Quarterly Net Worth Update: Q1 2021

I’m going to shorten these quarterly net worth updates going forward as these seem to be getting quite repetitive.  I’ll provide a brief update of changes going on during the quarter followed by updated charts and figures to keep these short and sweet.

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Before we dig into the numbers, I wanted to give my friend Chad a shout out for being featured by MarketWatch in their latest FIRE Starters Series!  You might recall Chad from our FIRE Community Guest Interview Series.

When the MarketWatch video producer (hey J if you’re reading!) finished our MarketWatch FIRE Starters interview she asked if we knew anyone else in the FIRE community who could be a good fit for their series.  I sent over a list of different peeps and low and behold, here’s Chads story!

Chad doesn’t blog.  Doesn’t have a podcast.  Isn’t big on social media.  And that’s what I love about him.  He’s proof that not all of us FIRE freaks go on to do this sort of stuff.  May he get the itch to do so in the future?  Sure, who knows.  Those of us who do are the ones you hear of and know because we are making our stories public.  But there are MANY other FIRE freaks out there behind the scenes.

Instead, part of Chad’s plans were to soup up a van to be able to travel around North America (pre-Covid) with his partner and pup and do whatever they please.  Chad did a few cross-Canada road trips and has visited us in our town a few times so far.  That’s the ultimate point of FIRE.  To do whatever you want with your time.

Any who, hope you enjoy this video, the FIRE is spreading.

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One other notice before we dig into the net worth numbers.

Ivan over at Money Savvy Canada reached out to me asking if we knew of anyone interested in being a beta tester for some new financial tools.  The free sign-ups for the beta-testers on the paid spreadsheet tools went like hot-cakes and have been filled up earlier this week, but there are a few other free tools on his site which may be of interest to you including a CPP calculator, Rent vs Buy calculator, and a Cash Manager.

You can learn more info by checking out his resources page and then scrolling down to the “MoneyManager Manual” at the bottom.

Note that I am not affiliated with MoneySavvyCanada.  I do not know Ivan personally, he found me through another blogger.  Just thought I’d share a new to me resource in case it could be beneficial to anyone out there.

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Ok, on to our update for the quarter.

What happened in Q1 2021

• Maxed out TFSA, RESP, and almost RRSP for the year.  Q1 tends to be the most active quarter for us FIRE freaks as we try to get as much money dumped into our tax advantaged accounts as soon as additional room opens up.
• TFSA
  • Added back the $9,500 we took out last year for the house down payment and added in another $6,000 to get the TFSA topped up to it’s max.
  • Shifted over some CAD to USD via Norbert’s Gambit and put $10,000 into ARKK, $10,000 into ARKG, and $10,000 into BTCC.U (Bitcoin ETF).  Both ARK funds are down since purchasing them at their near high in January and Bitcoin is up a bit.
• RESP
  • Added in some international funds of VIU and VEE.  The goal is to be 100% equities with a 70-80% tilt towards US (via VUN) and then 20-30% international (via VIU and VEE) – which is close to where it currently sits today.
  • We plan to remain 100% equities until at least age 15 and then will reassess the balance of the account to decide how to we want proceed our asset allocation for the later years.
  • It’s crazyyyy to me to see that the account value is double our contributions over the past few years since opening it.  As of right now, the little lady who is turning 3 soon (!), already has 2 years of tuition funded in her RESP.  Thank you grants + gains! This account is SO powerful, I truly hope all parents are able to contribute into it for their little ones.
• RRSP
  • All RRSP contributions at this point are going into the Spousal RRSP to try to even out our accounts.  After going crazy staring at numbers and calculations for a few days trying to optimize RRSP contributions for this year vs next year with differences in pay teamed up with CCB, we decided to postpone claiming any RRSP contributions for the 2020 tax year and instead claim them when filing our 2021 taxes this time next year.  We calculated we have roughly ~$3,000 additional to contribute in the Spousal RRSP to get that maxed out.  We are waiting to finalize our 2020 tax returns to see the exact amount of RRSP contribution room left and will fill that up in Q2 2021.
• Bonus time!
  • 2020 was a great year for our team as we crushed our goals (goal was $10 million and we made $30 million which is just wiiiiild).  This means I received a bonus that was just under 2 times my annual salary… $97,000.  It honestly shocks me what our team did when seeing the state of the world and millions of people sick or jobless.  I recognize my privilege to be in this situation and am very thankful for this opportunity.
  • Honestly, it’s just nuts to think of what I’m making as a part time employee – my 2021 earnings will be more than I’ve ever made as a full time employee (and that includes 6 months of EI/parental leave on the back end!).  About half of this bonus figure got chopped off from the get go to taxes, which I should hopefully be able to recoup some of that come 2021 tax filing next tax season (hence the delay above to claiming RRSP contributions in 2020).
  • We dumped some of this bonus money to the Spousal RRSP as the TFSA and RESP were already maxed for the year.  Around $7,000 is ear marked for a new hot tub (which we will be getting in May once we finish sanding/staining our deck!) and then the rest went towards the cash pile we are trying to rebuild in our high interest savings account.

