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At 38, and with approximately $2.4 million in net assets, George* is focused on his next goal: increasing his young family’s net worth to $5 million over the next 10 years. It’s a target he hopes will create a level of financial stability that will pave the way for retirement at 50, if he and his wife, Eileen,* 35, so choose.

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The couple have two pre-school aged children and, while they are on the same page when it comes to living within their means, Eileen is more confident in their ability to enjoy an expanded lifestyle today than her husband.

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“I don’t have a good sense of whether our net worth is enough,” said George. “I’m sensitive to costs and always looking to save more versus spend more. What is the financial benchmark for people our age?”

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George earns $275,000 a year before tax and Eileen’s annual pre-tax income is $140,000. Their annual expenses are approximately $170,000. This includes about $62,000 in mortgage payments on the family home and between $10,000 and $20,000 on travel, the one area where the couple are happy to splurge.

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They live in Ontario and their primary residence is valued at approximately $1.3 million with an outstanding mortgage of about $1 million. They converted the basement into a rental unit, which brings in about $22,000 a year. They also own two rental properties in Toronto with a combined value of $900,000 and are 50 per cent owners in two additional rental properties with a combined value of $850,000. The rental properties are self-sustaining, with rents covering mortgage payments and maintenance.

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George and Eileen are considering a move to a larger home in the next year to 18 months, a purchase they anticipate will cost between $2 million to $2.5 million. As with their current home, they plan to create a rental unit that will help address expenses.

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A self-directed investor, George has built an investment portfolio valued at approximately $1.25 million. This includes nearly $300,000 in tax-free savings accounts (TFSAs), approximately $530,000 in self-directed registered retirement savings plans (RRSPs), about $40,000 in a registered education savings plan (RESP), all invested largely in technology stocks with some blue-chip banks and utilities. He also has $17,000 in an unregistered account and approximately $60,000 in unvested company stocks. George and Eileen also have employer-sponsored RRSPs worth a combined $285,000. These are invested in growth mutual funds.

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George views the rental properties, which he purchased over a span of 10 years, as long-term investments, so long as they remain self-sustaining. He wonders, however, if this is the right approach, particularly when it comes to managing income in the most tax efficient way. “Is real estate the way to go, or should we sell some of the rental properties and invest the proceeds into the stock market? What is the right balance between real estate and stocks?”