Net Worth Update: July 2022 – Investment Loans Update

Last updated on March 10th, 2023 at 10:56 am

Welcome to my net worth update for July 2022! These numbers represent my wife and I’s net worth as of July 1st. Please check out our previous net worth update if you haven’t already!

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Investment Loan Update

It’s been a few months since I shared that I was starting the Smith Maneuver. I planned to write a lot more on that topic (and I still will!), but I’ve been busy with work getting as much enjoyment out of this summer while we still have it. However, I did want to give a short update and also update you on my original investment loan.

Basically, I’m continuing my Smith Maneuver strategy of investing $10,000 per month into VEQT, and I’m pretty happy to have capital available to buy as the market is down. With $20k invested as of July 1st, I’m down about $1,500.

My original margin account with Interactive Brokers is down much more (around $5,000) since I made all of my purchases last summer/fall. In this account I currently have $37,000 of VEQT backed by $25,000 of LOC debt and $15,000 of margin debt.

One thing that has been increasing is my investment loan interest! The bulk of this interest comes from my HELOC which is at 4.00% and my Tangerine LOC which is at 3.70%. And it seems certain that these rates will soon hit something closer to 5% in the very near future.

However, I’m not worried. Even at 5%, the after-tax interest rate is a reasonable 3.1% (given that my marginal tax rate is 38%), which in theory should be easy to beat over the long-term with equity investing.

Dividend Income

I was a bit disappointed to receive no dividend income last month, but this month more than made up for it: Two of my wife’s monthly dividend payers (XDIV and XDG) paid twice. On top of that, a few of our quarterly payers also paid. In total, we received $890!

That’s our second-highest earning month for dividends! That’s got me excited to see what August and the rest of the year delivers. We’re on track to earn way more passive income in 2022 than ever before!

Expenses in Depth

Last month was another expensive month. However, this was expected, as our annual property tax bill came due. This was a $3,500 expense that simply can’t be avoided (well, unless we sold our home!).

On top of property tax, we spent an incredible $594 on eating out. Much of this came from day trips and birthday outings we went on with our family—treating others out is expensive! We also spent another $252 on gifts.

For our home, we spend $100 on some shelves and $300 on an air conditioner which (thankfully, after last year’s heat dome) we haven’t had to use yet.

Because of all of these expenses, we only managed to contribute a measly $1,000 to our investment accounts last month.

Net Worth Change

With our high expenses and the stock market performing abysmally, this is our largest net worth decrease to date. Our net worth is now $645,800, down from $664,000 in the previous month. That’s a decrease of over $18,000!

Most of this decrease is from our investments. Overall, we lost $20,850 across all our investment accounts. Which makes sense, if you consider that our portfolio composition is similar to VEQT which fell from $32.98 to $30.73 in June—a 9.3% decline.

That leaves us with a liquid net worth of $239,600, which is less than it was back in April of this year. Luckily it looks like we’ll both have a three paycheque month at the end of summer. That’ll help us recover somewhat after this expensive month and juice our liquid net worth as we head into the end of 2022.

Thanks for Reading

I recently wrote a few articles that you may be interested in. This includes my pick for the best preferred share ETF in Canada and my post on the best Canadian gold ETFs. Consider giving those a read if you think they’ll help you on your financial journey!

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