This year turned out to be a great one, both financially and for our lifestyle. We got everything we wanted out of our new house. We love having a dedicated office space and a home gym. Our kids can easily walk to school. Our dog even has a huge field in which to run around and play.

We managed to upgrade our house without sacrificing much. Sure, our mortgage balance has tripled and we emptied our TFSAs. But our net worth continues to grow – we’re still pushing the needle forward and not going backwards.

More importantly, from a lifestyle perspective, we’re able to enjoy the same standard of living we’ve grown accustomed to over the past few years. That includes frequent and extensive travel whenever (and wherever) possible.

Our business had a record year for income, surpassing our wildest expectations. That allowed us to give ourselves a much deserved raise so we could meet our personal spending and savings goals, AND still invest significantly inside our corporate investment account.

We seriously have to pinch ourselves sometimes knowing this is our life now. We’re incredibly lucky and grateful.

This year also brought back the bull market and our globally diversified portfolios were up about 16% after a brutal 2022. We’ll need that to continue if we want a realistic shot at reaching our goal of a $2M net worth by the end of 2025. More likely, that won’t happen until the end of 2026 or sometime in 2027 – and that’s perfectly fine.

We’re looking forward to another good year in 2024. As I’ve previously written, we only have five financial goals next year:

1. Give ourselves a 10% pay raise (dividends)
2. Reorganize the kids’ RESP (including a catch-up contribution for our oldest child)
3. Revenge travel part two (Mexico in February, Europe in July, and Scotland in the fall)
4. Invest excess profits in corporate account (targeting $90k)
5. Renew our mortgage in May (likely taking a variable considering the market is now pricing in 5 rate cuts in 2024)

With that out of the way, here’s how our net worth looks at the end of 2023:

Now let’s answer a few questions about the way I calculate our net worth:

Credit Cards, Banking, and Investments

We funnel all of our purchases onto a few different rewards credit cards to earn points on our everyday spending.

Our go-to card is the American Express Cobalt Card, which we use for groceries, dining, and gas. We also look for the best credit card sign-up bonuses and time our large annual spending (car and house insurance) around these offers. One I’m using currently is the American Express Aeroplan Reserve Card.

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. 

My RRSP is held at the zero-commission trading platform Wealthsimple Trade. My LIRA is held at TD Direct, and the 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.

Principal Residence

We bought our home this year for $976,000, so that’s the price I’m using for our net worth calculation. I typically adjust the purchase price by inflation each year but I’ll likely keep listing it at the purchase price for a few years.

Astute readers will notice that the price of our previous home went from $459,000 to $555,000 from 2021 to 2022. That ended up being the sale price, so you can see that I was pretty conservative with the house value over the years.

Final thoughts and a look to 2024

Again, I want to acknowledge the tremendous privilege of being able to work from home and prosper during such a tumultuous period (pandemic, economic uncertainty, geopolitical conflicts, high inflation, housing crisis). My wife and I are incredibly grateful for everything we have.

We’re also consciously planning our so-called “rich life”, wanting to maximize our life enjoyment rather than just counting numbers going up on a spreadsheet (and, yes, I see the irony of that comment on a net worth update post). Live for today while still planning for tomorrow.

The pandemic took two years of travel away from us. My wife’s relapse last year almost cost us another year. We don’t take anything for granted.

Thanks to all of you who take the time to read the blog, comment, and send me emails. I appreciate it more than you know.

How did your finances fare in 2023? Let me know in the comments below.

Last year was one of the worst ever for a 60/40 balanced portfolio. Stocks and bonds were both down double digits and investors were understandably nervous about an impending recession.

I can’t tell you how many conversations I had with clients who wanted to abandon their perfectly sensible portfolios in favour of GICs paying 4-5%. The rationale? I can’t take any more losses and want to sit out for the next 6-12 months until things blow over or get back to normal.

The problem is there is no normal. Stocks and bonds are risky assets that move unpredictably in the short-term based on the collective market’s best guesses about the future.

Put another way, if everyone thinks there will be a recession next year then that risk is already priced-in to stocks and bonds now. 

Fast forward a year and stocks have had a surprising rally and reached all-time high levels. Once again I’m having conversations with clients who want to abandon their perfectly sensible portfolios in favour of GICs paying 5%. The rationale? Stocks are at an all-time high and I want to sit out the next 6-12 months in case there’s a market crash.

YTD returns from a globally diversified portfolio:

VBAL / XBAL: 9.23% / 9.46%
VGRO / XGRO: 11.40% / 11.63%
VEQT / XEQT: 13.49% / 13.77%

Just like everyone predicted this time last year.

