{"id":4853,"date":"2023-07-19T20:33:28","date_gmt":"2023-07-20T02:33:28","guid":{"rendered":"https:\/\/modernfimily.com\/?p=4853"},"modified":"2023-07-19T22:27:51","modified_gmt":"2023-07-20T04:27:51","slug":"quarterly-net-worth-update-q2-2023","status":"publish","type":"post","link":"https:\/\/modernfimily.com\/quarterly-net-worth-update-q2-2023\/","title":{"rendered":"Quarterly Net Worth Update: Q2 2023"},"content":{"rendered":"
Hey everyone!\u00a0 So we tackled the life and spending side of things<\/a>\u00a0and this week we\u2019re back with a net worth update.<\/p>\n As noted in our post with\u00a0our updated FIRE goals\/numbers<\/a>, we are aiming to get to the ~$1.26M mark in our liquid portfolio as our FatFIRE goal which equates to an annual spend of $50,400 if using the 4% rule.\u00a0 We were only $6,524 away in Q1 2022 then we saw the markets slide down down down in 2022.\u00a0 Let see how we compare with our goal in Q2 2023.<\/p>\n As of the end of June 2023, our current liquid portfolio is sitting at:<\/p>\n $1,305,646<\/p>\n Skeeeuuup!<\/p>\n Another big quarterly jump! \u00a0Last quarter our net worth increased by 5.1% and now we’re seeing a bump of 4.6% this quarter!<\/p>\n 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.\u00a0 Is this just a fluke? A 9.7% gain in 6 months is definitely strong. \u00a0We shall see what the stock markets continue do this year\u2026<\/p>\n For those who use the 4% rule, this portfolio size would equate to an annual withdrawal of $52,225.<\/p>\n While this all sounds lovely in theory we are picking up random bits of income here and there and we won\u2019t drain $109,000 in cash within our first 2 years of early retirement.\u00a0 It\u2019s 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.<\/p>\n We did not consider any CCB coming in or coaching clients<\/a> 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. \u00a0So far we haven’t but we shall see.<\/p>\n 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.\u00a0 \ufffc<\/p>\n We also will have interest income to report over the next 2 years from our\u00a0GIC mortgage payoff plan<\/a>\u00a0(taxed like ordinary income).<\/p>\n 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).<\/p>\n So the math looks like this for both Nic and I:<\/p>\n Federal Basic Amount \u2013 Income\/Dividends from Taxable Accounts and Kiddos Informal Trusts \u2013 GIC\/HISA interest = Amount to Withdraw from RRSP\/Taxable Accounts<\/p>\n So we each will be \u201cearning\u201d the Federal Basic Amount for the year ($15,000 each for 2023) as well as CCB (~$6,000 tax-free for 2023).\u00a0 Alberta also launched its Alberta Affordability Action Plan<\/a> which provided us with another $1,200 in tax free income ($200\/month from January-June 2023). And then there\u2019s the Climate Action Incentive Payments<\/a> of ~$1,500\/year for some more tax-free money. Geesh, Canada, stop being so generous! Then of course there\u2019s the cash cushion on hand too.<\/p>\n 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.\u00a0 Some years we may end up withdrawing more than the federal basic amount and owe some taxes which is fine too.\u00a0 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 + the various tax-free benefits listed above coming in and living on a very healthy income for the year (for our standards at least).<\/p>\n 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.<\/p>\n Stocks\/Bonds\/Cash Allocation:<\/p>\n (Some of this is slightly off due to currency fluctuations in my spreadsheets.\u00a0 Meh.)<\/p>\n Slowly the bond and cash percentage will go down and our plan is to glide back to ~90+% equites over time.<\/p>\n We\u2019re currently sitting at a 58\/42 USD\/CAD split.\u00a0 With the USD\/CAD exchange rate sitting at 1.32\u00a0our liquid portfolio fully converted into CAD is $1,563,299.<\/p>\n Let\u2019s see what this means when it comes time to withdraw.