Welcome to the Million Dollar Journey January 2014 Net Worth Update – first update of the year. 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 – yes this year!). If you would like to follow my journey, you can get my updates sent directly to your email, via twitter (where I have been more active lately) and/or you can sign up for the Money Tips Newsletter.
The beginning of a new year means registered investment accounts get new contribution room. In the first week of January, we deposited $11,000 into our TFSAs ($5,500 each) and $5,000 into the TD e-Series RESP accounts ($2,500 for each child). We paid for the contributions through a combination of our monthly savings, cash from our non-registered account, and a dividend distribution from our corporate account.
With the stock market taking a breather after the monstrous gains in 2013, I’m hoping to put the new cash to good use. The S&P500 (via SPY), which returned almost 30% in 2013, retreated -3.2% in January. The MSCI EAFE (international via XIN.TO)) index followed with a -4% loss. The TSX (via XIU.TO) outperformed the rest with a small 0.4% gain. How did these returns affect my portfolio? Fortunately, my portfolios held up relatively well with my RRSP returning +0.86% (mostly US stocks and international) and my leveraged Canadian dividend portfolio gained 6.18%. Mind you, not all of the 6.18% is organic as I transferred another $5k from the HELOC into the non-registered investment account.
In the big picture, for the January 2014 update we are up 3.04% for the month (and year thus far). We are up to $965k in assets and $852k in net worth with about 11 months left in the Million Dollar Journey deadline! With the deadline looming, there is about $150k left to go until the big $1,000,000 financial milestone!
On to the net worth numbers:
Assets: $965,085 (+3.22%)
- Cash: $4,500 (+0.00%)
- Savings: $20,000 (+0.00%)
- Registered/Retirement Investment Accounts (RRSP): $175,000 (+0.86%)
- Tax Free Savings Accounts (TFSA): $63,000 (+20.00%)
- Defined Benefit Pension: $47,800 (+0.63%)
- Non-Registered Investment Accounts: $190,000 (+0.00%)
- Smith Manoeuvre Investment Account: $146,000 (+6.18%)
- Principal Residence: $318,785 (+3.00%) (purchase price adjusted for inflation annually)
Liabilities: $112,650 (+4.60%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $112,650 (+4.60%)
Total Net Worth: ~$852,435 (+3.04%)
- Started 2014 with Net Worth: $827,300
- Year to Date Gain/Loss: +3.04%
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. If you cannot see the chart, please click here.
- 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
- December 2012: $690,400
- June 2013: $766,300
- December 2013: $827,300
Some quick notes and explanations to net worth questions I get often:
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.
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.
Where Does the Savings Come From?
We don’t live a lavish lifestyle (how we save money), and we do not carry a mortgage or any other 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.
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.
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.
Updated 2013 – My wife has recently changed her job position which has resulted in switching from a defined benefit plan to a defined contribution plan. This amount will be added to the RRSP totals going forward.
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.If you would like to read more articles like this, you can sign up for my free newsletter service below (we will not spam you).