Sep 032019
 

Gold and Silver Outshine the Equities Market

Stock markets fell in August across North America and Europe in general. 🙁 But there is a silver lining. Precious metal companies managed to do quite well. A couple of months ago I explained why silver is a great investment for 2019, and how it’s more undervalued than gold. I disclosed buying 300 shares of Wheaton Precious Metals (WPM) in July because I thought the price of silver would continue to rise. Thankfully it did. My net worth today is $2,000 higher because of that one investment decision. 🙂 Hurray!

Besides WPM I also own shares in Newmont Goldcorp (NGT.) If I didn’t have so much silver and gold related assets in my portfolio my net worth surely would have dropped in August. But diversification saved the day and I managed to grow my wealth by $4,100.

Gold had been in the dumps for several years since 2013. Its price dipped to a low of US$ 1060/oz in 2016. However things are looking very different now. Since the start of this year gold’s price has grown by 21%. It’s one of the best performing asset classes of 2019 so far, currently trading at $1548/oz. But silver has performed even better at 24% return year to date. The price of silver had a large rally last week and is now sitting at $19.17/oz. 🙂 Precious metals are making a comeback this year, due to more dovish monetary policies worldwide and the uncertainty of the U.S. and China trade war.

 

Liquid’s Financial Update

*Side Incomes: = $2,700

  • Part time job =$900
  • Freelance = $400
  • Dividends =$1000
  • Interest = $400

*Discretionary Spending: = $2,200

  • Food = $400
  • Miscellaneous = $300
  • Interest expense = $1300

*Net Worth: (ΔMoM)

  • Total Assets: = $1,372,600 (+600)
  • Cash = $7,600 (+2100)
  • Canadian stocks = $189,500 (+300)
  • U.S. stocks = $135,300 (-1600)
  • U.K. stocks = $20,700 (-800)
  • Retirement = $134,800 (+200)
  • Mortgage Funds = $36,600
  • P2P Lending = $36,100 (+400)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $389,700 (-3,500)
  • Mortgage = $186,900 (-400)
  • Farm Loans = $163,400 (-400)
  • Margin Loans = $35,400 (-700)
  • Line of Credit = $4,000 (-2000)

*Total Net Worth = $982,900 (+$4,100 / +0.4%)
All numbers are in $CDN at 0.75/USD

I have been an advocate of gold and silver since 2011, suggesting everyone should have at least a little bit of each in their portfolios. The value of my 1 kilogram Arctic coin has held up nicely in Canadian dollars. I have been slowly buying more bullion over the years at lower prices than today and stashing them away.

Continue reading »

Aug 192019
 

Millennials swell to 73 million as Boomers decline to 72 million

This year millennials have overtaken baby boomers as America’s largest living adult generation, according to population projections from the U.S. Census Bureau. This will have implications for how financial services are consumed now and in the future.

A new report called the Apex Millennial 100 takes a deep dive into the “unique investment behavior of a new generation.” It analyzed over 658,000 accounts held by millennials, which had more than 8,000 different stock holdings.

Apex CEO says that as “millennials mature into savvy investors, their evolving interests and values will shape a new wealth management industry, one that looks a lot different from the traditional model.”

Top 10 stocks held by Gen Y

Here is a list of the top 10 stocks most favored by millennials. Notice how heavily its concentrated on the high tech industry. 🙂

Maybe it shouldn’t be surprising how many digital companies are on the list. As famous investor Peter Lynch suggests, you should always invest in what you know. You must value the business in order to value the stock. And these are the type of companies you would expect millennials to know most intimately about. I personally interact with several of these companies on a regular basis. 🙂 You can see the entire list of 100 stocks here.

Some trending stock themes from the report include:

  • An increased focus on Canadian cannabis companies, which demonstrates the growing role marijuana may have on the medical and lifestyle decisions of millennial investors.
  • Chinese companies are leading the pack as millennials, who consider themselves to be global citizens, take the long view on international investments.
  • IPOs: Millennials consistently show support for companies that mirror their personal ideologies and offer products and services they understand and value, and will jump to invest in companies like Uber, Lyft and Slack as soon as they go public.

I can understand why other millennials are choosing these companies since I have a similar inclination to do so. I have fewer than 100 stocks in my portfolio. But somehow I hold most of the top 10 companies from the report. One of the most recent stock I purchased was Alibaba Group (BABA) which is already 15% higher since I bought it a couple of months ago. 😀 I guess I’m an example of your typical millennial investor. 🙂 The only stocks I don’t own on that top 10 list are Tesla, Berkshire Hathaway, and Microsoft.

 

__________________________________
Random Useless Fact:

According to Reuters, California and Texas are the 2 states with the highest number of school shootings.

Aug 062019
 

Much like raising horses, financial markets are at their best when they are in a stable environment. 😀 But when the economy starts to show signs of weakness, officials may step in to ease the situation. One way they do this is by making money cheaper to borrow.

