Happy Canada Day! It has been an absolute rollercoaster of a year so far. Canadian and US stocks started the year hot before plunging by 13% and 20% respectively from the end of January to the beginning of April. Now we’re back to all-time highs again as global stocks have soared by 20% since April.
Our investment portfolios are large enough now that one bad day in the market (-5%) means a paper loss of ~$70,000. But the flip side is true as well. Strong market returns can contribute much more to our overall net worth at this stage than our savings contributions ever could.
In our own personal finances we made the decision to finally switch up our compensation from all dividends to a mix of salary and dividends. This will allow us to pay into CPP, generate RRSP room for future contributions, and avoid potential tax landmines in our corporation if active and passive income continues to grow.
That decision will impact our previously stated goals for 2025 – but long-term it’s for the best.
As I’ve written before, we have six financial goals for the new year:
- Contribute $28,000 each to our TFSAs (TFSA snowball)
- Contribute $5,000 to our kids’ RESP in January and rebalance the portfolio for their age 16 and 13 years.
- Take three trips (Cancun in February, Italy in April, and Scotland in the summer).
- Earn enough business revenue to meet our personal income needs (same as 2024) and contribute $80,000 to our corporate investments.
- Pay for bi-weekly cleaning, summer lawn care, and winter snow removal to allow more time for work, leisure, and family.
- Reach the $2M net worth milestone (a stretch goal that is only possible with another strong year of market returns).
We have each contributed $12,000 to our TFSAs so far this year, so we’re a bit behind. That said, the first half of the year tends to be more expensive with more money allocated to travel (buying flights, train tickets, putting deposits on Airbnbs, etc.) and annual property taxes. We are on track to actually increase our TFSA contributions to $32,000 each by year-end.
Our kids’ RESP was maxed out in January and I rebalanced the portfolio according to our modified Justin Bender investing approach (for the most difficult account to manage). We also (finally) moved the RESP in-kind from TD Direct Investing to Wealthsimple.
We enjoyed a sunny holiday in Cancun over the kids’ February break, and had a lovely Easter break visit to Italy. Scotland is next this summer, and we can’t wait to get back to explore more of the Highlands.
As mentioned, our compensation structure has changed so we’re now paying ourselves a mix of salary and dividends. That will mean less money going into corporate investments (target is now $55,000) and more will be coming out personally to fund TFSA and future RRSP contributions.
Bi-weekly cleaning has been a blessing over the past two years in our new (larger) home. It’s so nice to have the floors and bathrooms cleaned on a regular basis so we can just focus on general tidiness.
It didn’t snow much this winter, but I did pay for shovelling a couple of times when we were away.
I did finally cave and pay for summer lawn care, which has freed up more time to spend with family on the weekends.
We crossed the million-dollar net worth threshold at the end of 2020. In that update, I haphazardly set a big hairy audacious five-year goal:
“What’s next after reaching the $1M milestone? They say the first million is the hardest, so why not aim for $2M by the end of 2025 (my age 46 year)?”
After “Liberation Day” I thought it would be quite a stretch to hit that $2M mark by year-end. But here we are half-way through 2025 and we are oh-so-close.
Net worth update: 2025 mid-year review
Total Assets – $2,430,444
- Chequing account – $12,000
- Corporate cash – $60,000
- Corporate investment account – $491,340
- RRSPs – $407,329
- LIRA – $270,298
- TFSAs – $80,925
- RESP – $132,552
- Principal residence – $976,000
Total Liabilities – $470,988
Net worth – $1,959,456
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 Platinum Card.
We’ve nearly broken all ties with our long-term banking relationship at TD. We’re down to our joint chequing account, our small business chequing account, and our kids’ personal accounts. My wife has her own chequing and savings accounts at Tangerine.
Our RRSPs, TFSAs, RESP, and my LIRA are held at the zero-commission trading platform Wealthsimple Trade. Our corporate investment account is held at Questrade.
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 last 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
They say what gets measured gets managed. We started posting our net worth updates in 2012. Back then our net worth was just a touch over $250,000 and comprised mostly of our home equity.
The goal was to move the needle forward each year and build that “up-and-to-the-right” momentum.
What a difference you can make in just 10-12 years with measurable financial goals, a plan to achieve them, good savings habits, and by investing wisely.
We’re looking forward to our summer adventure and then finishing out the year strong. While we’re on track to reach our big hairy audacious goal, markets willing, we recognize that it’s just a headline number – a vanity metric, if you will.
We’re incredibly fortunate to make a good living in a business we love, working from home and spending as much time with our kids both here and travelling around the world. We don’t take that for granted for one second.
How is 2025 shaping up for you so far? Let me know in the comments.
