Net Worth Update: March 2019

Monthly Summary

March 2019 saw a shift towards large cap and technology stocks. My largest leveraged equity holdings—U.S. small caps and emerging markets—were either flat or down for the month.

The VIX swung up twice in March and I got stung both times as it came quickly back down. I can live with one costly trade and chalk it up to strategy expectations without a second thought; however, with two costly trades in a single month I have to take a deeper look at what I'm doing to ensure I'm adequately covering all my bases. I like volatility exposure in my portfolio as it historically has great trend activity, so I am exploring better strategies on how to maintain exposure with a smarter method.

As my regular market updates shared, I have shed some exposure to equities. This was not done carelessly. My wife and I are considering some big changes that could shift our tax situation quite significantly. Part of this includes being much wiser about position sizing and how best to get exposure to certain broad areas of the market.

Based on the research I'm doing to accommodate these changes effectively, I can see myself moving towards a five position option portfolio: U.S. stocks, developed international stocks, emerging markets stocks, and volatility with short-term bonds as my cash holding.

As things become more confirmed, I can share the details with you on this blog. I expect this to happen in a month or two. My changes will probably make more sense to you at that time.

In March I held U.S. stocks in our registered accounts as per the Dual Momentum signal. I have talked in the past about shifting these accounts to U.S. ETFs, but for now I am still in Canadian-listed ETFs.

In February, we finished the month with a total of $739,105 in our investment accounts. If you recall, we had a loss of -2.86 percent that month.

This past month we generated a negative monthly investment return of -2.77 percent on our portfolio. I am holding off on new portfolio contributions as we have a tax liability that is due by the end of April.

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 March. We invest in TFSAs, RRSPs, and a non-registered joint margin account. You can keep track of our total investment assets and returns on the About Daren page.

We use a version of Dual Momentum and a moving average/breakout trend strategy to determine what we buy and when we sell our positions. I often employ leverage in positions, so our results tend to swing a bit more each way than the underlying indices.

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 gross 12-month return on our investment positions, corrected for new contributions at the end of the month. Due to the end-of-month adjustment, the true rate of return on a daily adjustment basis would be slightly different dependent on the intra-month return on the new contribution.

Total Investments: $718,617  ($745,462)
Monthly Net Worth Change: -$20,488
30x Rule Safe Annual Income: $23,953  ($24,849)
12-Month Investment Return: -0.66 percent

Background Story

My wife and I are late-20s 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 percent 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, LEAPS options, and futures contracts using a dual strategy portfolio that I personally developed and maintain. To keep our investing costs as low as possible, I use Questrade and Interactive Brokers as my online brokerages. Questrade is my go-to choice for registered accounts. Interactive Brokers offers powerful tools, low commissions, and low margin interest for our joint margin non-registered account.

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.

Sharing My Investment Returns

I'm writing a shorter post this week as I am on vacation enjoying beautiful springtime coastal British Columbia with my family.

I've received some requests to clarify my investment portfolio returns distinct from my contributions. Since 2014, my net worth has gone nearly straight up from $120,000 to $750,000—a compounded growth of 45 percent annually. This is the product of aggressive saving and aggressive investing.

There are outstanding risk/reward benefits of investing very aggressively when young with a small portfolio and high savings rate. In fact, if I had to do it all over again with my current understanding of risk, I would have invested even more aggressively at the start.

However, over time, as savings shrink in relation to net worth, it is generally wise to shift focus from high absolute returns to greater risk control (the Bernoulli rule). This is true in my own portfolio. Even when I'm contributing $60,000 a year towards my investment accounts, it is difficult to come back from a massive drawdown on $750,000 portfolio without a little nervous sweat.

As stated, our savings rate is quite high. This is thanks to careful spending. My wife and I both work full-time in professional careers. Our salaries are healthy, but far from enormous and actually look quite slim after the many mandatory deductions on our paycheques: income tax, pension contributions, extended health plans, life and disability insurance, CPP, EI, etc.

For the past few years, our income could roughly be broken down as follows: we spend around C$50,000 per year, we pay around C$50,000 in taxes, and we save the rest either in our directly controlled investment accounts or via our workplace pension plans.

I do not include our pensions in the net worth calculation as they are difficult to value with great accuracy. For some perspective on our pensions, we both have DB plans which are split between employee and employer contributions. We contribute over 12 percent of base salary and our employers put in around 13 percent.

Although DB pensions are envied by many and have much ado made about them in the media, based on my calculations our pensions are likely to provide the returns of a short-term bond fund if we wait until they mature.

My Investment Returns

I started investing in 2008, but I pulled nearly all my money out of my account to buy a house in 2011. I didn't get back to investing seriously again until 2014 as we put a lot of money into home renovations for a few years to try "build equity".  We eventually sold our house and made a pitiful profit. I can confidently say we would be much wealthier if we rented from the start, but it was a valuable lesson.

To share my actual investment returns net of contributions and without pension estimates, I completed a chart which shows my portfolio returns since 2014. I will keep this chart updated each month and post it on my About Daren page starting next week.

Adjusted monthly for contributions. Does not include all taxes.

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.