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July 2008 Net Worth Update (+0.54%)

Welcome to the traditional monthly net worth update – The July 2008 edition.

In terms of expenses, this month was a little higher than expected. We typically funnel all of our spending through our credit card (for the rewards points) and we ended up with a $2,500 bill for the month (paid in full of course) where we typically spend around $1500-$1700. I’m not quite sure where we went wrong, but looking over the statement, it seems as though we made a lot of trips to the grocery (and beer) store. Some of it may have to do with the fact that we’re entertaining more than usual this summer. Perhaps it’s due to the new house and everyone wants to come over to our house now instead of us going out to theirs. Also, higher gas prices haven’t helped.

In addition to regular spending expenses, we also had to pay the semi-annual property tax which worked out to be $1,500. Come to think of it, I should probably add property tax to my liabilities at some point.

Lets talk markets! After a large decline, the markets seem to be recovering a bit. The bright side is that financials seem to be on the come back which has helped stabilize my portfolio. Question, do you guys use technical analysis when making trades? Or do you believe that it’s voodoo magic? I personally use a combination of technical and fundamental analysis before making some trades and I’m wondering if technical analysis is a topic that you’d be interested in.

Enough rambling, here are the numbers:

Assets: $ 589,725 (-1.50%)

  • Cash: $4,500 (+0.00%)
  • Savings: $24,500 (-20.94%)
  • Registered/Retirement Investment Account: $56,200 (-3.44%)
  • Pension: $ 22,350 (+0.00%)
  • Non-Registered Investment Account: $19,200 (-1.03%)
  • Smith Manoeuvre Investment Account: $49,475 (-0.50%)
  • Investment Property: $ 124,500 (+0.00%)
  • Principle Residence: $275,000 (+0.00%) (purchase price)
  • Vehicles: $14,000 (2 vehicles) (+0.00%)

Liabilities: $277,566 (-3.69%)

  • Investment Property Mortgage: $93,100 (-0.21%)
  • Principle Residence Mortgage (readvanceable): $125,881 (-7.79%)
  • HELOC balance: $50,575 (+0.39%)
  • Other Liabilities: $8,000 (-0.00%)

Total Net Worth: ~$ 312,169 (+0.54%)

Started 2008 with Net Worth: $279,300

Year to Date Gain/Loss: +11.77%

Looking at the numbers, you may have noticed that my assets have decreased a little.  This is mostly due to taking some of our cash savings ($10k) and putting it down on our mortgage.  We are getting fairly aggressive with our mortgage pay down as we have an open mortgage and the extra HELOC space gives us more capital to invest with if we wish.

Overall though, we managed to squeak out another net worth gain however the year to date net worth gain is a little off track.  Hopefully we can make up in the remainder of the year!

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 17 comments… add one }
  • Four Pillars July 31, 2008, 8:14 am

    I think tech analysis is voodoo. Of course I also think every other type of stock analysis is voodoo as well. :)

    ETFs rule!

    Mike

  • Canadian Capitalist July 31, 2008, 9:45 am

    Of course, technical analysis is voodoo. What else do you expect a bunch of indexing fanatics to say?? :)

  • Chuck July 31, 2008, 11:03 am

    I like my voodoo, but only use it when buying individual stocks or about 25% of my portfolio. Its not worth the time when looking at an ETF.

  • Steve Heath July 31, 2008, 11:24 am

    So is it cheating that you calculated it with July 30th stock values? :) I was encouraged by yesterday’s rally but everything I’m watching is down about .75% at the moment this morning, so I think my final July numbers are going to be lower than I hoped.

  • Xenko July 31, 2008, 12:05 pm

    “So is it cheating that you calculated it with July 30th stock values?”

    It would likely make a small difference, but over the long term it really doesn’t matter, and that really is the point of tracking your net worth: to see the change over time. If you look back on the numbers in a year or two to watch your progress, the 1 day discrepancy won’t matter in the slightest.

  • FT FrugalTrader July 31, 2008, 12:10 pm

    Steve, actually if I were to take July 30th numbers, my portfolio values would be quite a bit higher. But like Xenko says, it’s just a small blip on a long term map!

  • AndyBuck July 31, 2008, 1:00 pm

    Why would you put your municipal property taxes as a liability? It is definitely an expense – a reoccurring one – but an expense like any other. Consider it similar to a CC payment, a semi-annual gym membership payment, hot water heater rental or equal billing payments on a gas bill.

    As long as you pay it before it goes into arrears, it’s just an expense.

    • FT FrugalTrader July 31, 2008, 1:20 pm

      Andy, property taxes are like a mortgage. If you don’t pay them, they can put a lien on your house and even repossess it if the balance grows large enough.

