Net Worth Update: 2019 Year-End Review
I remember writing last year’s net worth recap and being disappointed that I didn’t reach my goal after the stock market tanked during the last three months of 2018. What a difference a year makes!
My investments were up 20+ percent this year. We also reached all of our 2019 financial goals, including maxing out my RRSP, contributing $12,000 to my TFSA (to catch up on unused room), maxing out the kids’ RESPs, not taking on any new debt, and keeping our epic trip to Scotland and Ireland affordable.
The huge gains in the stock market boosted our overall assets to more than $1,000,000 and pushed us to within a hair of my 2019 net worth target of $830,000. Here’s how it all breaks down:
Net worth update: 2019 year-end review
| 2019 | 2018 | 2017 | % Change | |
| Assets | ||||
| Chequing account | $1,500 | $1,500 | $1,500 | — |
| Savings account | $35,000 | $15,000 | $12,500 | 133.33% |
| Defined Benefit Plan | $224,054 | $198,920 | $174,843 | 12.64% |
| RRSP | $208,614 | $162,939 | $162,201 | 28.03% |
| TFSA | $49,239 | $29,378 | $20,327 | 67.61% |
| RESP | $52,754 | $38,472 | $34,442 | 37.12% |
| Principal Residence | $459,000 | $459,000 | $459,000 | — |
| Total assets | $1,030,161 | $905,209 | $864,813 | 12.13% |
| — | ||||
| Debt | ||||
| Mortgage | $201,665 | $213,678 | $225,290 | (5.62%) |
| HELOC | — | — | $3,816 | — |
| Total debt | $201,665 | $213,678 | $229,106 | (5.62%) |
| — | ||||
| Net worth | $828,496 | $691,531 | $635,707 | 21.25% |
A few questions that I often get asked after posting a net worth update:
Credit Cards & Banking
We funnel all of our purchases onto a couple of different rewards credit cards to earn points on our everyday spending.
Our go-to card is the now discontinued Capital One Aspire Travel World Elite MasterCard. We have a grandfathered version that pays 2 percent back on every purchase and comes with a 10,000-point bonus each year.
Our secondary card is the American Express Cobalt Card, which we use at non-Costco grocery stores and on dining and liquor. Finally, we look for the best credit card sign-up bonuses and time our large annual spending (car and house insurance) around these offers.
We each have no-fee chequing accounts at Tangerine, which we use for bill payments, email money transfers, and the odd debit purchase.
The rest of our banking is done at TD, including our mortgage, line of credit, and investments.
Pension
Each month I contribute roughly 13 percent of my salary to a defined benefit pension plan that my employer also matches. The amount listed above is the commuted value of the pension if I were to leave the plan today. <–Update: I quit my job at the end of the year and I’m just awaiting the final valuation of the plan before determining whether I’ll keep it in the pension or take the commuted value and invest it in a LIRA.
RRSP / RESP
The right way to calculate net worth is to use the same formula consistently over time to help track and achieve your financial goals.
My preferred method is to list the current value of my RRSP and RESP plans rather than discounting their future value to account for taxes and distributions.
I consider a net worth statement to be a snapshot of your current financial picture, so when it comes time to draw from my RRSP and distribute the RESP to my kids, net worth will decrease accordingly.
Principal Residence
We bought our home in 2011 for $425,000 and developed our basement a few years later, increasing its value to $450,000. The next year I bumped up the market value by 2 percent (which is still less than its city-assessed value), but the local real estate market has since flattened – with nothing selling in our price range – and so I’ve left the value at $459,000 for the past three years.
Final thoughts and a look to 2020
I’ve had a long-standing goal to reach a net worth of $1M by the end of 2020. I’ll need another 20 percent increase in net worth to get there.
One minor wrench in the plan is that I quit my full-time job, and so I’ll be relying entirely on income from this blog, freelance writing, and my financial planning service.
I don’t see this as a problem so much as an opportunity. Both my salary and career trajectory had stagnated in the public sector, and the next four years of budget cuts look to be brutal. Meanwhile, my side business was growing by leaps and bounds.
Online income surpassed my full-time salary in 2018 and increased by another 30 percent in 2019. And that was with me dedicating just 12-15 hours a week to my online business. Imagine if I put another 10-15 hours a week into it?
That’s the plan, anyway. If successful, we’ll be able to meet our savings goals, accelerate our mortgage payments, and travel more than ever before. I’m looking forward to the challenge ahead, and to hit that $1M net worth milestone!
How did this year go for you? Did the rising stock market drive your net worth higher? Let me know in the comments below.
Hi Robb,
Congrats – looking forward to get details from you if you end up taking the commuted value or transfer to LIRA. I am in a similar situation as I quit my job as well at the end of this year.
Hi DJ, thanks! Hoping your change is a positive one.
I definitely plan to share the details of my pension decision once I get the final paperwork from my pension provider.
Thanks for sharing! I’m interested as well. Wondering how the commuted value compares to the PV of expected pension income??
Just quit my job yesterday! Looking forward to hearing about your Lira or commuted value decision.