July was an okay month for stocks. But the bond market was where all the action took place. 🙂 A couple of weeks ago I blogged about buying the long term bond etf (ZLC.TO) because I thought interest rates were about to fall. Luckily that was a pretty good move. A week later, for the first time in over a decade, the Federal Reserve actually lowered rates in the U.S. This means that rates in Canada may fall later this year as well. Long term bond funds increase in value when interest rate falls because existing bonds in those funds pay more money than newly issued bonds. The price of ZLC is already up 2% since last month. It also pays 4% interest every year. 🙂

My income was pretty good in July, and quite a bit higher than this time last year. Since interest rates are dropping I decided to increase my financial leverage a little bit. I borrowed $6K from my LoC to buy some new commodity stocks which I discussed in a previous post. I plan to pay back the debt before the end of the year but keep my investments for many years. 🙂

Liquid’s Financial Update

*Side Incomes: = $2,900

  • Part time job =$800
  • Freelance = $300
  • Dividends =$1000
  • Interest = $700

*Discretionary Spending: = $2,200

  • Food = $400
  • Miscellaneous = $400
  • Interest expense = $1300

*Net Worth: (ΔMoM)

  • Total Assets: = $1,372,000 (+19,000)
  • Cash = $5,500 (-2000)
  • Canadian stocks = $189,200 (+12600)
  • U.S. stocks = $136,900 (+6100)
  • U.K. stocks = $21,500 (-200)
  • Retirement = $134,600 (+1600)
  • Mortgage Funds = $36,600 (+600)
  • P2P Lending = $35,700 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $393,200 (+4,800)
  • Mortgage = $187,300 (-400)
  • Farm Loans = $163,800 (-400)
  • Margin Loans = $36,100 (-400)
  • Line of Credit = $6,000 (new)

*Total Net Worth = $978,800 (+$14,200 / +1.5%)
All numbers are in $CDN at 0.76/USD

 

I’m less than $22K away from a million dollar net worth. Wow. 🙂 One more month of positive stock market returns and I may just hit it by the end of August. Even though many experts warn of a U.S. recession by 2020, it wouldn’t be a good idea to try and get out of stocks before a bear market hits. Simply holding on to good businesses can be very profitable over time.

Technically, falling interest rates don’t just benefit bond funds – it’s also good for the stock market. But things are looking less certain with global trade disputes, and the elections coming up. I think we may see a small stock market correction before more stabilization in 2020. But who knows. In the meantime I still like the precious metal sector. I think gold and silver will finish 2019 really strong. 🙂

 

__________________________________
Random Useless Fact:

Social media companies monetize their user’s personal information.

Jul 252019
 

The Canadian federal election is coming up soon. And after that the U.S. presidential race will be in full swing for the 2020 election. Will the incumbent Donald Trump stay for another 4 years? It’s hard to make that call at this point. But perhaps there are some investment opportunities we can look at in the meantime.

Unfortunately the financial market as a whole isn’t particularly attractive right now. The S&P 500 currently has an Earnings Yield (EY) of just 4.45%. So if we put money in a stock market index fund today, we will likely receive an annual return of 4.45% based on corporate earnings, and assuming all other factors stay the same. This is noticeably lower than the long term average EY of 7.35%. Although 4.45% isn’t the worst return you can get, after paying maybe 1% of that in tax, and losing another 2% to inflation, the net real return on investment would be less than 1.5%.

That’s why I’ve decided to be more selective about which assets to buy. One thing you can always count on during an election is uncertainty. The market hates that word. One whiff of uncertainty and investors leave the stock market faster than a guy after hearing the results of the pregnancy test. This upcoming election comes at a time when the U.S. economy is slowing due to record amounts of debt weighing it down. According to the New York Fed, household debt increased for 19 quarters in a row, and is now nearly $1 trillion above the previous peak. Student loans have doubled since 2006 as a percentage of GDP. This will most likely lead to interest rate cuts in the United States to help bolster the economy. And my assumption is that the Bank of Canada will take similar action soon after, as it often did in the past. Lower interest rates usually boosts the stock market and commodity prices.

So for the next 6 to 18 months, I think the best asset classes to be in are bonds, prime real estate, and precious metals. Long term bond funds are highly sensitive to interest rate changes. But as long as we’re quite confident that rates aren’t moving up, then bond funds should provide a low risk option to earn some interest income, with the added potential for capital gains if the price of borrowing become cheaper.

Continue reading »

Jul 152019
 

tl:dr. I received raises from both my jobs. And got another 3 raises from various passive investments. On average each raise was $1,000/year.

Multiple Income Streams Update 2019

One way to potentially earn more money is to further our commitment towards our careers. But another way is to look for alternative income opportunities to supplement what we already have! There’s no limit to how much we can make if we plan ahead and build up a portfolio of multiple incomes. I began implementing this strategy in my early 20s. In my last update in 2016, I had expanded my total income sources to 6. 🙂 Here is a new update for 2019.

multiple income streams update 2019

Over the last decade my spending almost doubled due to improved living conditions, inflation, and higher debt payments. However, my income has roughly tripled in that same time. 😀 Overall my income to expense ratio has improved. I am now able to save over 50% of my take home income.

Breaking down my 5 raises

The Canadian economy stayed pretty flat, advancing only 0.1% in the first quarter of 2019. But even in a slow growth environment there are opportunities to make more money. Since I have multiple sources of personal income, each stream acts like a recurring revenue tool which I can try to extract value from. Some of this year’s raises required a bit of work on my part, while others just happened automatically.

Continue reading »