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%

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.


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.

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)

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)