  • dc July 31, 2008, 1:20 pm

    Small point regarding property taxes. I estimate what my property tax bill will be for the year and every pay period I put a proportionate amount into my high-interest savings account. When the bill comes due, they money comes out.

    This way, I track a monthly expense for property taxes and have the funds available (earning a bit of interest along the way). Technically, it is a wash from a net worth perspective, as your asset and liability net out and you show it as what it really is – an expense.

  • DAvid July 31, 2008, 2:16 pm

    Usually unpaid municipal taxes are considered a liability for accounting purposes, until paid. They then become an expense. In BC, for example, on January 1 of each year you become liable for your taxes. They come due on July 1, and subject to penalties. They are officially in arrears on Dec 31.

    DAvid

  • Sampson July 31, 2008, 3:38 pm

    I don’t feel technical analysis is Voodoo and I think its an important to understand certain metrics before making a purchase. I personally feel a large part of it is psychology, and exploiting other peoples’ fear.

    I actually select and buy stocks based solely on valuation and other fundamental analyses. However, take a favourite of everyone’s GE for example. Certainly one could critique this conglomerate as having some underperforming departments (like their recently sold off financial services division), but the Co.’s history of strong dividend growth and consistent and moderate gains in revenues while maintaining low debt ratios is attractive from any front.

    If you look at the company from a valuation perspective, its been trading well below average PE for quite some time now, so any long-term investors might say that buying it anytime from Feb when it was trading at $32-33 would be a good deal. But, looking at some of the technical metrics, one would have been able to snap some up at $26-28.

    Understanding that psychological barriers exist, and people will buy up at those prices will help me decide when its BETTER to add to my position, although I would be comfortable buying at anything below $35.

  • AndyBuck July 31, 2008, 3:47 pm

    FT,

    As I said, as long as you pay them before they begin to accumulate penalties, they can be treated as an expense. This is the same way that you treat credit cards, or any other bill that has some penalty for carrying a balance associated with it.

    The strategy provided by dc is also sound. Basically just budget for a semi-annual, annual, or quarterly payment. No big deal – I don’t think the net worth would take a hit either way, but it just seems bizarre to take an item that incurs no penalty and place it as a liability.

    Ultimately, my bank deals with the taxes as it is rolled into my mortgage payment. Technically we pay the town in June and September but I don’t see that transaction… come to think of it, I don’t get interest either, I should really hold that money myself like dc.

    (Well, in business speak it would probably be an Accounts Payable liability, but for personal finance that seems a little too much micromanaging since you typically don’t have an Accounts Receivable on the asset side)

  • Amit in Vancouver Canada July 31, 2008, 9:44 pm

    Most long-term investors are failed traders, and I am one of these. When I was dealing with forex, I learnt to study all the technical and standard analysis. And, I do look at it before entering into a long-term trade too. The most I look at is the 50-day, 200-day simple moving averages, and MACD. I don’t look at the parabolic SAR and the bollingar band that much as I used to when I was trading Forex. But some of the ETFs that I have on my buy list are still put on hold because of this analysis and I am waiting for them to fall below the 50-day average at least. Example, FXM. I missed the opportunity to buy it 3 months ago and since then its still above its 200 day moving average. Some of the ones that I have waited for last couple of months are in a buy signal right now such as EWO, EWG, EWS, DIM, I also got a very nice entry point for XEG, XIU and XMD due to this and bought these recently. XEG was trading above both the SMAs for last 3 months and I am glad I didn’t buy it when it was at $114 and bought it at $95 instead by waiting it out.

  • moneygardener August 1, 2008, 12:25 am

    FT, Your year to date nw gain of 11.77% seems pretty solid to me. Why do you feel that this is off track? Do you have certain targets in mind?

  • Double August 1, 2008, 1:13 am

    There is no right way to invest in stocks but if you are going to use technical analysis, I suggest using

    http://www.stockcharts.com.

    One of my favourite technical to us is MACD histogram.
    Stockcharts has a free chart school.

  • FT FrugalTrader August 1, 2008, 8:30 am

    Hey MG! I am comparing my gains from the same time last year. I am hoping to gain a total of 20-25% on the net worth in 2008, which seems to be a bit more challenging than I anticipated.

    Double, thanks for the suggestion. I’ve actually been through all of the free chart schools and it’s a great resource. My personal favorites are MACD in conjunction in candlesticks and moving averages.

  • Dividend Growth Investor August 1, 2008, 10:54 am

    Actually all stock analysis is voodooo.. 99% of the time spent analysing a security is done by using past data.
    One of my favorite TV series ever was called ” Morning Edition” about a guy in Chicago, who was receiving tomorrows paper today. Pretty cool if you want to save the world or trade the markets :-)

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