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Net Worth Update October 2010 (+1.78%)

Welcome to the Million Dollar Journey October 2010 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.  If you scroll down below, you’ll see that the net worth is getting close to the $500k mark with a little over 4 years to go.  If you would like to follow my journey, you can get updates sent directly to your email.

With the markets still heading in the upward direction, my portfolios are still gaining month over month.  In particular, my leveraged dividend portfolio has been seeing gains as of late as dividend stocks are the current media darling.  Why?  With interest rates at record lows, many investors are looking for a decent income, so anything with a reasonable yield is targeted.  For example, dividend stocks, bonds, preferred shares are all being bought up, which is why their values are relatively high.   My portfolios still have a high percentage of cash, but I’ve been actively looking and purchasing equities that look undervalued.  I still have some ways to go before I’m fully invested, but moving in the right direction none the less.

In addition to the strong markets, our savings remain strong.  We did not have any significant expenses in September, so in combination with our relatively low expenses, it equates to more cash in the bank (how we save money).

During my last update, a few readers suggested that I take some of the cash I have sitting around doing nothing, and simply pay off the mortgage.  The reason I’ve been holding off is because of my ridiculously low rate (P-0.85%), but as one of my goals for the year is to pay off the mortgage, now is a better time than never right?  I’m committed to paying the remaining balance this month so that I’ll be mortgage free in 2010!

For those of you who track your net worth, how did it turn out for October?

On to the numbers:

Assets: $ 552,300 (+1.24%)

  • Cash: $4,500 (+0.00%)
  • Savings: $43,500.00 (+11.52%)
  • Registered/Retirement Investment Accounts (RRSP): $100,300.00 (+1.11%)
  • Tax Free Savings Accounts (TFSA):  $20,450 (+0.25%)
  • Defined Benefit Pension: $31,600.00 (+1.28%)
  • Non-Registered Investment Accounts: $12,200.00 (+1.67%)
  • Smith Manoeuvre Investment Account: $57,000.00 (+1.79%)
  • Principal Residence: $283,250 (+0.00%) (purchase price adjusted for inflation)

Liabilities$64,900.00 (-2.26%)

  • Principal Residence Mortgage (readvanceable): $8,600.00 (-14.85%)
  • Investment LOC balance: $55,000 (+0.36%)

Total Net Worth: ~$489,200.00(+1.78%)

  • Started 2010 with Net Worth: $399,600.00
  • Year to Date Gain/Loss: +22.42%

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). 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.

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.

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).

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.

{ 46 comments… add one }
  • Echo November 1, 2010, 11:03 am

    Congrats on another positive month FT. Have you contributed the maximum towards your TFSA? I can’t remember seeing what you have invested in for that account, but it just seems strange that your total value is “only” $20,450 if you have contributed a full $10,000 each between you and your wife.

  • FT FrugalTrader November 1, 2010, 11:17 am

    Thanks Echo. Yes, we contributed the maximum earlier this year, but most of it is sitting in cash and short term bonds, thus the relatively small gain.

  • Ron November 1, 2010, 11:21 am

    Hi FT,

    Kudo’s on the net worth increase. I find your level of saving to be very good.

    Since we’re all anonymous have you ever posted your financial income stats and age?

    My wife (who is about to go on parental leave at xmas) and I make approximately $103k a year and are 27 and 28, respectively. We currently save about 26% of gross through RRSP, TFSA’s, Defined Contribution and Defined Benefit plans. Since we are still relatively starting out we have gathered about $135k in Net Worth.

    How did you and your wife fare at this age? In my own planning, I hope to have 1 million in net worth by 38-39. This assumes continuing this savings rate, including adjustments to savings rates, etc as well as an 11% return on my core investments (a bit aggressive). It is still attainable a year or two later with an 8% return.

    Ron

  • FT FrugalTrader November 1, 2010, 11:41 am

    Hey Ron, I’m 31 as is my wife and our income is variable due to the online business. However, we’re both professionals and make a steady low 6 figure income combined in salary.

    I started this blog in late 2006, and posted a net worth statement, you can follow them here. https://www.milliondollarjourney.com/category/net-worth-updates

    When we were 27, I believe our net worth was in the $200k range, you can see my first net worth post here. https://www.milliondollarjourney.com/networth-december-2006.htm

  • Sampson November 1, 2010, 11:46 am

    Great stuff FT!

    As Ron mentions, incredible savings rate. Somehow your family has seemed to fully resist lifestyle inflation.