How Do We Stand

Well, I can officially say that our portfolio of solely our investments (i.e. liquid portion of our net worth that means the most in our FI calculations) has crossed the 1 million mark!! Amazing and shocking all at the same time.  For those that follow the “4% rule” this means we can “safely” withdraw $40,000 every year which is much higher than our current annual spend.

We do still have the mortgage on the new home in place while we continue to rent out our townhouse.  Originally, we thought we would rent out the townhouse for a year, maybe 2, and then sell it.  We’re now thinking of renting it out for a longer timeframe (possibly 5 years?) depending on the market.  By holding on to the townhouse, the rental income is chipping away at our mortgage balance for us to the tune of ~$6-8k per year which is not chump change.  Every year that we hold on to it means that the mortgage balance will be lower so the net difference between sale of townhouse – mortgage balance will be larger aka more cash in our pockets.  We do have to be aware of capital gains but as of this time, we would be lucky to break even so no capital gains taxes to worry about.  However, having this additional income to report would lower our CCB payments so we have to see if it’s worthwhile when we play around with some online calculators.

Our equities portion of the overall portfolio continues to creep up which is fine with me as long as we have 5 years worth of cash in the bank.  Ideally, I’d like to get our cash figure to $150,000 before pulling the plug so we’re not too far away.  We have slightly over 3 years worth of spending in bonds.  I really like that combination of 8 years stocked away in cash/bonds and the remainder in equities (even though I am not a fan of bonds in this current environment).

As I continue to work and earn in CAD and as the USD goes down in value, we’ve now shifted from a 76/24 USD/CAD split to a 70/30 split.  With the USD/CAD exchange rate sitting at 1.26 our liquid portfolio fully converted into CAD is $1,291,406.

Withdrawal Rates

So what does this all mean when it comes time to withdraw? Well it all depends on our annual expenses of course.  Here are different scenarios we’ve put together and the corresponding withdrawal rates. Note how juiiiicy Canada Child Benefits (CCB) are for early retirees in Canada with kiddos. We do NOT bank on CCB hence why all our withdrawals on the left side are under 4% without CCB in place.

Putting It All Together

Total Assets:

• Liquid Investments: $1,093,404
• Townhouse: ~$300,000
• Home: ~$400,000
  • (Our town is starting to see the bidding war frenzy going on elsewhere in North America.  It’s currently only taking off for single family homes so our townhouse would still likely be selling at a loss compared to what we bought it for ($315,000 in 2016).  We could likely sell our place for $430,000+ today but I like to remain conservative and keep this around our purchase price.)
• We’ve decided to stop including our car values in these updates as they are depreciating assets and by the time we are ready to sell them, they will hold relatively low value.
• Total: $1,793,404

Total Liabilities:

• Mortgage on our primary residence: $311,939
• Total: $311,939

Net Worth:

$1,793,404 – $311,939 =

Total: $1,481,465

Comparing this to last quarter, we were sitting at $1,375,760 so we are up $105,705 or 7.6%.  Comparing this figure to this time last year, we were sitting at $1,104,666 so we are up $376,799 or 34.1%. (Note that this time last year the market was a wreckkkkk and about to start it’s climb to new highs hence the large jump year over year).

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 pension from my previous employer, Nic’s small 401k from her former employer, our child’s RESP, and any CPP/SS/OAS/GIS potentially coming our way in the future.  So for the sake of this exercise we are not including them.

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

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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.
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• 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.)
• How much are you paying for your monthly utility bills?  See how you can likely save on this monthly expense.

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