Welcome to Million Dollar Journey! If you're new here, you can learn about me, read our user guide, and even follow my net worth updates. A great place to start reading is with the popular articles located in the right side bar. If you would like to join thousands of others and keep up with the free daily updates, you can subscribe to the RSS feed via reader or E-mail.
On your way out, make sure to check out the exclusive Million Dollar Journey Freebies and Deals.
Net Worth Update September 2012 (+1.84%) – The Unlikely Rally
Welcome to the Million Dollar Journey September 2012 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, 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..
During the last update, I speculated that September was going to be a volatile month due to historical patterns. Fortunately for investors, both the TSX and the S&P500 continued its upward march with the S&P500 reaching multi-year highs. Upwards moving markets are always good for long term investment accounts which is evident in the gains in my RRSP, the leveraged dividend portfolio and my non-registered accounts.
My risk appetite has increased over the past couple of months where I’ve been doing a bit of trading with some excess cash (allocated play money). You may notice a large gain in the non-registered accounts below (+7.41%), this is due to some gold swing trades (lucky timing) in addition to pouring savings into that account.
Where do our savings come from? First, we don’t live a lavish lifestyle (how we save money) and do not carry any bad debt. The only debt we have is an investment loan (which pays for itself), so we end up pocketing a majority of our earnings. Our earnings come from salaries, private business income (via dividends to shareholders), and eligible dividends from publicly traded companies.
On to the numbers:
Assets: $756,200 (+1.64%)
- Cash: $4,500 (+0.00%)
- Savings: $20,000 (+0.00%)
- Registered/Retirement Investment Accounts (RRSP): $131,100(+2.02%)
- Tax Free Savings Accounts (TFSA): $40,500 (+0.75%)
- Defined Benefit Pension: $40,100 (+0.75%)
- Non-Registered Investment Accounts: $116,000 (+7.41%)
- Smith Manoeuvre Investment Account: $103,500 (+0.98%)
- Principal Residence: $300,500 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $93,700 (+0.21%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $93,700 (+0.21%)
Total Net Worth: ~$662,500 (+1.84%)
- Started 2012 with Net Worth: $585,228
- Year to Date Gain/Loss: +13.20%
In my last update, readers suggested to chart my net worth progress over time. Below are the net worth values since Dec 2006 with data points taken semi annually.
- December 2006: $198,500
- June 2007: $254,695
- December 2007: $279,300
- June 2008: $310,483
- December 2008: $309,950 (rough second half)
- June 2009: $355,850
- December 2009: $399,600
- June 2010: $456,910
- December 2010: $505,800
- June 2011: $558,713
- December 2011: $585,228
- June 2012: $631,400
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.
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. 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.
18 Comments, Comment or Ping
1. David
Can you break down the net worth growth drawn from passive income versus active income?
For example, how much did the assets you held at the beginning of 2012 grow versus how much you’ve socked away since the beginning of 2012.
TIA
October 3rd, 2012 at 11:07 am
2. Veronica @ Pelican on Money
Fantastic! Amazing to see your net worth grow so much over the last 6 years. You inspire me to get into investing more seriously.
October 3rd, 2012 at 1:56 pm
3. FrugalTrader
@David, I would estimate that 95% of my net worth growth is due to savings.
October 3rd, 2012 at 2:50 pm
4. David
Thanks for the response. I think it would be useful for you to accurately break down where the incremental net worth is coming from; i.e., is it coming from additional savings or capital appreciation?
It’s a crucial distinction and it’s omission could be misleading, i.e., one could not replicate the net worth growth unless they had a similar level of income/savings.
A pro forma way of approximating it would be to take the weighted average rate of return on your investments (from the P/E) and anticipated (conservative) capital appreciation on your real estate and then multiplying that rate by the total portfolio. That would be the passive growth in net worth.
The retained earnings from an income statement would be the active growth in net worth.
