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Net worth as a measure of security

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Financial security means different things to each of us. Most often, we measure it by net worth—comparing our assets to our debts. Canadians’ net worth has grown considerably after years of strong economic growth and an explosive real estate market. In 2005, Canada’s 13.3 million families had a median net worth of $148,350.

The total value of all assets held by Canadian families rose 42.4% from 1999 to 2005, due in large part to the rapid rise in real estate prices. Canadians collectively owned $2.36 trillion worth of real estate in 2005.

Canadians have also seen their net worth rise thanks to the performance of private pension assets and financial, non-pension assets. Pension assets—such as employer-sponsored registered pension plans (RPPs) and personal registered retirement savings plans (RRSPs)—rose 41.7% from 1999 to 2005.

Financial assets such as mutual funds, investment funds, stocks and bonds have grown at a slower pace of 20.0%, in part because of fluctuations in the stock markets in the first years of the new century. The value of Canadians’ stock holdings as a whole was virtually unchanged from 1999 to 2005.

Debts are the other side of the financial security equation. While Canadian families’ assets were increasing tremendously in value from 1999 to 2005, their debts were also accumulating—their total amount of debt swelled by 47.5%. Mortgages accounted for three-quarters of all their debts, although lines of credit, credit cards and car loans were also major sources of debt.

But even though debts have grown at a slightly faster pace than assets, the financial security of the average Canadian family is still fairly strong.