Our net worth surpassed the million-dollar mark at the end of last year. It was a goal I had been chasing since I began sharing net worth updates back in 2012. So, what now?
Life is about the journey, not the destination. Along the path to $1M I built a side-business that helped accelerate our financial goals. I quit my day job at the end of 2019 and turned that side business into a full-time entrepreneurial career.
That decision changed our lives, not just from an earnings perspective but also in terms of lifestyle. We caught the travel bug after an epic 32-day trip to the UK and Ireland, and plan to do more world travel again soon.
I’m motivated by big, audacious goals. That’s why I’ve targeted a net worth of $2M by the end of 2025. I’ll continue sharing these updates twice a year to hold myself accountable and to be completely transparent with my readers. Hopefully you find some inspiration for your own journey. If not, well, it’s always interesting to take a look under the hood at someone’s financial situation.
The first half of this year has gone incredibly well, financially speaking. Our business revenue in six months alone is 2x greater than my final annual salary at my day job. I plan to intentionally earn less money in the back half of 2021 as health restrictions ease and we can (hopefully) travel again.
The markets continue to hit record highs and my all-equity investment portfolio is reaping the benefits. I invest in Vanguard’s VEQT across all of my accounts, and so far this year my investments are up 12.18% (30.97% year-over-year). No meme stocks or crypto for this guy. Just 13,000 global stocks doing their thing.
The bulk of our savings have gone into my wife’s TFSA and into our corporate investment account. We decided not to pay down the mortgage any faster than our current amortization schedule calls for, taking advantage of our ridiculously low variable rate of 1.45%. My thinking is that if rates tick up above 3% by the time our term is up (Sept 2023) then we might throw some extra cash at the mortgage. Our registered accounts will be completely filled and we can balance non-registered savings with more aggressive mortgage payments.
Finally, we had some landscaping work done in the backyard and bought an above ground pool from Canadian Tire as a hedge in case we couldn’t travel this summer. The kids have been in the pool non-stop, especially during this incredible heat wave.
Now, let’s look at the numbers.
Net worth update: 2021 mid-year review
Total Assets – $1,376,719
- Chequing account – $5,000
- Savings account – $85,000
- Corporate investment account – $159,777
- RRSP – $277,317
- LIRA – $184,036
- TFSA – $131,908
- RESP – $74,681
- Principal residence – $459,000
Total Liabilities – $179,756
- Mortgage – $179,756
Net worth – $1,196,963
One interesting takeaway from looking at this is our total investments are now worth more than $825,000. I’d love for this amount to reach $1M by the end of the year, but that might be a long shot. We can control our savings rate but we can’t expect markets to continue climbing at 2% per month.
Now let’s answer a few questions about the way I calculate net worth:
Credit Cards, Banking, and Investments
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 Scotia Momentum Visa Infinite Card, which we use for non-Costco groceries and gas. I’m also using the HSBC World Elite MasterCard, which came with an incredible 100,000 point welcome bonus. Finally, we look for the best credit card sign-up bonuses and time our large annual spending (car and house insurance) around these offers.
Our joint chequing account is held at TD, along with our mortgage and kids’ RESPs. My wife has her own chequing and savings accounts at Tangerine. Our high interest savings account is held at EQ Bank, which pays 1.25% interest.
My RRSP and TFSA are held at the zero-commission trading platform Wealthsimple Trade. My LIRA is held at TD Direct, and the new corporate investment account is held at Questrade. My wife’s investments are held at Wealthsimple. You know all of this from my post about how I invest my own money.
RRSP / LIRA / 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, LIRA, 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/LIRA and distribute the RESP to my kids, my net worth will decrease accordingly.
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% (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.
I quit my job three months before a global pandemic shut down the economy. As health restrictions ease and we emerge from 16 months of largely stay-at-home orders, I can’t help but be excited once again for the future. To travel again and live the type of location-independent lifestyle that I had in mind in the Before Times.
My wife and I have designed a great work schedule that aims to maximize productivity during the week. But throughout the pandemic it was easy to work too much and bite off a little more than I could reasonably chew. Now we plan to dial that back to a more appropriate level that will allow us to travel and live the life we had envisioned earlier. Yes, we’ll intentionally earn less revenue so we can enjoy more leisure time.
I’ll share more about this in a future post, but with the amount we’ve been able to save and invest over the past two years I think we can dial back the work load so that we earn just enough to pay our living expenses and max out our TFSAs – and that’s it. This sort of Coast FI approach will allow us to work on our own terms and maximize our leisure pursuits.