October 3rd, 2012 at 3:07 pm
5. Goldberg
You will have to up it slightly.
Over the last three six-months period, you’ve grown your worth by 10%, 5%, and 8%…
Using an 8% growth rate (16% annual), you’ll be at roughly $925k on Dec 2014.
Awesome result but not enough for your goal… you need 20% annual from June 2012 to Dec 2014…
But what is six months anyway…
October 3rd, 2012 at 3:41 pm
6. FrugalTrader
@David, I think that net worth growth can come in a variety of ways. Some of these include savings, private business growth, real estate growth, or public equity ownership. The path we have taken is living a frugal lifestyle while looking for ways to increase our income. I don’t think it’s specific to me, I think that if people want it bad enough and willing to work for it, the sky is the limit when it comes to income.
However, high income is only half the battle. Most will increase their lifestyles as income increases. The key is to keep the lifestyle in check, while banking additional income. It works for us!
@Goldberg – thanks for the analysis. Yes, the goal is aggressive, but we going for it!
October 3rd, 2012 at 9:39 pm
7. David
@ Frugal Trader: You avoided my question. Of course net worth growth comes in a variety of ways. Demonstrating exactly where it comes from should be neither complex nor onerous. This should not be fearful stuff for you. I just started reading this website. I’ll stop now. Moderate away.
October 4th, 2012 at 11:13 am
8. FrugalTrader
@David, Sorry, must have misread your question. The way I was reporting before was showing savings account growth, but I have since moved all savings to a non-registered account. Perhaps I should move back to the old model so that it’s less confusing.
Thanks for stopping by, best of luck.
October 4th, 2012 at 11:51 am
9. Liquid
Nice job on the net worth gain FT. That’s like a 5 figure increase from last month in dollar terms. Making trades on the price of gold can be really lucrative if you time it properly. I did something similar with silver last month :D I like the historical chart from 2006 you added btw. Keep it up.
October 4th, 2012 at 9:18 pm
10. My Own Advisor
Up 13% YTD? Wow, great stuff!
October 4th, 2012 at 9:22 pm
11. FrugalTrader
Thanks for the kind words guys!
October 5th, 2012 at 2:13 pm
12. Manette @ Barbara Friedberg Personal Finance
Based on the increasing trend of your assets, I am sure that you will become a millionaire before you turn 35.
October 7th, 2012 at 4:30 am
13. Dave
I haven’t known this site before but I must say the idea for creating such a site is simply ingenious. It must be fascinating to follow your progress over time, which I am certainly going to. Having read this article, I can say that you are certainly going to make it before 35. Respect, man!
October 8th, 2012 at 10:57 am
14. Kinoli
FT, just curious if you have a percentage of what you add towards all your investments each month… AKA: 20% RRSPs, 10% TFSA, 50% Unregistered, etc…
Great blog by the way. I’m just getting going understanding the power of dividend blue chip growth investing. It’s fun learning about it and your blog is helpful in that regard.
October 8th, 2012 at 10:29 pm
15. FrugalTrader
Hi Kinoli, thanks for the kind feedback. For RRSP, TFSA, RESP etc, We save up cash the year prior and pay lump sums at the beginning of the following year. Right now, our RRSP contribution room is limited as we both have pension contributions.
October 9th, 2012 at 8:53 am
16. Kinoli
That’s an interesting approach to it. Is there any reason you don’t contribute to your investements on a monthly basis? That is what I’m doing, I’m just curious what your logic is in doing it annually. Cheers.
October 9th, 2012 at 1:34 pm
17. pooler
How much do you allocate to play money? Also, can you write an article on investing in gold?
October 14th, 2012 at 3:46 am
18. FrugalTrader
@pooler, I allow myself up to $20k in my non-reg account to trade/play with. Here is an article about ways to invest in gold.
October 14th, 2012 at 8:23 am
Trackbacks
Reply to “Net Worth Update September 2012 (+1.84%) – The Unlikely Rally”