Dec 062018

A lot has happened globally in the last few weeks that makes me weary about the growth of the financial markets over the next 1 to 2 years. Inflation in France sparked violent protests. The U.S. federal budget deficit for fiscal year 2019 is projected to be nearly $1 trillion. It will be hard to find borrowers who are willing to buy all those treasury bonds. The 2 largest foreign holders of existing U.S. debt are China and Japan. And both have become net sellers. The economic tension between the U.S. and China is momentarily on hold, but 3 months from now the trade war could escalate.

So what I plan to do going into 2019 is to keep more cash on hand. This will allow me to maneuver more easily as cash is very liquid. If interest rates become too high I will use the cash to pay down my debt. If stocks in general fall into a bear market I will be buying up more shares. 🙂

Liquid’s Financial Update

*Side Incomes: = $3,400

  • Part time job = $900
  • Freelance = $1200
  • Dividends = $900
  • Interest = $600
*Discretionary Spending: = $2,000
  • Food = $300
  • Miscellaneous = $500
  • Interest expense = $1200

*Net Worth: (ΔMoM)

  • Assets: = $1,225,600 total (+1400)
  • Cash = $19,800 (+2300)
  • Canadian stocks = $162,600 (-4500)
  • U.S. stocks = $117,400 (+300)
  • U.K. stocks = $20,400 (-300)
  • Retirement = $117,400 (+2700)
  • Mortgage Funds = $34,700 (+500)
  • P2P Lending = $33,300 (+400)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $420,200 total (-800)
  • Mortgage = $190,300 (-400)
  • Farm Loans = $180,400 (-500)
  • Margin Loans = $49,500 (+100)

*Total Net Worth = $805,400 (+$2,200 / +0.3%)
All numbers are in $CDN. 



Financial markets are stretched thin. The S&P 500 is still trading relatively expensive at 22x earnings, even after the pullback that started in October. There isn’t much room for growth in equities. Real estate markets around the world are softening. U.S. home building company Toll Brothers warned that the housing market slowed further in November, particularly in California. Home prices and sale volume in Canada, particularly in Vancouver and Toronto are going down. Prices will likely fall further into the upcoming spring. But Canada’s continued trade deficit and high energy prices mean the cost of living will probably climb higher. The theme for 2019 could very well be higher inflation but lower investment returns. If that turns out to be true then I would prioritize paying down debt and acquiring hard assets.


Random Useless Fact:

Nov 232018

Kiplinger made a list of “best” and worst career choices for the next generation of workers. They analyzed 785 popular occupations, considering their pay rates, growth potential over the next decade and educational requirements. The 10 most promising jobs focus on fields that are projected to expand greatly over the next decade and currently offer generous paychecks. Meanwhile the 10 worst jobs tend to pay little at present and are expected to shed positions in the future.

Let’s start with the top 10 best jobs. 🙂

  1. App Developer

    Total number of jobs: 798,233
    Projected job growth over 10 years: 21.6% (All jobs: 8.6%)
    Median annual salary: $97,483 (All jobs: $43,233)
    Typical education: Bachelor’s degree

    “Without a bachelor’s degree, you can break into the tech field as a web developer, a role that typically requires just an associate’s degree to get started and pays a median salary of about $60,385 a year. Also, the number of such jobs is expected to grow 26.5% to nearly 214,850 positions by 2026.”

  2. Computer Systems Analyst

    Total number of jobs: 597,812
    Projected job growth over 10 years: 22.0%
    Median annual salary: $85,080
    Typical education: Bachelor’s degree

  3. Nurse Practitioner

    Total number of jobs: 145,331
    Projected job growth over 10 years: 32.3%
    Median annual salary: $98,288
    Typical education: Master’s degree

  4. Physical Therapist

    Total number of jobs: 226,661
    Projected job growth over 10 years: 30.4%
    Median annual salary: $83,501
    Typical education: Doctoral degree

