Net Worth Update: October 2017

This past month we made the final investment account contribution of 2017! I won't be making any new contributions the final months of each year as I try save enough to fill both of our TFSAs each January up to our contribution limit.

This year that savings will be in cash. At this point, having a cash balance does no harm to our performance as it forms a relatively small percentage of our total portfolio. If you're newer to investing, it could make more sense to keep investing and do a balance transfer to your TFSA instead.

I feel it's important to max TFSAs as soon as possible to make the most of this tax free growth. With TFSAs you contribute money that's already been taxed to your account, but all investment growth is tax exempt forever. The compounding effects of this are enormous over time. With sound investing and full annual contributions, it's very realistic to grow one TFSA to exceed $500,000 in value by the time you retire. For a couple, $1,000,000 in 100% tax free investments is a huge tax windfall!

Despite the poor choice in name, you are wasting the potential of your TFSA if you open an account at your bank, or even Tangerine, to earn a measly 1% interest. TFSAs should be invested in growth assets like stocks.

We are still mostly invested in currency-hedged U.S. stocks. This month I added a position in a larger energy name as it hit my buy signal. I have a stop-loss number in place to limit any downside if things turn downwards. I also have some cash in our investment accounts patiently waiting for another entry.

In September, we finished the month with a total of $597,521 in our investment accounts. September was a weaker month for my strategy and I actually ended the month with a small investment loss.

I wasn't worried at all because I trust math. Regular saving and a good investment strategy means winning over time. It's the key to financial freedom! I hope through sharing our real numbers, you will be inspired to start saving and investing young – it pays!

The Current Numbers

Here are our current Investment Assets as of the last trading day in October. We invest in TFSAs, RRSPs, and a joint Cash/Margin Account. We use a trend investing strategy to determine what we buy and when we sell our positions.

January 1 of the current year is in brackets to help illustrate the change during the current year. Net Worth Change reflects the total increase/decrease of this past month including new contributions.

The Investment Return is the total year-to-date return on our investment positions. The additional value of contributions are not included in this number.

Total Investments:  $624,456  ($441,813)

Net Worth Change:  +$26,935

30x Rule Safe Annual Income:  $20,815  ($14,727)

YTD Investment Return:  23.8%

Background Story

My wife and I are 20-something professionals working in the public sector. We don't earn enormous salaries, but by keeping our spending under control we save a large portion of our incomes each month. Our Investment Assets are 100% the result of our own hard work and the return on investments; we have not received any gifts or won any lotteries.

While we both work in pension careers, for this purpose we don't include pension values in our net worth nor pension contributions in our savings. Our investment assets and contributions are from our net paycheques.

We invest primarily with index ETFs using a trend strategy that I personally developed and maintain. To keep our investing costs as low as possible, I use Questrade as my online brokerage – they do not charge trading commissions for purchasing any ETFs. Where index ETFs are not liquid enough for a position size, I am open to using highly liquid stocks which have a close beta to their sub-index.

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