<\/p>\n I like looking at a few different scenarios as we can cut down our spending if need-be in hard times.\u00a0 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\u00a0any\u00a0external 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.<\/p>\n <\/p>\n This upward trend in the market this quarter sure is making everything look rosier than it was last quarter – which was already looking good! \u00a0It\u2019s pretty awesome to see that the only scenarios where we are currently over the \u201c4% rule\u201d is if we spend $55k+\/year and not have the USD\/CAD conversion in place and also assume $0 in CCB.\u00a0 It is highly unlikely we will spend $55,000+ every year and<\/b>\u00a0have the USD\/CAD sit right at par\u00a0and<\/b>\u00a0somehow see CCB dramatically altered\/removed in the near future.<\/p>\n As tallied up in our Q2 life and spending report<\/a>, we spent ~$45,000 during our first \u201cfiscal year\u201d so I\u2019m loving what we see in this chart.<\/p>\n Total Assets:<\/p>\n *Our area continues to remain a hot real estate market and our house could sell for ~$500,000-$550,000 in today\u2019s 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.<\/p>\n Total Liabilities:<\/p>\n Net Worth:<\/p>\n $1,933,146 \u2013 $240,958 = $1,692,188<\/p>\n Total: $1,692,188<\/b><\/p>\n There we have it! Comparing this to\u00a0last quarter<\/a>, we were sitting at $1,647,757 so we are up $44,731 or 2.7%.\u00a0 After a crappy 2022 for the markets, we\u2019re finally starting to see a bump here in 2023. \u00a0Will it last?\u00a0 Who knows what the future holds, but I sure hope so!\u00a0 Comparing this figure to this time last year<\/a>, our net worth was $1,546,309 so we are up $145,809 or 9.43% in a 12 month period.\u00a0 No too shabby when neither of us are working our corporate jobs anymore!<\/p>\n Since taking time off at work in June 2021<\/a>, our net worth was sitting at 1,524,413 so we\u2019ve seen our net worth grow by $167,775. This is still just wild to me.\u00a0 It will be interesting to track this number over time.<\/p>\n During Q3 2023 we have to unravel our year 1 GIC as past of our 3 year mortgage payoff plan.<\/p>\n Even though I understand the\u00a0magic of compound interest<\/a>, it continues to amaze me.\u00a0 I\u2019m curious to see what the market does this upcoming quarter.<\/p>\n 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\u2019s 401k from her former employer, our children\u2019s RESP, and any CCB\/CPP\/SS\/OAS potentially coming our way in the future.\u00a0 So for the sake of this exercise we are not including them.<\/p>\n The key to all of this is to stay flexible.\u00a0 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.\u00a0 We also have no problem picking up some fun part time gig for 15 hours a week to add some extra padding.\u00a0 We are humans, not robots, and are capable of adjusting plans if need be.<\/p>\n 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!<\/p>\n If you liked this article and want more content like this, please support this blog by sharing it.\u00a0 Not only does it help spread the FIRE, but it lets me know what content you find beneficial.\u00a0 Writing is NOT my strong suit and it honestly takes me hours to write each post so the more encouragement the better!\u00a0 Engaging in the comments below keeps me motivated.\u00a0 You can also support this blog by subscribing to receive emails anytime a new post is published.\u00a0 Thank you FImily!<\/p>\n We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.\u00a0 Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:<\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Hey everyone!\u00a0 So we tackled the life and spending side of things\u00a0and this week we\u2019re back with a net worth update. How Do We Stand …<\/p>\nHow Do We Stand<\/b><\/h2>\n
Changes This Quarter<\/h2>\n
\n
\n
Portfolio Details<\/h2>\n
\n
Withdrawal Rates<\/b><\/h2>\n
Putting It All Together<\/b><\/h2>\n
\n
\n
Support This Blog<\/b><\/h2>\n
\n