    You think you’ll ever go by the moniker “Not-As” FrugalTrader “as when we were students”? ;)

    With no mortgage payments, did you decide if you were going to tackle the HELOC next? Or just bank the savings?

  • FT FrugalTrader November 1, 2010, 12:25 pm

    Thanks Sampson, how did you guys do this month? The bulk of our lifestyle inflation came when we built our house in 2007/2008, but other than that, we have been pretty steady when it comes to spending. Note though that it’s the increases in income (mostly business income) that’s making the difference to the savings rate.

    I think I’m going to leave the investment loan in place for now and focus on pouring funds into a non-reg portfolio. Not sure what the strategy for that account would be as it would need to be as tax efficient as possible. Perhaps more dividends?

  • Ron November 1, 2010, 1:20 pm

    Kudo’s FT.

    You’ve done a great job. My wife and I are expecting our first child, a son in December (around xmas actually). This will obviously put a dent in the plans but we will continue her pension contributions and I will make every effort to keep my savings rate where it is. It will be tough though ;)

    Keep up the good work and thanks for sharing the info.

    Cheers,
    Ron

  • Money Smarts Blog November 1, 2010, 1:22 pm

    Congrats! I’m very jealous that you are paying your mortgage off – I’m still a couple years away from that. :)

    When I was your age [insert old man voice], I had just bought a house and had no concept of being debt-free anytime soon. 11 years and 1 house later – I’m still not debt-free, but it is on the horizon.

  • Freedom 40 November 1, 2010, 1:22 pm

    Nice Work.

    2.10% this month. $429k total. Approx 12% YTD. Anticipating some lower and/or negative returns in Nov/Dec.

  • FT FrugalTrader November 1, 2010, 1:40 pm

    @MoneySmartsBlog – put those book earnings against the mortgage and it’ll be paid off in no time. :)

    @freedom 40, congrats on the big gains! Was the 10% from market gains?

  • Freedom 40 November 1, 2010, 2:22 pm

    Wish it was 10%! Unfortunately it was only 2.10%. Yes, mostly market gains.

  • Big E November 1, 2010, 4:31 pm

    Good work FT. I just started reading your blog recently and find it extremely useful. Questions:

    1. Why did you decide to include your pension in your net worth?

    2. Why don’t you use the assessed value of your real estate as a more accurate number (it may not be accurate, but might be closer)?

    Keep it up and look forward to seeing how you do this month!

  • Mario November 1, 2010, 5:20 pm

    Up 2.77% over last month, and just over 20% over the past 12 months, 1/3 market gains, 2/3 savings. Might go down in the next couple of month, as I continue to help put my GF through school, and buy a new (well, new to me, used) car. I hate you so much depreciating assets.

  • Money Smarts Blog November 1, 2010, 5:21 pm

    put those book earnings against the mortgage and it’ll be paid off in no time.

    Lol. I might have to write quite a few more books for that to happen!

  • Jungle November 1, 2010, 5:49 pm

    Congrats again Frugal! Last month markets and savings was good leading to 1.8% increase for us. Just need to keep it up.

  • Melanie Samson November 1, 2010, 7:24 pm

    This is a very exciting month beause we’re finally in the black! We’ve been working hard to pay down our student loans while building our savings and October has been the turning point.

    We’re expecting our first child in January, which might slow us down a bit, but not too much since we’ve managed to make budget adjustments without changing our savings/debt column too much.

  • mode3sour November 1, 2010, 8:03 pm

    Up 2.15% on the month and 19.65% YTD and that’s nearly 95% savings as my investments are still pretty small.

    Do you set any kind of yearly goal or is it a wash from the market?

  • Sampson November 1, 2010, 9:33 pm

    Hey FT,

    We’ve had a great few months. >2% this month. Mostly from investments (little from real savings – but we’re expecting our first in a few weeks here, so we’ve been hoarding cash).

    However, we did cross another $100k milestone, so pretty happy about that, and we’re ahead of year-end goal already – time to spend some… oh wait, was did I say about savings rates? ;)

  • canucktuary November 1, 2010, 9:57 pm

    Great month for us in October: 2.85% increase! On track for 37% yearly growth….mostly due to savings as well.

  • robb_stark November 1, 2010, 10:14 pm

    Here’s a simple cut and paste version of my Networth IQ account for the month of October: the 1.17% increase doesn’t seem impressive, but when your net worth is in the seven figures, its tougher to acheive big % gains. Especially when, as you can see, the stock market scares me, and I choose to sit on a sizable pile of cash. If another big market correction occurs, I’m going all in….