— Boomer and Echo (@BoomerandEcho) December 5, 2023

Conversely, many chats with clients in 2021 made it seem like a portfolio of 100% global stocks (VEQT) was as boring as a 5-year GIC. They wanted high flying stocks, crypto, and thematic ETFs.

Investing should be incredibly easy. Buy the entire market with a risk appropriate asset allocation ETF and move on with your life.

And if we were all emotionless robots that would work out just fine. We’d understand that markets go up and down based on events outside of our control, but mostly trend up over the long-term and lead to successful outcomes if we stay the course.

But we’re not emotionless robots. We’re human and susceptible to emotions like fear and greed. It’s like we’re wired NOT to stay in our seats – like we need to take control and do something to side-step losses and capture higher returns.

Resist the urge to do something you may end up regretting next year. Understand that stocks and bonds are rallying because “the market” expects inflation will continue to cool, interest rates will fall, and the economy will avoid a major recession (the so-called soft landing).

But that consensus can change on a dime with a surprise inflation surge, massive layoffs, escalating global conflict, or something we’ve never experienced before.

Stocks and bonds reward us for staying the course through all of this uncertainty. That’s how investing works. 

Bottom line: Your investing strategy shouldn’t change based on current market conditions.

Promo of the Week:

Looking for a last minute gift for an avid reader? Here are two solid books I’ve recently read:

Same as Ever: A Guide to What Never Changes – the latest by Morgan Housel.

Going Infinite: The Rise and Fall of a New Tycoon – the latest by Michael Lewis.

Weekend Reading:

I was thrilled to join Shaun Maslyk on The Most Hated F-Word podcast to share my money story (from frugal to freedom).

Why are people so mad at Michael Lewis? The embattled author stops by the Freakonomics podcast to set the record straight.

Overconfident much? Dr. Preet Banerjee explains why when it comes to investing knowledge, perception doesn’t match reality.

Speaking of overconfidence, PWL Capital’s Ben Felix looks at the cost of investing hubris:

Here’s A Wealth of Common Sense blogger Ben Carlson on overcoming a cash addiction in your portfolio.

Advice-only planner Anita Bruinsma offers a terrific reminder about the generous donation tax credit.

Dr. Preet Banerjee analyzed 10 of the biggest firms on Wall Street’s calls for the last 10 years and compared them to how the S&P 500 actually did. The results? Not good!

Millionaire Teacher Andrew Hallam on why the FIRE movement began and is still gaining steam.

The always brilliant Morgan Housel on the difference between frugal versus independent.

Ben Felix is back again, taking aim at those absurdly high yield products marketed today. He says, “distribution yields are not investment returns, they are not sufficient to assess expected returns, and, in the way that they are used to market financial products, often to unsophisticated investors, they can be misleading.”

Mortgage broker David Larock explains why cooling inflation data is good news for Canadian mortgage rates.

Finally, a funny look into Norway’s massive $1.4 trillion sovereign wealth fund and why it asked the Norwegian government for permission to invest in private equity – a request that has been repeatedly denied.

Have a great weekend, everyone!

The future is always uncertain, but at this time last year my crystal ball was as murky as ever. We were in the middle of building a new house and still needed to sell our existing home. Stocks and bonds were down double digits, and interest rates were still on the rise. Investors were piling into high interest savings ETFs and GICs. A recession was all but certain.

So, of course global stocks soared more than 6% in the month of January and are closing in on all-time highs as of this writing. The Bank of Canada increased rates three more times, but paused at its last two meetings and is almost certainly finished hiking as inflation trends lower. And, while the economy is definitely slowing down (and we may be in a technical recession), we may have achieved the so-called soft landing after all.

Personally, we experienced four months of uncertainty as we finished the new house build and put our existing house on the market. When it comes to financial goal setting, it’s okay to take a pause until you have more information – especially for big transitions like moving houses, changing jobs, taking a year off for parental leave, etc.

That’s why our 2023 financial goals were fairly straightforward:

1. Move into our new house 
2. Sell our existing house
3. Set aside ~$50,000 from the house sale proceeds for window coverings, landscaping, and other “extras”
4. New house is completely furnished, windows covered, yard landscaped in 2023. No “someday, maybes”
5. Remaining proceeds from house sale go towards the new mortgage
6. Max out RESP contributions ($5,000)
7. Contribute $6,500 each to our TFSAs (late 2023)
8. Invest excess profits in the corporate investing account (~$36,000)
9. Maintain work-life balance – no increase in business revenue expectations
10. Use accumulated travel points towards a one-week all-inclusive holiday somewhere sunny

We moved into our new house at the end of April, and sold our previous home at the beginning of May. We had enough from the proceeds of our house sale to pay for blinds, landscaping, and some new furniture. 

