June Networth

by Mr. Cheap

On June 1st (actually May 31st, I got excited and couldn’t wait until the next day 😉 ) I chugged through my financial figures to have a look at what my current networth is. The variables that I’m considering are:

Mortgage: $93,174.21
E-Trade: $10,058.30
Cash: $11,145.49
Condo: $143,500.00
Loan: $5,000

Networth: $76,529.58

The condo value is debatable (until I sell it, the value is somewhat unknown), but $143,500 is quite a conservative figure (similar units in the same building are selling in the $160’s). The loan is basically $5,000 that I lent to a friend (I know, I know, bad idea) that I’m hoping to get back in September. The stock portion is very volatile, so I’m not sure what the best way to include it is (I commented on this on “A Canadian and her money” and I think it annoyed her :-), but that’s the shares’ value as of June 1st.

This is a 9.29% gain ($7,096) over May, which is good but primarily comes from a lucrative contract I’m working right now (and suffering every day for, so I don’t think these gain rates are sustainable). This contract is paying around $6400 / month, and the rest came from getting my tax refund, a GIC coming due, some gains on the stocks I bought, etc (e.g. lucky circumstances, nothing I can repeat month-to-month). Additionally, there’ll be taxes to be paid on this next year (no withholding at source), so this is a before-taxes number (I’m expecting to be at around a 33% marginal tax rate next year).

Last months gain was around 7.82% ($5,539) which is probably closer to what I should expect.

My current estimate of my monthly expenses are around $2,140.00, which I’m trying to bring down, so my gross in May was somewhere around $9K).

I’m earning about $250 / month from my condo (I’ll post details on this later, but its around a 7.5% ROI), and an estimated $67 / month from the stocks and cash (assuming 4% return / year, I’m hopeful that the stocks will do significantly better then this). Therefore passive investments (before taxes) cover 14.8% of my monthly expenses. Given that my passive income was around $150 in December, this is an excellent gain (more than double the passive income in less than half a year).

I don’t really care too much about my assets vs. liabilities, so I won’t bother with that.

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{ 3 comments… read them below or add one }

1

I think you should always value your securities at the latest available price regardless of what you are using the numbers for. You may find that when you have a larger portfolio that most of the valuation differences comes from market movement and your contributions become much less significant.

Your comment about not knowing the true net value of your condo is another thing I don’t like about net worth calculation. There’s just too much guesswork and in the case of a principal residence, the equity valuation might not be too relevant (although it should be part of a networth calc).

I’m not too clear about your comment on passive income – are you counting capital gains from the stocks as passive income? I’ll have to think about that one – I guess it’s valid though.
The problem with measuring this one is that with the volatility you will probably experience, this number could go way up or way down each month and be negative as well.

One other thing – why do you have so much cash? Is that your emergency fund?

Interesting post!

Mike

2

Hey Mike,

The passive income is only rental property income ($250) and an assumed 4% return on stock & cash (which would be partly interest on the cash, partly dividends, and partly capital gains). After taxes Im earning about 3% on the cash (its in PC Financial at 4%) 3.99% from the stocks from dividends (5.5% yield on the ROC, 4% yield on the BMO, taxed at around 16%). Lump in a conservative 1% gain after taxes on shares and thats my “passive income”.

I just had a $5K GIC come due and am preparing to put in an offers on a couple of more properties which is why Im bulking up on cash (otherwise Id be tempted to buy more bank stock, maybe some SLF or some ING Canada).

Ill post about it more in the future, but I feel that people should LOCs for “emergency cash” rather then having piles of money sitting in highly taxed, low yield accounts (I assume from your question you feel the same way).

3

Yes, I definitely believe in the LOC method of emergency savings.

Some day when I don’t have any debt and my investments are huge then I’ll probably keep more cash around, but that day won’t be for a while 🙂

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