high at the time…

I would keep the valuation of your real estate at original price. If you change that value you will skew the percentage gains for the year and worse, if real estate values go the other way (which I suspect they will once this orgy of low rate home purchases is exhausted) then you will have to score a negative amount on your net worth and will lose track of how your organic savings/investment returns are doing. I’d keep it simple and keep the comparison even when comparing back over the years. Real estate is a fickle (and illiquid) asset, I’d price it ultra conservatively.

It’s like saying I bought the TSX Index at 7,000 but I might increase it with inflation after this year (even though the TSX is now at 11,700).

One of the most conservative estimates would be your property tax assessment. Even still, comparing your house to comparable houses that have been sold in the area is another indicator.