Our wealth goals, journey, and targets
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Thread: Our wealth goals, journey, and targets

  1. #1
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    Our wealth goals, journey, and targets

    I thought I would start a thread so we can track our progress, put our goals down and have a bit of accountability. The back-story is available here:
    http://canadianmoneyforum.com/showth...l=1#post202356

    Long term goals:

    Achieve 500K net worth at 35 (achieved mid-Sept 2013)
    Achieve 1,000K net worth at 40
    Partial retirement for me at 50.

    Goals for 2014:
    Net worth over 725K by the end of the calendar year
    Paid off mortgage (fixed portion) in September
    Purchased lot for subdivision and residential infill by end of calendar year
    Take at least one month off in parental leave and possibly travel a bit with the new family.
    Replace my car with something bigger, safer.
    Open TFSA's for both of us.
    Open RESP for the new addition and start contributing immediately enough to get full CESG.
    Increase XIRR on non-reg portfolio from current 2.7% to 7%.

    Current state:
    Our gross household income is around $240K, not including bonuses. Bonuses are inconsistent, but healthy when they do occur. When my wife goes on maternity leave in early 2014, this will obviously drop, but she wants to teach summer school (3 weeks, $7K). If we put a gap in between maternity leave and her parental leave, this does not run afoul of EI rules.

    Assets:

    House - $453,050 (assume inflation increases of 0.25%/mo, 3%/yr.)
    SUV - $25,425 (2013 model year. I depreciate it $175/mo which matches current asking prices)
    Car - $2,825 (2000 model year. I depreciate it $75/mo. It's my commuting vehicle in the city)
    Non-Registered Portfolio - $182,450 (smith maneuvre portfolio)
    Work RRSP (mine) - $106,500 (contribute 5% of salary, company matches)
    Pension (wife) - $40,250 (just her contributed amount)
    Wife RRSP - $14,500
    TFSA's - $0
    Cash - $1,300 (two bank accounts)
    Miscellaneous assets - $20,600 (camera gear, sporting gear, gift cards, electronics, etc)

    Total Assets $847,000

    Liabilities:

    House mortgage - $91,500 (Prime-0.80%)
    HELOC - $191,500 (Prime+1%, readvanceable used for Smith Maneuvre)
    SUV Loan - $12,500 (0.5%)
    Credit cards - $2,700 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $298,200

    Net Worth: $548,800

    We've been averaging 30-40% year over year growth in our net worth for a few years. Hopefully it can continue, but at some point it will have to level off a bit.

    I will be updating the numbers around the 9th of every month, starting in December. I welcome any questions or suggestions.


  2. #2
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    You're doing well - good financial position and great income. I assume you are mid-thirties or so?

    One point about the goals - some of them are not really in your control. I wrote my thought here:

    http://www.moneysmartsblog.com/shooting-down-goals

    Specifically the investment return and net worth stuff. I'd rather use things like "pay down mortgage by X$ by Dec 1, 2016" or "Contribute $N to TFSA by end of 2015.

    Yes, you can affect investment returns to a limited degree, but if the markets tank - so too probably does your portfolio.
    Mike Holman
    Hidden Content Investing and Personal Finance

  3. #3
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    Hi FP,

    Thanks for the comments. You are correct, some times goals become unrealistic in that they are outside of one's control. They may reach the goals, but generally it was just because they existed, not because of something they did.

    I can agree that the goal of XIRR to 7% is mostly outside of my control. Perhaps I should label that one as a Target, instead of Goal.
    The Net Worth goal is still fairly accurate as 80-85% of the gain comes from savings. Granted, a drop in the markets would offset any gain in savings by a drop in portfolio value. So perhaps that becomes a Target as well.

    As for ages, yes, I am 35 and the wife is 32.

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  5. #4
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    December 2013 Update

    Small progress this month. It was an expensive month, costs-wise, as I bought flights for Xmas, reno items for a home gym in the basement and pretty much all the nursery items we require, and some winter tires/wheels for the wife's suv. Two of the stocks that make up a decent portion of my RRSP and non-reg portfolio took a bit of a dive over the past month (one of them my company stock). Nothing to be concerned about as they've been on a pretty decent run over the past year and I expect it to continue through 2014. I have also started to clear off some of the HELOC in order to make room for a lot purchase for residential development. This requires selling some stocks in the non-reg.

    Assets:

    House - $454,308 (+0.25%)
    SUV - $25,075 (-1.4%)
    Car - $2,750 (-2.7%)
    Non-Registered Portfolio - $93,566 (-49% selling positions to clear off HELOC)
    Work RRSP (mine) - $109,113 (+2.4%)
    Pension (wife) - $40,975 (+1.8%)
    Wife RRSP - $14,650 (+1.0%)
    TFSA's - $0 (N/C)
    Cash - $4,000 (+308%)
    Miscellaneous assets - $20,600 (N/C)

    Total Assets $765,037

    Liabilities:


    House mortgage - $82,955 (-9.3%)
    HELOC - $111,230 (-41.9%)
    SUV Loan - $11,325 (-10%)
    Credit cards - $6,715 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $212,225

    Net Worth: $552,812 (+0.7%, +$4,012 month over month, +42.4% year over year)
    Last edited by nobleea; 2013-12-28 at 06:08 PM.