  5. Health Services Manager

    Total number of jobs: 337,863
    Projected job growth over 10 years: 17.4%
    Median annual salary: $93,294
    Typical education: Bachelor’s degree

  6. Physician Assistant

    Total number of jobs: 103,422
    Projected job growth over 10 years: 28.8%
    Median annual salary: $98,869
    Typical education: Master’s degree

  7. Dental Hygienist

    Total number of jobs: 207,223
    Projected job growth over 10 years: 19.0%
    Median annual salary: $73,141
    Typical education: Associate’s degree

  8. Market Research Analyst

    Total number of jobs: 557,031
    Projected job growth over 10 years: 20.9%
    Median annual salary: $61,816
    Typical education: Bachelor’s degree

  9. Personal Financial Adviser

    Total number of jobs: 251,715
    Projected job growth over 10 years: 23.8%
    Median annual salary: $86,780
    Typical education: Bachelor’s degree

  10. Speech Language Pathologist

    Total number of jobs: 142,715
    Projected job growth over 10 years: 21.0%
    Median annual salary: $73,334
    Typical education: Master’s degree


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Nov 052018

It was bound to happen sooner or later. October was a bad month for the stock markets. Some of my highest growing stocks in the technology sector such as Facebook, Amazon, Netflix, and Google (Alphabet) or FANG stocks fell into bear market territory, which means they’ve fallen by more than 20% from the top. Here is a look at how much stock indexes lost in the month of October.

  • TSX Composite -7.5% (Canada)
  • Dow Jones -5.9% (USA)
  • S&P 500 -7.9% (USA)
  • NASDAQ -10.7% (USA)
  • ASX 200 -6.0% (Australia)
  • FTSE 100 -5.4% (UK)
  • SSE Composite -6.2% (China)
  • Nikkei 225 -12.4% (Japan)

My investments weren’t able to escape this global stock market correction, and my net worth fell a bit. I hope the next couple of months will make up for it.


Liquid’s Financial Update

*Side Incomes: = $7,300

  • Part time job = $600
  • Freelance = $500
  • Dividends = $900
  • Interest = $600
  • Farm rent = $4700
*Discretionary Spending: = $2,100
  • Food = $400
  • Miscellaneous = $500
  • Interest expense = $1200

*Net Worth: (ΔMoM)

  • Assets: = $1,224,200 total (-15,900)
  • Cash = $17,500 (+4700)
  • Canadian stocks = $167,100 (-9700)
  • U.S. stocks = $117,100 (-9,800)
  • U.K. stocks = $20,700 (-900)
  • Retirement = $114,700 (-600)
  • Mortgage Funds = $34,200 (+100)
  • P2P Lending = $32,900 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $421,000 total (-2,700)
  • Mortgage = $190,700 (-500)
  • Farm Loans = $180,900 (-600)
  • Margin Loans = $49,400 (-100)
  • CIBC Line of Credit = $0 (-1500)

*Total Net Worth = $803,200 (-$13,200 / -1.6%)
All numbers are in $CDN. 


This was the first down month I’ve had in over a year. A few things saved my net worth from dropping further: My farmland paid me some rent. My fixed income all ended the month with positive returns. And despite being invested in the stock market for the past 9 years, stocks only take up about 34% of my assets. This means any changes in the overall stock market will probably affect my net worth by only 1/3rd as much. 🙂



Random Useless Fact:

Some people say Elon Musk reached puberty in his 30s

Oct 292018

Short Term VS Long Term Bond Funds

Earlier this year I put together a list of high quality bond funds for readers to check out. There was a lot of good feedback, but some people questioned why I didn’t include any short term bond funds in my list. More recently reader Carla also asked about my indifference to them.

Well, to be Frank, I would have to change my name. 😎 But rather than doing that I will answer Carla’s question. 🙂

Retirement portfolios are usually associated with long term planning. Short term bonds tend to be less volatile and less sensitive to interest rate movements. But since I don’t plan to sell any time soon, short term volatility doesn’t really affect my bottom line. On the other hand, long term bonds pay a higher interest rate (or coupon) which more than compensates for the higher volatility in the long run. For evidence of this, let’s compare 2 bond funds with different durations.

