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Sunday, April 23, 2017

Net Worth – Feb 2010

Posted by Tim Stobbs on February 26, 2010

Some days I honest feel like I just did my last net worth and then I’m doing it again, instead of the actually two months between them.  I assume then my life isn’t too boring, any way on to the numbers.

Assets

House $331,200
RRSP $23,300
LIRA $10,200
TFSA $7,900
Pension $19,000
Wife’s RRSP $12,100
Wife’s Investment Account $12,200
Wife’s TFSA $6,900
My Investment Account $6,000
High Interest Savings Account $6,400

Debt
Mortgage $112,400
HELOC $0

Therefore my net worth now stands at $322,800 for the end of Feb 2010. That is an increase of $18,300 or 6.0% from my last update.  Of that my investment net worth was $104,000 which was an increase of $5,300 or 5.3%.  Mortgage is down by $8,800 or 20% of my goal for 2010.

So a few general notes about all of this.  First off I did adjust the house value up slightly to reflect local market conditions.  Given the potential spike that could occur from the new mortgage rules during my next update at the end of April I might have to just freeze my house value till that passes.  I’ll decide during my next update what to do.

In the mean time the equity markets didn’t move all that much so my investment net worth remained fairly stable with a slight increase.

The obvious mover in this update is the drop off in the mortgage as it is my goal to reduce that to $78,000 by year end.  I should explain a quirk of how I’m paid for my school board work.  Since school isn’t on in the summer I don’t work and also don’t get paid.  So you won’t’ see much of a drop over the summer on the mortgage.  In addition I’ve decided to put my last two cheques into my RRSP to balance off some of my tax bill.  So overall you will see a sharp reduction at the start of the year and then it will slow down for the second half.

Any questions?

canadian_dreams_net_worth_feb2010canadian_dreams_investments

(Click for a larger image)

Comments

14 Responses to “Net Worth – Feb 2010”
  1. b foot says:

    Just reading your latest two articles, and on the other one, you’re mentioning about getting 18K a year when turn 39. By looking at your networth now, how could you expect 18K of investment income? Sorry, I ‘m new to your blog.

  2. Why not maximize your TFSAs by moving the money from your High Interest Savings Accounts?

  3. Travis says:

    I was thinking the same thing as b foot. I would expect a much larger investment portfolio would be needed to generate that income. What are your long-term return and inflation assumptions?

  4. Nice post; congrats on the 6% rise in net worth. You’re plan is good and the results are showing. Great idea to offset some taxes with your RRSPs.

    @b foot: my understanding is that Canadian Dream will be plowing his hard-earned money into investments once his mortgage is paid off in a few years. By then, the dividends and interest income he will be earning from investments will grow to the point where it reaches 18K per year.

    @Think Dividends – my understanding is that Canadian Dream is prioritizing his money towards his mortgage, which is a sound approach.

  5. Canadian Dream says:

    @b foot,

    The Rat had it about right. I’m saving about 50% of our pre-tax income. All of that currently is going to the mortgage and then going into savings. Do that for five years after the mortgage and you get about $18K on $450,000 in investments.

    @Think Dividends,

    It’s a waste of TFSA room in my mind. A high interest account at most gets 2% so at a 35% marginal tax on $5000 would save me only $35 in tax. If I can use it for income trusts I’m much further ahead on the tax savings. Also I would use it for higher interest rate GIC or bond income.

    @ Travis,

    I thought I covered that in the posts, but anyway. I assumed a 6.5% return with a 1.5% inflation rate to start with and dropped that down to 5.5% return after paying off the mortgage. So in today’s dollar that’s 5% and 4% respectively. If you want a bit more detail on why I used such a low inflation rate search for inflation in the archives. I did a few posts on that topic a while ago.

    Tim

  6. Mark says:

    When you say “my net worth” do you really mean “our net worth”? (I’m too lazy to run the numbers).

    I always find it confusing when people say “you” need (say) $1 million by retirement. Is “you” singular or plural (i.e. you and your spouse)?

    Just a rhetorical question.

  7. Mama Zen says:

    rhetorical, but I am asking myself same question ;-) so Tim, do you mean you or you and your spouse?

  8. Jon Snow says:

    Can’t speak for Tim, but when calculating my net worth, I use a “household” number – consisting of my wife and I. The resulting figures are much more impressive and encouraging. :)

  9. Canadian Dream says:

    Mark,

    Good point. All net worth post and retirement projections are based on us as a family unit. So it should technically be ‘our’ net worth. I admit I get lazy and just write ‘my’ without thinking. Perhaps it’s a subconscious thing about the fact my wife doesn’t care as much about these numbers so I tend to think of them as ‘mine.’ I can guarantee my wife has never calculated our household net worth. I do everything joint since it seems rather useless for me to be financially independent without her.

    I rather thought that was obvious with the asset list containing “Wife’s TFSA…Wife’s RRSP…” Any way, thanks for the question.

    With regard to the million dollar question. I would guess per household. A million would generate about $40,000 in investment income (give or take a few thousand) which if you had paid off your house should cover just about most people’s basic retirement dreams.

    Tim

  10. b foot says:

    Can you please comment on your investment strategy after paying off your mortgage?

    18K (4% on 450K portfolio) is reasonable, the hardest part is to build the 450K portfolio :-) Our mortgage will be paid off by the end of this month. We have about 100K of investment/savings/etc but with a new born baby.

    Perhaps your income is high enough, but we figure to build a 450K portfolio from nothing, will take us at least 7/8 years of starving :-)

  11. Canadian Dream says:

    b foot,

    A high level summary was buying my individual stocks and index funds for the first $100,000 or so. Then buy a lot of GIC’s to help stabilize the return. Overall I was thinking about 25% stock and 75% fixed.

    A lot of my individual stocks have been for dividends or specific income trusts. I buy for cash flow not for growth.

    Tim

  12. qmanrei says:

    It always seems with all these net worth statements on peoples blogs that your home is your best investment. Mortgage pay down and equity appreciation, the numbers seem to work really well. I could see why you would want to pay off your mortgage.

  13. Canadian Dream says:

    @qmanrei,

    I lucked into most of my home equity. I hit two back to back market spikes in prices. It really doesn’t matter in the long run. Once the mortgage is gone I intend to stop reporting my net worth and only focus on my investment net worth.

    Tim

  14. Precious Metal says:

    Why use your house as an asset or at least an asset you can spend/invest, what will you live in if you sell it and use the money for retirment income. i do not include my house as retirment asset. i am 48 semi retired, morgage free with 500k in investments. i feel i only need another 100k or so to live a good retirement.

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