Quarterly Net Worth: Q3 2023 + All Access Pass Giveaway

Hey hey!  It’s been a busy quarter around here!

The summer for us means lots of time outside and at the cabin.  This year we took two 2 week long trips out to the cabin to spend time out in nature.  It’s always so good for the soul to do some forest bathing.  The cabin set up is such an ideal spot for families with young kids – ice cream shop, a lake to bike around, swimming at the pool and lake, hikes to go on, music at the amphitheatre, kayaking, berry picking, sand castle building, petting horses, playgrounds, star gazing at the dark sky observatory, golf and mini golf, farmers market, and various kids activities going on.  This year the visitor centre started offering free activity bags which would include crafts, books, games, etc with a certain science theme (birds, bees, rocks, space, etc) that our kids loved getting each day.  We also ventured off site to go to a dinosaur museum, the sand hills, and the goat farm.

My mom was up visiting at the beginning of the quarter which ended up being a longer than expected stay due to a 12 night stay at the hospital. Thankfully she’s better now and it was nice to have extra time with her, even under unwanted circumstances.

We also hosted some of our FIRE friends who live out east in the GTA but love the Rockies.  They spent a month calling our basement home as they galavanted on an insane amount of amazing hikes.  I honestly wasn’t sure what it would be like to have people stay in our (non suited) basement – but it was so lovely and the door is open if they ever want to return again in the future.  We all respected each others privacy but also would hang out for an hour or two here and there when our schedules aligned.  It was nice to have another kiddo in the house for our kids to play with and bobbing for crab apples in our backyard became a nightly ritual.

Finn also did a week of camp at the science centre and outdoor soccer for 5 weeks.

We booked tickets to head to Colorado in the fall to visit some family down there.

To say we’re tired is an understatement!  I still don’t understand the “won’t you be bored without work” comment…

How Do We Stand

July showed some growth, August was roughly flat, and then September ended up being a rocky month for the markets and brought the quarter’s earlier gains down back to lightly under Q2 results.  As of the end of September 2023, our current liquid portfolio is sitting at:

$1,282,337

Last quarter our net worth increased by 4.6% and this quarter was down by 1.78%.

Even with this bump down, we’re still up 8.42% YTD and that’s after spending from our portfolio vs contributing into it.  This is the crazy power of the markets, investing for the long term, compound interest, being in tune with sequence of returns risk, and keeping your withdrawal rate low.  We shall see what the stock markets continue do this year…

For those who use the 4% rule, this portfolio size would equate to an annual withdrawal of $51,293.

Changes This Quarter

• Our 1 Year GIC paid out as part of our mortgage payoff plan.  We’ll keep the majority of it in our HISA earning 4.1% and periodically shuffle over to our checking account to account for this year’s mortgage payments.
• We met the minimum spend on our 4 credit cards we’ve applied for this year and we’ve earned 290,000 IHG hotel points, 85,000 Chase Ultimate Rewards points, and 71,000 Hilton Honours points.  We’re in the process of applying for card number 5 (TBD) for the year. Thank you US credit card companies for still allowing us to somehow get approved for US cards as Canadian point options suck in comparison.
• We had a few larger expenses this quarter:
  • We had plumbers come out to fix an issue with our backyard spout = $450
  • We replaced our eavestroughs and downspouts throughout the entire exterior of our house = $950
  • Bought flights for our family and 1/2 my mom’s ticket to Colorado = $1,500
  • Random house fixings – new light fixtures, bulbs, rugs = $475
• Here is our cash plan for the next two years:
  • $16k for year 1 monthly mortgage payments
  • $35k for year 1 spending
  • $35k for year 2 spending
  • $6.5k for year 1 TFSA contribution
  • $6.5k for year 2 TFSA contribution
    • Will keep this money invested instead and withdraw next year
  • $5k for year 1 RESP contribution
  • $5k for year 2 RESP contribution
    • Will keep this money invested instead and withdraw next year
  • Total cash goal: $97.5k cash

While this all sounds lovely in theory we are picking up random bits of income here and there and we won’t drain $97,500 in cash within our first 2 years of early retirement.  It’s been a year since this plan was crafted and we are still sitting on ~$101,000 in cash on hand so clearly we are currently too cash heavy.

We did not consider any CCB coming in or coaching clients or any other one-off income that may come our way that will likely lower the amount of cash we actually need on hand. We like to play it safeeeee. Part of me says to throw a chunk of this cash into the market.  So far we haven’t but we shall see. I think Q4 will be the first time our cash holdings will drop below $100k and we are A-OK with that.

Portfolio Details

Any taxable income/dividends we receive from our taxable/non-registered accounts we plan to withdraw, rather than drip right back into the non-registered accounts since we have to claim this income for tax purposes anyway.  

We also will have interest income to report over the next 2 years from our GIC mortgage payoff plan (taxed like ordinary income).

We will also withdraw from a mix of our RRSPs/taxable accounts up to the federal basic amount which is currently at $15,000/person for 2023 (accounting for any dividends, earned income, etc).

So the math looks like this for both Nic and I:

Federal Basic Amount – Income/Dividends from Taxable Accounts and Kiddos Informal Trusts – GIC/HISA interest = Amount to Withdraw from RRSP/Taxable Accounts

So we each will be “earning” the Federal Basic Amount for the year ($15,000 each for 2023) as well as CCB (~$6,000 tax-free for 2023).  Alberta also launched its Alberta Affordability Action Plan which provided us with another $1,200 in tax free income ($200/month from January-June 2023). And then there’s the Climate Action Incentive Payments of ~$1,500/year for some more tax-free money. Geesh, Canada, stop being so generous! Then of course there’s the cash cushion on hand too.