    Assets $ Diff % Diff

    Cash $205,000 $5,000 2.50 %
    Stocks $36,000 $0 0.00 %
    Bonds $0 $0 –
    Annuities $0 $0 –
    Retirement $108,000 $8,000 8.00 %
    Home $310,000 $0 0.00 %
    Other Real Estate $450,000 $0 0.00 %
    Cars $14,000 $0 0.00 %
    Personal Property $17,000 $0 0.00 %
    Other $72,000 $0 0.00 %
    Total Assets $1,212,000 $13,000 1.08 %

    Debts $ Diff % Diff

    Home Mortgage(s) $89,000 $0 0.00 %
    Other Mortgage(s) $0 $0 –
    Student Loans $0 $0 –
    Credit Card $0 $0 –
    Car Loans $0 $0 –
    Other $0 $0 –
    Total Debts $89,000 $0 0.00 %

    Net Worth $1,123,000 $13,000 1.17 %

    My wife and I are 38.

  • Financial Cents November 1, 2010, 10:28 pm

    I sound like a broken record, awesome progress FT!

    Any major purchases planned with the savings?

  • FT FrugalTrader November 1, 2010, 11:16 pm

    @BigE – I would consider pensions as an asset. For example, if my wife were to leave her job, she could choose to get a pension lump sum. Regarding real estate, I could do the valuations every month, but it would be very subjective (not unless I got a realtor or appraiser). I simply adjust the value every year to keep it simple.

    @Melanie, Sampson – Congrats and all the best with the new baby!

    @mode3sour – I just try to gain as much as possible with the million dollar mark as my goal. :)

    @Financial Cents – We may develop our basement in the near future, which would cost around $25k-$30k I suspect.

    I’m really enjoying the reader net worth updates, keep them coming!

  • JP (The Rat) November 1, 2010, 11:28 pm

    Hi FT,

    Congratulations on your net worth; you’re million dollar journey is not far away.

    That’s awesome news about your mortgage. Principal residence will be yours in 2010 and at such a young age – that is commendable. It’s nice to see all your hard work (and your wife) is clearly paying off.

    Great stuff.

  • Jungle November 2, 2010, 12:10 am

    robb_stark you have the exact same new worth as jon_snow on NetworthIQ.. lol

    Click my name and you can see my NetworthIQ. Not as big as Frugals and robb_stark aka Jon_snow lol

  • The Passive Income Earner November 2, 2010, 2:55 am

    Well done! I can’t wait to have my mortgage paid off but I got ways to go.

    Is your TFSA for you and your wife or did you manage to double your 10K$ contribution? Impressive if that’s the case. I only managed 50% ROI on it.

  • Atniz November 2, 2010, 3:30 am

    Excellent planning and achievable results given here. Mortgage is a great way to add more worth to our investment as the value grows give significant move in overall earnings.

  • FT FrugalTrader November 2, 2010, 7:55 am

    @pasive income earner – the net worth displayed is the family total. So with the TFSA, we deposited ~$20k earlier this year.

  • Cruiser November 2, 2010, 11:24 am

    I had a good month…had about a 5.8% increase. As I am about to get married, I have the wedding costs as a liability. Fortunately, we found out that her parents plan to give an extra $2.5k which really helps. I also had some savings happening, and some increases in the markets.

    Not looking forward to the wedding when her school debt starts getting lumped into the Networth Updates!

  • The Passive Income Earner November 2, 2010, 11:31 am

    @FT
    Thanks for answering. I have not setup my wife yet for a TFSA – I don’t really have the extra money at the moment so I am 10K behind in leveraging this fantastic account!

  • nobleea November 2, 2010, 12:45 pm

    It’s been pretty volatile for us this year. Got rid of the rental condo, a lot of renovations to the house, and a nice Mediterranean cruise.

    YTD Net worth is up 12.4%
    About half from investments and half from savings.
    2011 is shaping up to be a great year for net worth.

  • Canadian Dream November 2, 2010, 3:58 pm

    FT,

    Oh, WOW. Paying off your mortgage is a huge goal. I’m so happy for you! Hopefully in early 2013 I will be joining you.

    By the way, is it me or are our net worth statements like nearly the same? I’m up 21.5% YTD. Freaky.

    Tim

  • Ryan November 2, 2010, 5:42 pm

    FT, nice job.

    It is always inspiring to see how others fared. I really enjoy the net worth updates, and it has inspired me to start tracking much more closely.