Oh, wow – congratulations?!?
I’ll be sure to write something as soon as I can in the new year.
Hi Robb,
I was in a similar situation as you in 1999. Speaking from my experience I would caution you when it comes to cashing your Defined Pension in the event you decide to rejoin the Public Service — things do change in life. I left the Public Sector in 1999 for the Private Sector only to return to the Public Sector in 2006. In 1999 my commuted value was $225k and moved into a LIRA where I had to wait until age 60 before collecting income. To repurchase my pension in 2006 was $289k and it was a no brainer as I could retire in 10 years with a 35 year pension as I transferred my LIRA and DCPP to the government pension plan. That being said, I retired in 2017 at 54 with a very healthy indexed pension which is close to $80k annually — even with the 5% penalty. In my case leaving the government and gaining some valuable private sector experience helped move my career forward rapidly.
I should also mention I have a seven figure portfolio out side of my pension as investing was a hobby of mine during the working years.
Good luck on your decision as it is not something to take lightly.
@Galove – thanks for sharing your experience. I think most people expect me to take the commuted value and invest it but unless I’m blown away by the current valuation I’m leaning towards keeping it in the plan. An indexed pension for life is definitely not something to throw away without careful consideration.
Hi rob,, all the very best for the coming year, I follow you with interest. Every best wish for 20/20. Valerie
Thanks, Valerie! Same to you.
Hi Robb,
Thanks for the update, super-interesting.
I don’t own a home, nor do I have a pension and I am single, so our situations are somewhat different but our NWs are similar. Plus, I am planning to have the choice to work or not by age 55.
I’m reading ‘Pensionize Your Nest Egg’ by Moshe Milevsky at the moment. Have you read it? It’s very good so far and is obviously pointing out the merits of DB plans/annuities. The book asserts that the numbers don’t even have to be close to favour the DB.
I would caution some of your readers that whatever decision you make for your pension does not automatically mean it is best for them. Everyone’s situation is different and there is no one-size-fits-all. RRSPs are not ‘good’ nor ‘bad’, same for TFSAs, dividend-paying stocks, life insurance, pensions, CPP timing, etc. I’d say hiring an advice-only planner or doing a lot of research is the way to go.
All the best for 2020!
Steve
Hi Steve, thanks for this. Yes, of course my decision will be unique to my situation. Best to get some independent advice for yours.
I have read Pensionize Your Nest Egg – it’s a very interesting read.
All the best to you as well!
Congrats Robb.
However, despite your reasoning I think including your RESP account in your net worth is flawed. While you may be in control of this account, the funds are not and will likely never be part of your true net worth as the funds will eventually be dispersed to your kids education, so why include it in the first place? Makes no sense to me.
Hi Dave, I beg to differ. While we set up the RESP to save for our kids’ eduction the fact is one or both children may not attend post-secondary. Or, one or both may enrol in a two-year diploma, or stay home and attend university, in which case they may not use all of the funds.
If either of those situations occur then my wife or I would be able to transfer up to $50k of the accumulated income into our RRSP (assuming we have room). We could withdraw our contributions (capital) tax-free. Unused grant money would be repaid to the government.
The way I see it, the RESP is ours until it’s not. If or when we start dispersing the funds to pay for our kids’ post-secondary our net worth will decrease accordingly.
Hey Rob, I guess we’ll just have to agree to disagree. (I actually agree with you on most things. LOL) Counting funds destined for someone else in your net worth is wrong. In fact, if I can paraphrase your reasoning slightly, the RESP is actually your kids funds until it’s not.
If you expect your parents to leave you an inheritance someday, do you also think those funds should also be included in your net worth (until it’s not)? I suspect not since I didn’t see it in your summary, but the argument is the same. Cheers!
Hi Dave, fair enough. Your comparison to an inheritance is a good one, but again I’ll take the opposite view. The money would be included in my parents’ net worth until they gave it to me – then it would be mine. I’m not counting assets that don’t belong to me. Just like the RRSP is mine until I withdraw it and have to pay back the government’s share (in taxes).
Look at it this way. If I died today, what would be included in my estate? Everything listed in the article, RESP included. Since my kids are not eligible to receive that money, the RESP would pass to a new subscriber. See what I mean?
Ha, good point. It’s likely that 20% or 30% or that RRSP money belongs to the government. One might say the same about taxable account sums. But it’s yours until they grab their share. And perhaps you’ll be able to take it out in a low tax environment.
That’s why we include it in our net worth.
But discounting for taxation is an interesting notion. It’s not all our money. The gov is essentially loaning some of those funds, especially those RRSP monies.
Dale
Really exciting that your online business/blogging is taking off, especially since you only invested 12-15 hours a week! That seems like a really great return on time invested. And don’t worry about the real-estate slump, it’s a long game and often the market bounces back.
Best of luck moving forward into 2020!
Hi Robb,
How do you calculate the commuted value of your DB pension (or estimate it)? I’ve always left mine out of my NW calculation as I never knew how to incorporate with any level of accuracy. And I don’t recall seeing it anywhere in my annual pension statement.
Thanks!