December 2016 Investment Income $2,162

By: GenXinvestor

December 2016 investment incomeWelcome to my December 2016 investment income report.  This report helps me track all of my investment income from rental properties, dividend stocks, index funds and exchange-traded funds (ETFs).

I was pleased to see that our net worth continued to rise in December, hitting 924k.  The increase in net worth had to do with the strong performance of global stock markets.  This brought the value of our financial assets to an all time high at just over 450k!  This is why I think that it really pays to stay invested and not try to time the market.  It was only a short while ago that the markets were in dire straits and we could buy Canadian banks at bargain basement prices.  Now take a look at them, they’re trading at all-time highs!

Well now that we’ve broken through the 900k mark in net worth I can sees us hitting that coveted $1 million mark early next year if all goes well.  Like I said before, net worth is great and all, but unless it’s backed up with some serious cash flow, it doesn’t really mean all that much.

As for my monthly cash flow, it was one of the better months this year and it had everything to do with my financial assets.  As it stands with the rental units, I have 2 vacant units.  They are both ready to go so hopefully they get rented out and my rental income improves.

Overall, we had an amazing year financially.  Our net worth increased by $180k!  Much of that gain had to do with the performance of our financial investments and real estate.  Our annual passive income nearly doubled from 2015.  We earned about $16,400 in investment income in 2016 and only $8,400 for 2015.  It was a strong year across the board and I’m hopeful that this will continue in 2017.

Monthly Investing Activity

As usual, I’m sticking to the same old boring investment plan.  I continue to buy up blue-chip Canadian dividend stocks and keep making extra cash purchases in my DRiP account to buy more shares of great dividend-paying companies.  I like to save and invest automatically because it’s a proven strategy for building long term wealth.  In addition to the stock purchases, I’m also investing in low-cost index funds in our retirement accounts.

One of the great things about being a dividend investor is that all of my dividend income is automatically re-invested.  Every month this income buys more shares in my favourite companies that will, in turn, produce even more monthly income for me.  This is how compounding works and is why it’s such a powerful force…what Einstein called the “Eighth Wonder of the World”!

This month, reinvested dividend income bought more shares in Fortis (FTS), Canadian Utilities (CU), RioCan (REI), Enbridge (ENB), Manulife (MFC), Suncor (SU), and SunLife Financial (SLF).

Since my January dividend income report, I’ve been trying to diversify my stocks away from Canadian banks.  Bank dividends make up the majority of my overall dividend income so I want to build out some positions in other industries to reduce risks.

I took advantage of the big sell off in interest rate sensitive stocks in November.  In my registered accounts, I made a few big purchases: 300 BCE shares, 125 shares in Fortis (FTS), and 150 shares of Unilever (UL).

I’ve also sent a lot more money to my DRIP accounts to buy more shares in Enbridge (ENB), Fortis (FTS), Telus (T), Sun Life Financial (SLF) and Bell Canada (BCE).

Dividend Raises

I had a couple of dividend raises this month: CIBC (CM) raised its dividend by 2.5% or 3 cents/quarter.  The Bank of Montreal (BMO) raised by 2.3% or 2 cents/quarter.

Monthly Passive Dividend Income

December was the best month of the year for dividend income coming in at a solid $2,126.45!    This month’s dividend income has grown by 17.8% from that of December 2015 ($1804.95).  The reason for the big number has to do with year-end index fund distributions.

Here is the breakdown of the numbers for December:

Dividend Stocks

Bank of America (BAC) – $2.27

Canadian National Railway (CNR) – $37.50

Canadian Utilities (CU) – $65.34

Enbridge (ENB) – $6.80

Fortis (FTS) – $89.24

Manulife Financial (MFC) – $32.86

RioCan Real Estate Investment Trust (REI) – $4.35

Suncor Energy (SU) – $17.02

Sun Life Financial (SLF) – $18.34

Mutual Funds and ETFs:

iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) – $52.48

iShares S&P/TSX Capped REIT Index ETF (XRE) – $40.37

Canadian Short-Term Corporate Bond Index ETF (VSC) – $14.08

Canadian Short-Term Bond Index ETF (VSB) – $20.93

TD Canadian Bond Index – e (TDB909) – $7.82

TD International Index Fund – e (TDB911) – $174.90

TD European Index Fund – e (TDB906) – $35.73

TD US Index Fund -e (TDB902) – $676.12

TD Canadian Index Fund – e (TDB900) – $866.03

Total = $2162.18

Rental Income

This month, 2 of 4 units were rented and the properties we were in a negative cash flow position on the rentals.  1 unit is fixed up and rent ready and the other needs a bit of extra cleaning and work before it can be rented.  December’s profit on the rental properties was -$482.06.  This was after all expenses and is considerably less than I’m used to but things should get back to normal in the new year.  I should note that this is less than the equity portion of the mortgage payments – so technically I’m paying the principal for these units out of pocket, everything else is covered by the rent.

One reason I decided to invest in rental property is that it offers a decent amount of cash flow relative to the initial investment.  I expect that in the next few months I’ll be averaging about $1,100/month from my rental properties.

Total Monthly Rental Income = $0

This brings the grand total for our December 2016 Investment income to $2162.18

I was hoping to rake in at least $1k this month from the rentals but unfortunately we fell far short.  I’m glad that the rental properties are getting sorted out and I expect they’ll be performing much better in January.

