Net Worth Update: 2015 Year-End Review
With 2015 wrapping up I wanted to take the time to update my net worth statement and check in on my financial progress. It’s another year down and another year closer to achieving my goal of becoming a millionaire by 41, and reaching financial freedom by 2025.
Even though I’ve been frustrated that the past year has been spent mainly paying off debt rather than adding to our investments, it’s comforting to see our net worth continue to grow with a healthy 17.5% gain this year.
Related: 2015 Mid-Year Review
In fact, my goal at the end of 2014 was to reach a net worth of just over $450,000 by the end of 2015. That’s exactly what happened. Here’s a look at the numbers:
Net worth update: 2015 year-end review
| 2015 | 2014 | 2013 | % change | |
| Assets | ||||
| Chequing account | $1,500 | $1,500 | $1,500 | – |
| Savings account | $5,000 | $5,000 | $10,000 | – |
| Defined benefit plan | $127,451 | $104,703 | $82,950 | 21.7% |
| RRSP | $119,373 | $101,006 | $90,502 | 18.2% |
| TFSA | $4,227 | $4,651 | $4,523 | (9.1%) |
| RESP | $17,642 | $12,350 | $8,551 | 42.9% |
| Principal residence | $450,000 | $450,000 | $425,000 | – |
| Total assets | $725,193 | $679,210 | $623,026 | 6.8% |
| – | ||||
| Liabilities | ||||
| Mortgage | $248,056 | $258,916 | $267,865 | (4.2%) |
| HELOC | $25,387 | $35,840 | $20,000 | (29.2%) |
| Total liabilities | $273,443 | $294,756 | $287,865 | (7.2%) |
| – | ||||
| Net worth | $451,750 | $384,454 | $335,161 | 17.5% |
A few questions that routinely get asked after posting these net worth updates:
Banking
We used a combination of the Capital One Aspire Travel World Elite MasterCard and the Scotia Momentum Visa Infinite for our everyday spending. These cards allow us to maximize our reward points and helped us earn over $2,000 in credit card rewards this year.
We have a no-fee chequing account 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. To keep things simple we hold a basic chequing account and maintain a $1,500 balance in order to waive the monthly account fee.
Pension
Each month I contribute roughly 12 percent of my salary to a defined benefit pension plan that my employer matches. The amount listed above is the commuted value of the pension if I were to leave the plan today.
The plan pays 2 percent of your highest average salary multiplied by the number of years worked. So if I retired at 60 with an average salary of $100,000 I’d receive $60,000 per year from the pension plan.
RRSP / RESP
I prefer to list the current value of these 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 August 2011 and, even though the market has gone up, continued to list its value at purchase price. Last year we factored our basement renovation into the equation by increasing our home value by $25,000.
Final thoughts and a look at 2016
I put my investments on autopilot this year when I switched from dividend investing to a two-ETF indexing solution. One benefit was less time spent analyzing individual stocks, but the biggest payoff came from some much-needed international diversification. The result was a healthy portfolio gain of close to 9 percent in a year when Canadian markets suffered. More on this next week.
I expect next year to be similar to 2015, with our biggest financial goal to pay off the line of credit so that we can free up money to start TFSA contributions in 2017. We’ve also increased our kids’ RESP contributions to a total of $416 per month, which means 2016 will be the first year that we max out each of their plans.
I also expect our net worth to increase by almost $90,000 next year through a combination of saving, debt reduction, and another solid 8 percent stock market return. That will put us in the $550,000 range and more than halfway toward my million dollar goal with four years to go.
How did your finances fare in 2015?
Interesting. I have calculated my net worth annually for many years but never included RESP balances. I only included funds/investments that were available for my use. Obviously, I was comparing apples to apples so it was really of little or no consequence.
I’m wondering why you include RESP amounts in your calculations.
Hi Ron, great question. The money in an RESP legally belongs to the parents (subscriber) until it is paid out to the children (beneficiary).
Not that we have any intention of keeping the money for ourselves, but we’ll adjust our net worth accordingly once it gets paid out.
I like to track it because the contributions are significant and I don’t want it to seem like the money is going into some black hole of consumerism. It’s savings for a future need.
Terribly as far as your question goes… I hope you can shed some light on a previous post I commented on about supporting a spouse when in debt.
Looking at the evaluation of your house as being listed at only 450k is an understatement depending on where you live. I would imagine that the value has increased quite a bit from when you bought.
Hi Alison, we don’t live in Toronto or Vancouver so I doubt the value has gone anywhere in four years. I’ll peg the long-term growth at 2.5% per year.
Question about your TD account. I had a similar setup, but checked on the balance at some point and had noticed that they bumped the minimum fee less balance to $2,000, and had charged me for months of fees without telling me. How did you keep yours at $1500?
Assuming this is the account in question: https://www.tdcanadatrust.com/products-services/banking/accounts/chequing-accounts/minimum.jsp
Hi Ian, great catch! I copied that section from previous net worth updates since I get asked those questions a lot. Earlier this year I asked to close my TD account because of the fee increases and the account rep seemed to move heaven and earth to get me to stay. He waived all fees and monthly minimum balances (essentially making it a “student” account) and so I stayed put. I do still keep $1,500 in the account out of habit and to use as a buffer / small emergency fund.
You mentioned a 9% gain on your ETF’s due to international diversification. Is this in CDN dollars? If so, much of the gain would be due to the drop in the CDN dollar relative to the US dollar, approx 16%. Are your investments hedged to account for a possible (likely?) rebound in the Canadian dollar?
Hi Duncan, VXC does not use currency hedging so it has exposure to the US dollar, yen, euro, pound, etc. I don’t have a crystal ball to see how currencies will fluctuate in the future.
Read this article to see why currency hedging doesn’t work in Canada – http://canadiancouchpotato.com/2014/03/06/why-currency-hedging-doesnt-work-in-canada/
Once you are drawing your defined benefit pension in retirement would you still include it in your net worth statement? If so, how?