    We were up 2.97% this month, and 40.76% YTD.

    Big percentages look great, but they are much easier to achieve when you are working from a small base.

    That being said, I am happy because we broke through the 200K mark in October, which for us is a big achievement.

    Cheers,

  • Rebecca November 2, 2010, 8:37 pm

    FrugalTrader

    What is your ballpark principle house value if it was to be sold in the market today?

    My husband and I are both over 35. Our networth is about 500K, but this assumes that our house would sell at the same value as our neighbour’s house last month.

    You and your wife are well ahead. Congrats on achieving and recognizing the importance of networth at such an early age.

    Rebecca

  • FT FrugalTrader November 2, 2010, 9:58 pm

    @nobleea, what are your financial plans for 2011?

    @Tim, thanks! It is funny, have most of your gains come from savings as well?

    @Ryan, congrats on the big progress, keep your goals in sight, they come sooner than you think.

    @Rebecca, Thanks! I would say after commissions and legal fees, we could clear $350 for our house. Nothing wrong with taking fair market value from comparables, just make sure to account for selling fees.

  • Future Money-Bags November 3, 2010, 6:22 am

    Monthly 3.92%
    YTD 42.69%
    All is cash (except $50/m into a Seg Fund) because I am not sure what investments to start in…I don’t want to take out of my ‘Down-Payment’ fund.
    Year end goal has been to have a 50% Net Worth gain.
    Longer goal is to reach $100k before age 26. (I am 24)

  • Atniz November 3, 2010, 8:50 am

    Paying extra on mortgages will definitely help us to save more on interest and reduce the tenure. Looks like your additional $20k will give some impact there.

  • Emily November 3, 2010, 10:51 am

    Great job FT! I am starting at -5000, that’s right negative. However my goal is to break even within in next 4 months! Then of course can come the bigger goals. We just bought our first home in March so it will be nice when I start to see the principal start getting hit. Gotta start somewhere right? Your blog is very inspiring!

  • nobleea November 3, 2010, 12:57 pm

    Using market value for your house in net worth calcs is fine, as long as you adjust it down when market value goes down. A lot of people like to track it up, but then don’t want to track it down. Who wants their net worth to slide 50K a year when house prices slide even when you’re doing great things otherwise? And if you think house prices won’t slide, they will. It’s already started.

    FT, our goals for 2011 are to reach 250K in NW, refinance the mortgage in to a variable closed with a better rate (we’re variable open right now), demo and replace our detached garage, go on a trip to machu picchu and south america, grow my side business (photography) to 20K a year, and start a regular investing plan outside of our rrsps.

  • Gary November 3, 2010, 1:32 pm

    I don’t consider my house part of my net worth because I will never touch that money even if I sell it. I always will need to live somewhere.

  • FT FrugalTrader November 3, 2010, 4:03 pm

    @Emily, Thanks! Speaking of negative net worth, to put things in perspective we started with approximately -$160k!

    @nobleea, neat, I didn’t know you had a side biz. What are the biggest revenue streams? Do you do weddings?

  • nobleea November 3, 2010, 4:26 pm

    FT:
    Yes, I do weddings, but families and babies are by far the biggest stream. Everyone’s willing to shell out a couple hundred for photos of their children.
    http://www.evannoble.com
    (There goes the internet anonymity.)

  • FT FrugalTrader November 3, 2010, 6:51 pm

    Congrats Nobleea, looks like you are doing very well for yourself. If your photography business could support your expenses, would you take the leap to full time entrepreneur?

  • nobleea November 3, 2010, 8:15 pm

    FT:
    making 10-40K a year as a part time photographer is not out of reach, especially if you do a few weddings. however, to make enough to cover my salary as an engineer, including benefits, etc (and future raises as an engineer) is pretty much out of the realm of possibility.
    right now, its extra cash for a hobby that i really enjoy and other people benefit from.

  • Jungle November 6, 2010, 12:07 am

    Hey Frugal, how old approx were you when your net worth was 300K?

  • nobleea November 8, 2010, 8:38 pm

    ^ It would be nice to see a graph of net worth vs age (maybe average age for you and the wife) to show how it trends. I suspect it’s slightly exponential, and seeing that might make others feel a little more comfortable that they’ll reach they’re goal, even if it seems like they’re making small progress right now.

  • Jane November 26, 2010, 8:04 pm

    I love that you clearly show your net worth itemization in your updates! I like your goal to hit $1M at 35 and will be cheering for you.

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