Comparing Returns of ZCS and ZLC

For consistency purposes we’ll isolate the duration variable and look at the following 2 funds.

  • BMO Short Bond ETF (ZCS)
  • BMO Long Bond ETF (ZLC)

Both funds are from the same company, and hold corporate bonds. The only key difference is the duration of bonds they hold. Below shows the annual total return of these funds from Morningstar, highlighted in yellow.

bond fund comparison between short and long

As we can see, over the last 5 years the short term bond index fund (ZCS) returned only 2.21% per year. The latest inflation rate number from Statistics Canada is 2.2%. So holding a short term bond fund such as ZCS would have earned an annual real return of 0.01%. I think we can all do better than that. 🙂

Meanwhile the long term bond fund (ZLC) returned 6.21% per year on average. Even the 1 year return shows that long term bond fund ZLC came out ahead. Keep in mind this is during a rising interest rate environment, which should hurt long bond funds more. But short bond fund ZCS currently has a weighted average coupon of only 2.91%, while ZLC’s is at 5.29%. The longer investment time horizon we have, the bigger the difference in returns we should see between ZLC and ZCS. 🙂

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Oct 172018

Last week I lost nearly $20,000 in net worth. 🙁 Parts of the stock market slipped into correction territory. My Amazon shares lost up to 6.2% on a single day, the worst performance since 2016. The market has recovered a bit this week, but I am still in the red for the month. The recent volatility is a stoic reminder that the market can be fickle, and doesn’t care about how much we pray or like it on Facebook.

Stocks and bond funds move up and down without our control. But the one investment that can not be taken away from us is personal development.  When it comes to building wealth, human capital is more valuable than money in the long run. 🙂

Developing useful knowledge and skills is the best way to maintain a prosperous life. Ideally you want to become so valuable that the company can’t afford to give you the pink slip. 🙂 But even the most stable careers are susceptible to a labor shake-up or restructuring. I was employed by the same company for about 10 years. My position certainly felt safe, until I was suddenly let go earlier this year without any warning.  :/

If anyone is nervous about potentially being laid off, below are 8 suggestions to help you prepare for the unexpected.

  • Keep your LinkedIn profile and resume up to date. Recruiters often use online tools to help them look for potential new hires. 🙂
  • Save up your vacation time and treat it like an insurance policy. Any unused vacation days must be paid out if a worker is laid off in my city. I always try to keep at least 10 working days of vacation stored up. This amounts to 2 weeks worth of extra termination pay. That’s a pretty good parting gift. Yay!
  • Build up some cash liquidity or savings to give yourself time to look for other opportunities. Many experts believe saving enough to withstand 6 months of living expenses is enough. I personally prefer longer. According to my stress test calculations (under the employment risk category) I currently have 36 months.
  • Collect work achievements. I have been periodically saving projects throughout my career to demonstrate my thought process and problem solving skills. I keep these files at home with permission so I can update my resume and show off my skills to future employers.
  • Don’t burn bridges. Be nice to everyone because you never know who can help you get your next job. One coworkers who was laid off the same day I was received a call from the same company a few days later. Apparently they wanted to hire him back. He even got to keep his termination package lol. 🙂 #bonusmoney
  • Practice solving problems. Our productivity is correlated with how many problems we can solve. If we are good at finding solutions to big problems then more people will want to employ us for our skills.
  • Explore new careers options. I worked at an Amazon warehouse making about $14.50 per hour, which is less than half of what I was making at my old job. The experience made me appreciate my old desk job a lot more. I also developed more respect for physical laborers.
  • Create a side income. My part time job kept food on the table while I was looking for another full time job. Other side hustle ideas include giving music lessons, selling t-shirts online, or building up a dividend stock portfolio.

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