subscribe to the RSS Feed

Thursday, February 23, 2017

Dec 2016 – Net Worth

Posted by Tim Stobbs on December 31, 2016

The following is an update of Tim’s plan to retire early.  Please note we are mortgage free.

Our ultimate goal between investments and the home equity is a net worth of around $1 million.  The investment part of that target is $582,000.

Investments

Accounts

RRSP $52,910
LIRA $15,830
TFSA $74,580
Pension $151,790
Wife’s RRSP $83,590
Wife’s TFSA $70,020
Wife’s Taxable $62,880
High Interest Savings Account $14,880

Investment Net Worth $526,480 (increase of $19,390 over last month)

Home Equity

Estimate $395,000

Spending

Last Month $3339

There was a bit more Christmas shopping in this month. Yet the big purchase was my wife’s Rider season tickets which was $1270 for the pair.

Trailing Last 12 Month Average $2726 (or $32,714 for the last 12 months)

Results

PF Score: 28.2 {Target 31}

Net Worth ~$921,480

Commentary:

Out of curiosity, I looked up our investment net worth from last year.  Back in the end of Dec 2015 we had an investment net worth of $384,230, so for 2016 we went up $142,250 (yes that is a crazy high number).  That is also a slightly misleading number as we had some cash put aside that wasn’t showing up in these updates since I wasn’t tracking that account (our chequing account by the way, it’s never shown up in these updates since it is just a spot for money to move around).  I estimate that was perhaps ~$12,000 or so, so the actual increase in our investments was likely closer to $130,250, yet that still is an 33% increase in our investment net worth.  By the way, no I didn’t track our actual contributions this year.  I would estimate our contributions at around $60,000, so backing that out would mean a pure investment return of ~$70,250 or 17.7% (which kicks the crap out of my little 4.5% target). Compounding is a great thing! ;)

Our spending was up a for the year, but that is hardly surprising as I’ve been making efforts to get certain upgrades and maintenance issues done around the house prior to leaving my day job.  The trend will continue next year as we have some big ticket items coming up like new singles for the roof.

Any questions?

Dec 2016 Invest Net Worth

(click to make bigger)

Comments

6 Responses to “Dec 2016 – Net Worth”
  1. Liquid says:

    Great job on the 17.7% return. The larger your portfolio the more money you stand to make. I am about one year behind you guys as my liquid net worth is about $370,000 at the moment. Is there any particular reason for choosing 4.5% return as your target? What’s your opinion on the targeting inflation + 4% approach used by some professional fund managers?

  2. Tim Stobbs says:

    @Liquid – The 4.5% return is just our long term target for withdrawals, so I want to at a minimum make that each year in investment returns. So in reality I should hit 4.5% plus inflation. As the 4% + inflation target, it’s not a bad one to take on but I would caution not taking on too much risk to get there. Sometimes people get caught up in year to year returns when you should really care about the five year rolling average. Basically as long as your principle is going up you should be doing fairly good.

  3. Risk Manager says:

    A 17.7% rate of return is pretty darn good but, without much more information, suggests pretty close to market returns (similar to TSX returns of roughly 20% for 2016). Moreover, bonds have been getting hit at the tail end of this year (particularly long duration bonds), suggesting you might have a heavier allocation to stocks. You may also have benefited from US dollar appreciation combined with decent returns in the US.

    To the degree that you are highly dependent on this wealth / income going forward, key question is whether you could survive a 25% or 30% hit. (TSX dropped nearly 50% over the span of one year from 2008 to 2009).

    The sequence of returns is extremely important. For example, a 30% hit this year, would leave you at $407k and you’d be pulling out a fixed amount of funds to cover living expenses that might swamp future rates of return.

    I have only recently come across your blog, so excuse my ignorance if many of these issues have been dealt with in prior blog entries. I’ll be back to read more.

    Keep up the good work!

  4. Tim Stobbs says:

    @Risk Manager – No problem. Thanks for letting me know you were new. Yes I’ve got several backup plans and risk reduction plans going forward including but not limited to: my wife plans to keep working, I plan on some other income as well, we have an emergency fund ($15k), a $100k line of credit to shift expenses around if needed,and our dependence in investment income drops heavily once we get the full Canada Child Benefit for our two kids for a few years. Also the TFSA are all in dividend paying stocks which are fairly stable source of income (besides the obvious cuts to some of them when things go REALLY bad). Also we plan to consume the bond part of the portfolio first and then only re-balance once stocks up are up significantly (~20%), so that should help on avoiding selling stocks when the market is down. Have fun reading some previous posts where I discuss parts of this.

  5. FreedomFighter says:

    When are you pulling the retirement trigger Tim?

  6. Tim Stobbs says:

    @FreedomFighter – Ideally this year at some point. Likely late in the year, but it depends on getting several things done (like new singles on the roof) and how the market does for the year. So worse case, I may get pushed into next year.

home | top