  6. #5
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    Are you employee or business owner , 240K seem above average of Canadian households

  7. #6
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    Quote Originally Posted by inverstmentmentjinja View Post
    Are you employee or business owner , 240K seem above average of Canadian households
    My wife and I are full time employees. I do run a small photography business on the side, but it amounts to about 10% of the income above. Certainly an upper-middle class income.

  8. #7
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    January 2014 Update

    A decent month in December. I tried to push through as many prepayments on the mortgage as possible to reach the 20% yearly max, but was only able to get to 19.1% for the year - a decent amount to be sure. I received a year end statement for my wife's pension plan showing her contributions being a bit higher than I had assumed, so there's a bump in her pension amount (just her contributions). I have 4 weddings booked for 2014 and that's likely all I will take with a new child to show up in a few months. I am planning on taking parental leave this year, likely all of Nov and a bit of Dec. We plan on renting a villa somewhere in the caribbean (or hawaii) and do nothing. The mortgage will have been paid off for a few months by then, so we should have cash saved up to cover it.

    Assets:

    House - $455,444 (+0.25%)
    SUV - $24,900 (-0.7%)
    Car - $2,675 (-2.8%)
    Non-Registered Portfolio - $94,234 (+0.7%%)
    Work RRSP (mine) - $112,000 (+2.6%)
    Pension (wife) - $44,360 (+8.3%)
    Wife RRSP - $14,650 (+1.0%)
    TFSA's - $0 (N/C)
    Cash - $5,080 (+27%)
    Miscellaneous assets - $20,750 (+0.7%)

    Total Assets $773,709

    Liabilities:

    House mortgage - $77,414 (-7.2%)
    HELOC - $111,230 (N/C)
    SUV Loan - $10,450 (-8.4%)
    Credit cards - $3,960 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $203,054

    Net Worth: $570,655 (+3.2%, +$17,843 month over month, +36.9% year over year)

  9. #8
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    February 2014 Update

    Well January was good in terms of things we had control over, such as reducing debt, but not good in terms of things we didn't have control over, namely the equity markets. We have a newborn showing up in 2-6 weeks, so things will certainly change around the house. Wife is already on medical leave (full pay) plus her employer has 6 weeks EI top up after birth, which is a nice benefit. We are on track to pay off our mortgage in September this year. The payments from that point to the end of the year will be used for a new (used) car for myself and paying for flights and accommodations while on parental leave somewhere warm later this year. Booked another wedding for 2014 (Oct) and some corporate photography. In January, I also did my annual photo fundraiser to raise money for Canadian Cancer Foundation. People get free photos in exchange for a donation, I match it and donate the whole thing. $1700 donated this year, $1650 last year. February and March is normally an exciting time since that is tax season, and for some reason I actually love doing it. This year will be especially nice as we have a large medical expense claim that should yield a nice refund.
    I'm not bothered by the small drop in net worth. Out of the past 65 months where I have been tracking NW, I've had 16 months where it's gone negative on a monthly basis, but it's climbed 350% over that period, so I'll stick with the long term view.

    Assets:

    House - $456,582 (+0.25%)
    SUV - $24,725 (-0.7%)
    Car - $2,300 (-16%)
    Non-Registered Portfolio - $58,450 (-38%)
    Work RRSP (mine) - $108,998 (-2.7%)
    Pension (wife) - $45,260 (+2.0%)
    Wife RRSP - $15,500 (+5.5%)
    TFSA's - $0 (N/C)
    Cash - $1,625 (-68%)
    Miscellaneous assets - $20,700 (-0.2%)

    Total Assets $736,900

    Liabilities:


    House mortgage - $69,011 (-11%)
    HELOC - $84,650 (-24%)
    SUV Loan - $9,575 (-9.1%)
    Credit cards - $4,900 (this is not a balance, but the amount due. we pay off every month, but a true snapshot must include this)

    Total Liabilities $168,436


    Net Worth: $568,254 (-0.4%, -$2,401 month over month, +31.3% year over year)

  10. #9
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    Looks good!

    One of the problems with net worth is that as your investment portfolio grows, the equity market swings influence the NW changes more and more to the point where the NW changes become meaningless.

    ie you make $20k of contributions or debt repayments, but your portfolio goes up or down by $80k.

    I found NW most worthwhile when I was starting out. At that time I had mostly debt and very little savings, so the net worth increases were a very good proxy to measure the debt repayment.
    Mike Holman
    Hidden Content Investing and Personal Finance

  11. #10
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    Quote Originally Posted by Four Pillars View Post
    One of the problems with net worth is that as your investment portfolio grows, the equity market swings influence the NW changes more and more to the point where the NW changes become meaningless.
    That's a good point. Once the equity portion of the NW reaches a certain %, I might switch to a 3mo or 6mo rolling average for net worth calculations. That should smooth out big drops and gains without hiding the trend.


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