We’ve been in our new house for seven months and are loving it! Best of all, no “someday, maybe” projects. We finished everything we intended to do.

Our new mortgage is larger than our previous mortgage, and at close to triple the interest rate (we took out a one-year fixed rate at 5.74%). Ouch!

We’ll max out our kids’ RESP contributions with one more monthly contribution in December. We have not contributed to our TFSAs this year.

We did, however, see a 40% increase in business revenue this year and were able to invest more in our corporate investing account ($50,000). We also gave ourselves a raise for the first time in a few years.

I’d say we were able to increase revenue without sacrificing too much work-life balance (I’ll have to ask my wife and kids about that!). I think it’s more of a function of having taken 9-10 weeks off to travel in 2022. This year we only went away for three weeks.

We did not use points to take an all-inclusive holiday this year. Instead, once we got settled into the new house and finished our landscaping, we decided last minute to go to Scotland and Amsterdam in August. I’m glad we did – it was an amazing trip!

I’m happy with how the year has gone, both financially and with our new house and lifestyle. We’re excited to see what’s in store for 2024.

With that in mind, here are my financial goals for 2024:

1. Give ourselves another pay raise for 2024. Business is going unbelievably well and shows no signs of slowing down. We plan on increasing our wages by 10%.
2. Reorganize kids’ RESPs to follow the Justin Bender RESP strategy. That means selling e-Series funds and setting up a risk appropriate ETF portfolio for each child. We’re also switching to annual contributions (January) and making one catch-up contribution for our oldest child. Total contributions of $7,500 in 2024.
3. Revenge travel part two. We plan on taking a hot holiday in February, an epic trip through Europe in July (including a Taylor Swift concert in Zurich!), and a return to Scotland later in the year.
4. Invest excess profits in the corporate investing account (targeting $90,000).
5. Renew mortgage, taking the best of either a short-term fixed rate (1-2 years) or 5-year variable rate when it comes up for renewal in May.

I know, I know. What about our TFSAs? We prioritized the travel, concert, and RESP contribution top-up this year – but our plan is to each double-up on annual contributions starting in 2025.

This Week’s Recap:

I wrote about retirement assumptions and how to think about factors such as life expectancy, inflation, investment returns, wage growth, etc. in your financial plan.

From the archives: My pension decision – deferred pension or commuted value?

I was a guest on the Money Feels podcast with Bridget Casey and Alyssa Davies talking about when you need a financial planner.

Promo of the Week:

Earlier this year I launched an investing course for those looking to make a successful transition to DIY investing using low cost ETFs.

This investing course is for long-time holders of a big bank balanced mutual fund who want to save up to 90% in fees by switching to a low cost all-in-one ETF.

It’s also for fledgling stock pickers looking to reform, or brand new investors who just want to start off on the right foot with a sensible, easy to manage investing solution.

If this sounds like you, then head over to my DIY Investing Made Easy page and let’s get started!

Weekend Reading:

We need to talk about your retirement spending. Why big inheritances can be a sign of underconsumption and suboptimal planning.

Speaking of inheritances, don’t leave your kids a white elephant.

Here’s David O’Leary on why you might not be getting the financial advice you want or need.

Ben Felix answers a common question during “these times”: Should my investment strategy change during a recession?

“People spend so much time worrying about the next downturn that they miss out on market returns, which tend to be positive in the long-run.” 

These Canadian ETFs are tickets to great balanced investment opportunities at a fraction of the cost of many similar mutual funds. 

Advice-only planner Jason Evans took a deep dive into all of the free retirement calculators online and picked the best and worst of the bunch.

Anita Bruinsma says that university campus tours are in full swing, but even parents with RESPs lack an education financial plan.

Steadyhand’s Tom Bradley says to beware of bright shiny objects to avoid falling off your investment plan.

A really interesting post from Preet Banerjee: Could investing apps that allow you to start small encourage you to stay small?

Mark McGrath shares the tax implications of buying a rental property or investment property in Canada.

Ben Carlson on the magnificent seven stocks and power laws in the stock market:

“Outsized gains are normal. It doesn’t feel right for a handful of stocks to experience the biggest returns but this is the norm in the stock market over the long run.”

Seniors with large retirement accounts face a big tax-deferred liability. Jason Heath explains which tax and estate planning strategies might help.

Finally, for the travellers, Rewards Canada’s Patrick Sojka shares how to select the right Aeroplan flight award option to maximize the value of your points.

Have a great weekend, everyone!