Our new annual passive income goal for 2016 was $18,000 and we have ended up with  $16,398.57.  So we managed to get 91.1% of the way there.  We almost reached our goal, but fell short due to a vacancy and renovations at one of our rental properties.

Overall, both the dividend portfolio and our rental properties are adding a considerable amount to the monthly investment cash flow.  On a monthly basis, we manage to earn about $1,366.50 from both sources.  Not bad, but I see lots of opportunities to grow this income further.

Thanks for reading my December 2016 Investment Income Report!

Photo by sscreations/FreeDigitalPhotos.net

January 2017 Net Worth Update $924,174

By: GenXinvestor

January 2017 net worth updateHere is my January 2017 net worth update.  As I’ve said before, I like to track my family’s progress through monthly net worth updates.  To calculate our net worth, I add up all of our household assets and subtract any outstanding liabilities (ie. debt owing).  The result is simply a snapshot of what my family is worth at a particular moment in time and does not give any of the relevant details as to how or why we reached that point.  For that kind of information, as well as for our monthly investment income, please refer to our dividend income and monthly highlights section.

In a previous post, I laid out a variety of financial goals for 2017.  My focus for the year however, will be on achieving 3 major goals.  First, we want our net worth to hit 1 million dollar mark by the end of the year.  Today we’re at almost $925k so we need to increase this by 75k to achieve the 1 million dollar goal.  I think this should be doable barring a major stock market or real estate meltdown.

Our second major goal is to increase our passive income to $25k.  In 2016, we managed to earn just over $16k.  So I feel that if our rental properties perform nicely and we continue to invest a great deal of our paycheques then I think that it’s entirely possible that we earn $25k from our investments.  At that point we’ll be half way toward our goal of earning $50k a year in investment income.

Finally, we still want to aggressively pay off our mortgage so that we can be mortgage-free in 10 years or less.  To this end, we plan to pay off at least an extra $35k this year in the form of lump sum payments.

Assets: $1,617,112.71 (+0.65%) 

Well thanks to our approach to regularly invest our money, along with a little help from the Trump rally, our assets have risen past the 1.6 million mark!

Home: $846,000 (0%)

A few years ago we purchased our “final” family home where we expect to be for at least the next 30 years.  In June of 2016, we received the latest property assessment and the assessed value had increased to $846k!

Rental Properties: $290,000 (0%)

In 2015, we purchased our first rental property and have since added a second.

Cash: $2626.45

As a matter of habit, I rarely keep a lot of cash on hand in a savings account.  The reason being is that at today’s record low interest rates I’d rather put the money toward paying off my mortgage faster or invest it.  That said, I’m building a cash cushion in my Tangerine Savings account.  If you’d like to open one, then visit the Tangerine website and remember to use my Orange Key: More25 to get $50 in free bonus cash just for opening up an account!

Non-Registered Investment Accounts: $47,250.68

Our non-registered investment accounts include DRIP accounts with Computershare and Canadian Stock Transfer, a discount brokerage account and a work savings plan.  For the most part, in these accounts, I prefer to hold Canadian companies that pay eligible dividends.  From time to time you may see a decrease in this account as a result of me moving some of these assets that are fully taxable into our registered accounts that are not subject to any immediate taxes.

Tax Free Savings Account (TFSA): $113,588.01

In the TFSA I like to hold growth assets, such as low-cost ETFs, TD e-series index funds or Canadian dividend paying stocks.

Retirement Accounts: $270,299.61

Our retirement accounts consist of RRSPs, a small locked-in retirement account (LIRA) from a previous employer and a company defined contribution pension plan.  The RRSPs and LIRA hold low-cost TD e-series index funds and other low-cost ETFs, while the company pension plan is invested in a low-cost target date fund.

Education Savings Plans (RESP): $19,947.96

In the RESP we hold low-cost TD e-series index funds.  We contribute the annual amount of $2,500 so we can get the 20% match from the government.  Our strategy for contributing is to use the money we receive each month from the universal child care tax credit and make up the difference at the beginning of each year.  This ensures that we receive the maximum government contribution of $500.

Other Assets: $27,400 

Under the “other” assets category, I include an extensive coin and paper money collection.  For years I collected rare gold and silver Canadian coins and Canadian paper money.  The collection has a face value of $10,000 so I conservatively estimate the collection’s worth at around $27,400.  For the purpose of my net worth calculations, I’ve been keeping this number constant versus increasing it over time because (a) coins and paper currency can be difficult to accurately appraise as they are subject to changing market trends and (b) can become illiquid if you can’t find a buyer for them.

Liabilities: -$692,939.00

The only debt we now carry that is not tax deductible is the mortgage on our primary residence.  This is a priority to pay off so we can get out of debt!

Mortgage: -$446,225.64 @ 2.89%

Paying down our mortgage will be a high priority for 2017 and we expect to be mortgage-free in less than 10 years.

Rental Property 1 Mortgage: -105,064.20 @2.62%

Rental Property 2 Mortgage: -102,399.67 @2.54%

We added mortgage debt with our rental properties.  The mortgage interest is tax deductible so we won’t prioritize paying off these mortgages.

HELOC: -39,249.59 @ 3.35%

I used the HELOC for a downpayment on a rental property.  The interest is tax deductible so I’m fine with carrying this debt for a while.

Thanks for reading my January 2017 Net Worth Update!

Image Credit: Image courtesy of hywards/FreeDigitalPhotos.net