Net Worth Update – April 2008

Alright, I’m a day late on this update. I’m sorry. To be honest I forgot about it. Where does two months go between these updates? Now onto the numbers.

Assets

House $359,000
RRSP $18,600
LIRA $11,500
Pension $3000
Wife’s RRSP $7900
Wife’s Investment Account $8300
My Investment Account $4900
High Interest Savings Account $6200

Debt
Mortgage $141,600
HELOC $2800

Therefore my net worth now stands at $275,000 for the end of April 2008. That is an increase of +$13,300 or 5.1% from my last update.

A couple of changes this month. My old work pension finished up and I was able to transfer the money to my RRSP account. The house increased sightly again, but if I need motivation on that front I found a house around the corner from me that listed for $450,000. Granted the house is bigger than mine, but it’s interior is highly dated. I personally think they are asking far too much, but we will see how long it stays on the market before they start reducing their price.

Well I should take a good look at this numbers and enjoy them since I’m going downhill from here. As I start my leave shortly we will start using our savings to live for six weeks. So by my next update I expect my net worth to drop. After that is done I’ll be back on my race to increase my investment net worth by $12,000 this year.

For more details see the following graphs (click to see a larger version).

Invest Net Worth April 08Net Worth April 08

4 thoughts on “Net Worth Update – April 2008”

  1. First off, great posts and comments.

    A couple of points to consider when setting and defining your networth; wouldn’t it more accurate if you defined your networth in “after tax” or as “pre-paid tax liquid assests”? For example, you are assuming 18,600 in RRSP, but if an opportunity comes up to invest, or you had to liquidate because a bump came along and you needed the cash, wouldn’t the ACTUAL value or networth be the true after tax market value? Thus if you’re in a 29% tax bracket, the ACTUAL value of the RRSP is 18, 600 less 29%. The same holds true for liquidating the wife’s RRSP and the pension. While the asset may indeed grow tax free in a sheltered plan, the asset doesn’t necessarily have a true value as claimed unless that asset can be liquidated for the actual worth or cash value at any given time, or is held outside a RRSP as a pre-paid tax asset. For example the high interest savings account would have a true asset value of $6,200 because you could liquidate it today and spend the full $6,200.00 without a tax bite.
    When claiming an RRSP at 100% value as a contributor to your networth, would it be more prudent to claim it as 71% yours and 29% CRA’s as ultimately an RRSP is simply an extended loan and the government will patiently wait for their share while you spend the next 20 years saving and investing on behalf of your silent partners; CRA, the mutual fund manager, and the bank.
    In several studies I have read, it suggested that at retirement, 80% of people will rely on goverment pensions, be still working, or be broke, 15% will be barely getting by, and 5 % will be wealthy. Of the wealthy, most own their own small business, most invest in real estate, and many have high residule income either from T5 dividend sources, rental income, or some combination.

  2. JaT, I think the main purpose of this exercise is for retirement purposes… and therefore tax is less of a concern on a per investment basis. The premise for the net worth computation is not to determine what the present cash-out value is, but to determine how the retirement journey is progressing. How that money gets divided out after retirement is another discussion and will certainly have an impact in the net realizable cash from the net worth. In CD’s case, with his low retirement income expectation, the marginal tax rate will be very low.

  3. Just a Thought,

    Interesting idea, but I think it would be messy to do. As Sarlock mentioned I’m expecting to keep my income requirements very low as such my tax bill will be low to nothing. So my current net worth would actually be mostly available as cash in my retirement years (with the obvious exception of the house).

    Also what study were you reading and who wrote it? In my experience about half the studies done out there are paid for by banks or mutual fund companies which use some unreasonable expectations (like needed 70% of your preretirement income or 4% inflation). In my case I’m going to be about 35% of my preretirement income and my personal inflation I would estimate has never been close to 4%. So the results are meaningless to me.

    MCM,

    The house helped, but even excluding that we’ve just lucked out with our taxable accounts doing well with the oil surge and I picked up some BMO as it was around its bottom.

    Sarlock,

    Thanks!

    Tim

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