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Discussion Starter · #23 ·
Seems like the RRSP is gone
The cash holding seems high
RSP was reduced by 30% to account for future taxes. (Assets are really at 128.4k) Cash isn't really cash but short term investments (1 year or less) collecting an avg of ~2.3%. This is for emergency funds and/or potential down payment on a home. Concidently, this fixed income % of my total assets is also roughly my age.
 

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Very cool, I love how you don't have any debt. Keep up the awesome progress. I am in my late 20's and have similar net worth. It's comforting to see other people around my age with similar financial mindset. Cheers.
 

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Discussion Starter · #26 ·
Very cool, I love how you don't have any debt. Keep up the awesome progress. I am in my late 20's and have similar net worth. It's comforting to see other people around my age with similar financial mindset. Cheers.
Thanks. I'm now in my early 30s, so you are in better shape than I am. I think there are quite a few people out there that are financially responsible, they just don't talk about it or go on financial forums (if they do, they just don't post on it).

In my personal group of friends, they seem to be split into 2 groups:
- 50% are in Group 1 is all about living in the moment, spending that money, enjoying life, and maintaining that image
- 50% are in Group 2 are financially responsible and are diligent with their savings

The odd thing is, I know some people who are in group 1 who know and acknowledge they have expensive taste, enjoy the finer things, and "want more". This has driven them to study/work hard resulting in them outearning those in group 2 by a large margin. With some of them having annual salaries that exceed my savings.

I myself have been probably been historically 30% category 1 and 70% category 2. But more recently, I think I have shifted towards 50/50 since my time of being young and stupid is coming to an end. I like being young and stupid.
 

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Very cool, I love how you don't have any debt. Keep up the awesome progress. I am in my late 20's and have similar net worth. It's comforting to see other people around my age with similar financial mindset. Cheers.
As per Thomas Stanley, the author of Millionaire Next Door, your expected net worth should be 10% of your age times yearly income....(0.10 X age X income = expected net worth). Now you can check that if you are ahead of the game or not.
 

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Discussion Starter · #30 ·
Dec 4, 2019

Cash: 105.2k
Investment: 95k
TFSA: 112.4k
Pension: 107.5k

Debt: 25k

Total Net Worth: $395.1k
 

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Discussion Starter · #31 ·
Mar 19, 2020

Ouch what a drop. I briefly got all the way up to $420k in Feb but it has now dropped all the way to $340k

Cash: 87k
Investment: 78.4k
TFSA: 91.6k
Pension: 89.2k

Debt: 5k

Total Net Worth: 341.2k
 

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Discussion Starter · #33 ·
Feb 20, 2021

Wow, what an odd year. Lots of changes in life. Definitely did not expect savings to go up the way it did (no change in income, mostly just reduced spending and market returns). Parent's employment has been affected last year and now both are not working. Thankful to be in a position where my sister and I have been able to gift them an amount that should take care of them for a while. Also by doing so, we've accomplished the target we have set out a few years ago! Though I'd like to admit I only contributed only around 30% of it, the rest came from sister.

Cash: 80k
Investment: 145k
TFSA: 144k
Pension: 143k

Debt: 0k

Total Savings: 512k
 

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Half a mill.
Great job.
And kudos for sticking to your thread for 5 years.
 

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Discussion Starter · #36 ·
June 2, 2021

Thanks for support everyone.

I've been thinking that this is no longer a true representation of net worth after tax. I have reduced my pension by 30% to account for future tax liability, but realize that my investments contains unrealized gains which would generate a future tax liability. This expected tax liability isn't too big at the moment though. Do people here usually reduce their holding's value to account for this?

Cash: 80k
Investment: 165k
TFSA: 145k
Pension: 154k

Debt: 0k

Total Savings: 544k
 

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I project my future draws on net worth to be real expenses plus account for the tax due to net the real expenses in a year. I make assumptions like tax rates sort of will be like present day rates but values of different marginal rate tiers will rise with inflation. Presently planning early retire with draw out rrsp funds, pay the marginal tax, and then even draw extra up to the next tax tier to pour fresh money into tfsa every year I can. To account for higher tax long term with wife and I I do not presume there will be income splitting.

I don't take off value of present holdings though.
 

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I don't reduce expected taxes from my net worth calculations for a couple of reasons.
My main goal for monitoring the value of my holdings is to take monthly snapshops to check if I'm on track to hit my targets and track changes/trending. Adjusting for taxes complicates it without a lot of value for my intended purposes. And tax rates on withdrawals obviously vary depeding on a number of factors and are subject to regulatory change.

However, I have a separate worksheet to track planned annual withdrawals with inputs from my different holdings and map it against my expected expenses from a high level. Similar to Ponderling, it's here where I estimate the impact of taxation as an friction on my withdrawals. It's fairly rough though, because there are too many variables that are subject to change/fluxuations.
 

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I've been thinking that this is no longer a true representation of net worth after tax. I have reduced my pension by 30% to account for future tax liability, but realize that my investments contains unrealized gains which would generate a future tax liability. This expected tax liability isn't too big at the moment though. Do people here usually reduce their holding's value to account for this?
Like Ponderling and Milhouse, I don't formally account for future tax liability.

If you do wish to plan for it, I think your 30% figure is almost certainly too high.
I'm guessing that's your current marginal rate. In Ontario, that's consistent with a salary in the $50K-$90K range.

However, you should be using your average tax rate as a guide. In Ontario, the average tax rate on an income of $80,000 is 20.7% (says the TaxTips calculator). You only hit a 30% average tax rate at about $150K of income. That's a hell of a retirement!

Even the average rate may be high. I am in early retirement and taking advantage of several tax-saving opportunities -- eligible dividends, pension credit, optimizing capital gains. Our average tax rate has fallen dramatically from our working days.
 

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Discussion Starter · #40 ·
Like Ponderling and Milhouse, I don't formally account for future tax liability.

If you do wish to plan for it, I think your 30% figure is almost certainly too high.
I'm guessing that's your current marginal rate. In Ontario, that's consistent with a salary in the $50K-$90K range.

However, you should be using your average tax rate as a guide. In Ontario, the average tax rate on an income of $80,000 is 20.7% (says the TaxTips calculator). You only hit a 30% average tax rate at about $150K of income. That's a hell of a retirement!

Even the average rate may be high. I am in early retirement and taking advantage of several tax-saving opportunities -- eligible dividends, pension credit, optimizing capital gains. Our average tax rate has fallen dramatically from our working days.
Good point about that tax rate likely being lower in retirement. I am a bit hesitant about not reducing the pension size, because it would give the illusion that $100 in my pension is equivalent to $100 in my bank account, which isn't true.

What is pension credit? And what do you mean by optimizing capital gains?
 
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