8/12/2019

Neighbour Joe - Return on Assets

Photo by Austin Distel on Unsplash

Hello everyone, today I am going to be calculating a popular ratio used by security analysts when evaluating a company, on my personal finance. The return on assets (ROA) ratio is a quick measurement to show how well the company generate income from its assets. You take the net income and divided by the total assets. My assets were all layout in my latest net worth update post. Let us begin:

Total Assets - $522,845 (As of August 2019)

For the total assets, I did not include my define benefit pension because it will make this calculation very complicated. I contribute to it monthly, but it'll be tough to find out exactly how much monthly income the portfolio is currently generating.

Income (As of August 2019)

TFSA Investment - $3267.33/Year
RESP Investment - $51/Year

Rental Income - $8,880/Year
Rental Expense
Insurance - $588/Year
Property Tax - $1,504/Year
Mortgage Interest - $7,172/Year

Net: $2,934.33

For income, I am strictly focusing on passive income, since employment income is generated by me, and I did not include myself in the total assets.

ROA Ratio: 0.56%

Insights
Not a bad ratio, since TD Bank's latest ROA, is at 0.88%. Anyway, one thing I learned from going through this calculation is that my rental property is actually not generating income for me right now. That's the price you pay for doing 100% debt financing on the house. I am about $300 in the red right now, but it won't stay that way for long, the rent increases every year, and the interest expense decreases every year. In a year time, I should be breaking even and into the positive.

Hopefully, as I continue on this journey, I'll be able to make better use of my assets and start increasing my return on assets ratio.



8/03/2019

Neighbour Joe - August 2019 Net Worth


Here is the net worth update for August 2019. The market is very volatile this year, which has caused my net worth to fluctuated quite drastically on month by month basis. Overall, my monthly employment income is still the most significant contributor to my net worth increase. I have also started tracking my rental property in my net worth. I've had the property for a year now but never got around to putting it into my spreadsheet. The rental property is a partnership between my parents and me. They didn't have the income to qualify for a mortgage, so I took on the debt while they put down the equity. Cost and profit are shared accordingly.

Asset
Chequing: $1,498.38
Savings: $1,210.48
TFSA Investment: $93,360.57(Market Value)
RESP: $2,776.01 (Market Value)
*Real Estate: $224,000 (Purchase Price of my house)

NEW*Real Estate Rental Property: $200,000 (Purchase Price of the house)
*Define Benefit Work Pension (Transfer Value): ~$153,000 (Last checked in Jul 2017,aprox $1000 a month of contribution)

*These have not been updated since the start of this blog.
**Automobile is not included (No monthly car payment)

Liabilities
Mortgage: $120,769.98

NEW Rental Mortgage: $196,533.81

*Credit Card is paid in full every month

Last Net Worth Update: $355,996.77
Current Net Worth: $359,147.97 (+0.89%)

Passive Income
Current Passive Income: $3,267.33/Year or $272.28/Month (TFSA only, RESP and rental property not included)


7/01/2019

Neighbour Joe - July 2019 Net Worth



Happy Canada Day! Here is the net worth update for July 2019.

Asset
Chequing: $2,228.21
Savings: $2,705.30
TFSA Investment: $92,569.79(Market Value)
RESP: $2,263.41 (Market Value)
*Real Estate: $224,000 (Purchase Price of my house)
*Define Benefit Work Pension (Transfer Value): ~$153,000 (Last checked in Jul 2017,aprox $1000 a month of contribution)

*These have not been updated since the start of this blog.
**Automobile is not included (No monthly car payment)

Liabilities
Mortgage: $120,769.98

*Credit Card is paid in full every month

Last Net Worth Update: $353,583.24
Current Net Worth: $355,996.77 (+0.68%)

Passive Income
Current Passive Income: $3,213.81/Year or $267.82/Month

6/19/2019

Beginner's Guide to Mortgage



Hi, today I am going to talk about mortgage and things to consider when getting a new mortgage. Since my near term goal is to pay off my mortgage within three years, I figure it only makes sense to do a post about mortgage. OK, so what is a mortgage? It's a fancy term for a loan to allow you to buy a house, meaning you are borrowing money. Mortgage is a big business and banks love them. Let's just think about this, when you get a mortgage, you pretty much are sharing ownership of the house with the bank since they, in theory, are buying the house for you. In return you pay interest and you assume almost all the risk for that property. There is a reason why you must have home insurance on your home or else the bank will not give you the loan. If you stop paying your monthly payments then the bank will come and evict you from the house, this is known as foreclosure. Intro asides, let us get into the process of getting a mortgage.

6/06/2019

Must read personal finance books!

The question a lot of people, myself included, ask when they start their journey is, what are the must-read books for personal finance. Reading has been an essential part of my journey, and I will highly advice anyone trying to reach financial independent to try and read a book a month. Here is a list of books that I've personally read and will recommend for people that want to learn more about personal finance.

6/01/2019

Neighbour Joe - June 2019 Net Worth


Networth update for June.

Asset
Chequing: $1,777.14
Savings: $2,705.30
TFSA Investment: $90,912.50 (Market Value)
RESP: $1,958.28 (Market Value)
*Real Estate: $224,000 (Purchase Price of my house)
*Define Benefit Work Pension (Transfer Value): ~$153,000 (Last checked in Jul 2017,aprox $1000 a month of contribution)

*These have not been updated since the start of this blog.
**Automobile is not included (No monthly car payment)

Liabilities
Mortgage: $120,769.98

*Credit Card is paid in full every month

Last Net Worth Update: $358,246.53
Current Net Worth: $353,583.24(-1.35%)

Passive Income
Current Passive Income: $3,213.81/Year or $267.82/Month

A drop in net worth this month had to spend around $2400 on tuition for my MBA. Also, my portfolio dropped this month due to a few bad earnings reports and the on-going trade tension between the US and China. 

5/27/2019

Asset Management: Putting your money to work!


Assets management is an important skill you must learn during your journey. You must develop the mindset of money as your workers, and you are their manager. Just like at any job, the manager gives tasks for workers to perform. Therefore you must do the same thing with your money.

5/23/2019

Why is car a horrible asset class?

If you've been following my monthly net worth updates, you'll know that I don't include my car as an asset. This is done on purpose to highlight my belief that car is not a wealth building assets. I've also talked in a previous post on what I consider good assets.

5/20/2019

Things to do during your journey to financial independence


Starting your journey to financial independence can be very exciting at first, tracking your monthly cash flow, seeing your net worth change, learning about investing, and even planning what to do with all your wealth once you've accumulated them. After the initial excitement, you'll probably start wondering what else is there to do? Today I am going to share things that I've been doing since I started this journey to keep the excitement alive.

5/13/2019

A money tree that gives you $1 a day.


As the saying goes, "What, Do you think money grows on trees?". Well, I am going to show you that money does grow on "trees" and how you can get your hands on such a tree. This idea came to me the other day when I was talking to my wife about the current materialistic culture that we lived in. She said people don't want to invest in stocks because they can't show off their investment. I started thinking, what if you can buy a tree that gives you $1 a day, how many people will buy such a tree and how much will it cost? I can't answer the first question, but I can roughly tell you how much it should cost.