Welcome to my 2016 Financial year in review post. This is where I take stock of all things financial and examine our financial progress for the year.
First, let me start off by saying that 2016 was definitely a year of surprises. The stock markets started the year off on multi-year lows and finished on record highs! There was Brexit and, of course, Donald Trump winning the presidential race!
If you were any type of investor, 2016 was an easy year to make money. If your strategy is to simply buy and hold passive index funds then you’re likely ahead over 20%. If you’re a stock picker and bought some blue chip Canadian Bank Stocks in January or February, then you’ve made an easy 50% as the stocks had a strong year. If you owned real estate in southern Ontario, then you’ve likely made anywhere from 10-18%. Yes it was very hard to pick losing investments in 2016. Unless of course you sunk everything you had into bonds.
For the most part, I feel that our investment strategy which focuses on building income streams from dividend stocks, other financial assets and rental properties has done very well. This strategy, along with a strong commitment to saving a high percentage of our income has achieved the following results:
- Our net worth has increased year over year by nearly 24% to over $920k!
- Our assets have increased by 17% to over $1.6 million.
- Our debt has increased by nearly 11% to just over $690k
Those results were pretty impressive but I’m even more impressed with the growth of our investment income. In 2015 we managed to earn $8,428 in passive investment income. In 2016 we increased that amount by a whopping 94.7%, earning $16,411!
To be sure we had our share of ups and downs and the above results didn’t come easy. We struggled to pay down a $50k line of credit, we had problems with our property manager, my wife’s work was slow in the back half of the year etc. But we managed to stay focused on our long term financial goals and investment strategy and it really paid off.
I feel like we are well positioned for 2017. The rental properties are sorted out now so it’s just a matter of filling the vacancies and we continue to buy and hold solid dividend paying stocks. Both of these items will undoubtedly provide a big boost to our investment income in 2017.
But what’s just as important as building our passive investment income are ways to reduce our debt and tax burden. On that front, we continue to follow strategies to pay down our non-deductible mortgage debt. These include making lump sum payments and increasing our weekly mortgage payment. All of this saves us thousands of dollars in interest over the life of the mortgage and will help us be mortgage-free years sooner. Our mortgage payments are the largest monthly expense item so it’s really important that we get it paid off sooner rather than later.
In terms of reducing our taxes, we’re making use of the contribution room in our RRSPs and TFSAs to move our dividend stocks from taxable accounts to tax-sheltered accounts. Taxes take a big chunk of most people’s paycheque so it’s really important that we pay attention to them and find legitimate ways to reduce the amount we have to pay. RRSPs, for my family at least, are a no brainer in this regard. Not only do they provide decades of tax-sheltered growth for our investments but they give us a nice tax refund that we use to make further investments or to pay down debt.
Well that’s my 2016 Financial year in review. Thanks for following my journey to financial freedom. Now it’s your turn. How did you fare in 2016? Was it a year of surprises?