Last updated on February 2nd, 2021 at 12:47 am
Hello everyone! Thanks for checking out my net worth update for January 2021! These numbers represent my wife and I’s net worth as of January 1st. I do my best to round to the nearest $100 to keep everything easy on the eyes. Let’s get started!
Assessment Up! So What?
On January 1st, British Columbia released its property assessments for 2021. These assessments are essentially guesses for what your home is worth, and are used to calculate the property tax you’ll have to pay next period. If your home rises in value relative to the average home in your municipality, your taxes will go up more than others.
Now, having owned this home since late 2019, this is my second property assessment. Last year my assessment fell by a small amount. That was because we purchased during somewhat of a buyers’ market and were able to buy our home for $40k under assessment. So, when the new assessment came out, it adjusted downwards to partially reflect the lower than expected purchase price.
Canada’s real estate market was completely different in 2020. So much so that I wrote a few articles on the real estate market this summer and tried to explain why things were getting so red hot in Canada. Prices across B.C. have been rising, especially for detached homes. As a result of these changes, my assessment is $45k higher than last year. This captures all of the price gains as of July 2020, which is the end of the reporting period for the assessment.
Why I’m Ignoring My Assessment… for Now
So, what does this mean for my net worth? Well, other than the warm and fuzzy feeling of my net worth supposedly increasing, not much. I haven’t planned on accounting for these on-paper increases to my net worth. And that’s for a few reasons:
- Assessments are just a guess. Homes often sell over or under assessment.
- Transaction costs take a huge chunk out of any price appreciation when selling a home.
Perhaps after a few more years, if my assessment continues to rise, I’ll incorporate it into my net worth calculation. One method would be to reduce the assessed value by the expected transaction costs and some margin of safety. But for now, I’ll wait until I sell to add these gains (or losses!) to my net worth calculation.
A More Modest Net Worth Increase
Ignoring my property assessment, our family’s net worth rose by $7,300 compared to the previous month. That’s an increase of 2.1%. Most of this increase can be attributed to us saving $4,000 of our income. Investments added about $1,200 to our net worth, which is much less than last month, where they boosted our net worth by $5,900.
Looking at all of our assets, I’m happy to see that our investment accounts are so close to hitting $100k; that’s when stock appreciation can start having a sizable impact on your finances. Looking back on our first net worth update last year, I can see that we’ve paid down our mortgage by $8,600 and grown our investment accounts by $51,300 – amazing!
We’ve made some great progress towards our 2021 goal to add $30k to our investment accounts. I was able to contribute $3,500 to my TFSA while my wife contributed $3,400 to hers. With these funds, I added to my VCN, VIU, and VEE positions. My wife added to her XAW, XDIV, and XDG positions. Overall, we’re off to a great start for 2021, and I’m hopeful that we can hit our goal of investing $30k.
Passive income was a little less interesting. Our big quarterly dividend payers payout in January, so I’m hopeful that our February 1st net worth update will show a sizable increase to our dividend income. As for this period, we earned $67 in dividends on top of $24 in income from our high-interest savings account. We’ll continue to add more money into our TFSA and hopefully see a nice increase to our dividend income in the months to come. Stay tuned!
Thanks for Reading!
Thank you for checking out my net worth update for January 2021! I recently wrote a few articles that may help you in the new year. This includes my article on the home office expenses for employees and my article on whether you should contribute to a TFSA vs an RRSP. Consider giving those a read if you think they may help you on your financial journey!
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What are your thoughts on property assessments? Are they reliable? Do you use them when calculating your net worth?