Each year we will see what the equation looks like and decide how much to pull from our RRSPs vs taxable accounts to get our total cash to the Federal Basic Amount for both of us each year.  Some years we may end up withdrawing more than the Federal Basic Amount and owe some taxes which is fine too.  But in reality, the capital gains from our taxable account are only taxed on 50% of the earnings so it should be quite easy to withdraw the Federal Basic Amounts for both of us + the various tax-free benefits listed above coming in and still live on a very healthy income for the year (for our standards at least).

If we happen to bring in any sort of additional income, we view this as gravy to the above plans and have no issues paying taxes on that.

Stocks/Bonds/Cash Allocation:

• Stocks: 84.6%
• Bonds: 4.8%
• Cash: 8.9%
• Crypto: 0.9%

(Some of this is slightly off due to currency fluctuations in my spreadsheets.  Meh.)

Slowly the bond and cash percentage will go down and our plan is to glide back to ~90+% equites over time.

We’re currently sitting at a 57/43 USD/CAD split.  With the USD/CAD exchange rate sitting at 1.35 our liquid portfolio fully converted into CAD is $1,567,805.

Withdrawal Rates

Let’s see what this means when it comes time to withdraw.

I like looking at a few different scenarios as we can cut down our spending if need-be in hard times.  I also like looking at what our withdrawal rate looks like with Canada Child Benefit (CCB) factored in since it is such a juicy benefit that we will be receiving for the first ~15 years. We do NOT rely on any external support in our FIRE figures (CCB, CPP/SS, OAS) and view them as icing on the cake or to account for any future unexpected medical expenses we may encounter in old age.

It’s pretty awesome to see that the only scenarios where we are currently over the “4% rule” is if we spend $55k+/year and not have the USD/CAD conversion in place and also assume $0 in CCB.  It is highly unlikely we will spend $55,000+ every year and have the USD/CAD sit right at par and somehow see CCB dramatically altered/removed in the near future.

We spent ~$45,000 during our first “fiscal year” of early retirement, so I’m loving what we see in this chart.

Putting It All Together

Total Assets:

• Liquid Investments: $1,308,481
• GIC For Mortgage Payoff: $212,000
• Home: ~$400,000*
• Total: $1,920,481

*Our area continues to remain a hot real estate market and our house could sell for ~$500,000-$550,000 in today’s market but we like to keep this value close to our purchase price as we do not know the true value until we actually sell in the future.

Total Liabilities:

• Mortgage on our primary residence: $238,144
• Total: $238,144

Net Worth:

$1,920,481 – $238,144 = $1,682,337

$1,692,188

Total: $1,682,337

There we have it! Comparing this to last quarter, we were sitting at $1,692,188 so we are down $9,851 or 0.58%.  Considering September was all over the map, I’m ok with this!  Comparing this figure to this time last year, our net worth was $1,545,748 so we are up $139,589 or 8.8% in a 12 month period.  No too shabby when neither of us are working our corporate jobs anymore!

Since taking time off at work in June 2021, our net worth was sitting at 1,524,413 so we’ve seen our net worth grow by $157,924. This is still just wild to me.  It will be interesting to track this number over time.

During Q4 2023 we will sell some ETFs to get us up to our Federal Basic Amounts for the year.

Even though I understand the magic of compound interest, it continues to amaze me.  I’m curious to see what the market does this upcoming quarter.

Those following along know we have a few other items in our portfolio that we like to hide behind the scenes as our true emergency fund such as my Health Savings Account (HSA), my pensions from my previous employers, Nic’s 401k from her former employer, our children’s RESP, and any CCB/CPP/SS/OAS potentially coming our way in the future.  So for the sake of this exercise we are not including them.

The key to all of this is to stay flexible.  If we see the markets tanking during the early years we have no problem tightening the spending belt and taking some staycations vs longer vacations.  We also have no problem picking up some fun part time gig for 15 hours a week to add some extra padding.  We are humans, not robots, and are capable of adjusting plans if need be.

Voila! Stay tuned to see how our net worth has changed in 3 months when we check back in on this. Stay weird and wealthy muchachos!

Canadian Financial Summit: All-Access Pass Giveaway!

In our last post I mentioned the Canadian Finance Summit that’s taking place next week – October 18-21.  We have TWO FREE All-Access Passes to giveaway to blog readers!  To be entered into the giveaway, comment below with your biggest takeaway you’ve received from reading this blog (not this post, our blog overall).

I will select the two winners on Tuesday October 17th just before the summit begins.  All I will need is your email to get it set up for you.

Good luck!

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We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.  Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:

• Investing Newbies: Check out our free Investing 101 Series.
• How much are you paying for your phone plan?  Canadians, learn more about Public Mobile, and see how we are paying $3/mo for our cell phone plan.
• How much are you paying for internet?  Canadians, learn more about the various Independent Service Providers out there to see who services your area so you can lower your monthly bills.
• How much are you paying for home insurance?  We were able to reduce our rates by 25% by switching over to Square One Insurance.  If you live in BC, AB, SK, MB, and ON, check out Square One for your home insurance, landlord insurance, and/or tenant insurance.  Use this link to receive an extra $15 off your quote.  (Note that you must use this link to start the process to get the $15 off even if you prefer to pay over the phone.)

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