Jan 312015
 

January is one of my favourite months because I tend to benefit from the New Year’s bump phenomenon which earns me a lot of money without requiring me to do any work. A typical monthly net worth increase for me is roughly $4,000. But in January this number can easily double. This annual boon is the product of two main factors. 1) High quality financial assets that I often write about like my recent REIT investment. And 2) natural market forces that occur at the beginning of every year. 🙂

*Side Income:

  • Part-Time Work = $700
  • Dividends = $600
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1500

*Net Worth: (MoM)15-01-networth-update-jan

  • Assets: = $847,300 total (+9,900)
  • Cash = $3,200 (+400)
  • Stocks CDN =$88,400 (+500)
  • Stocks US = $56,100 (+2800)
  • RRSP = $52,600 (+1200)
  • MICs = $15,000 (same)
  • Home = $259,000 (+5000)
  • Farms = $373,000 (same)
  • Debts: = $516,700 total (-1,100)
  • Mortgage = $195,400 (-300)
  • Farm Loans = $203,000 (-500)
  • Margin Loan CDN = $26,800 (-100)
  • Margin Loan US = $26,300 (+1200)
  • TD Line of Credit = $29,800  (-200)
  • CIBC Line of Credit = $10,000 (-400)
  • HELOC = $18,200 (same)
  • RRSP Loans = $7,200 (-800)

*Total Net Worth = $330,600 (+$11,000+3.4%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

Stock Gains – The Santa Claus Rally is a term to describe a rise in the stock markets around the holiday season. From Dec 23rd to Jan 3rd, the Dow Jones index has made a positive return 77% of the time since 1896. Furthermore the entire month of January has historically been mostly favourable toward investors. This year was the exception however, as the Dow ended the month lower. 🙁 But up here in Canada the TSX managed to squeeze in a small gain. 😉

Extra Income – A lot of quarterly dividends are paid out in January so I received about $600 in dividend income this month, which is more than usual. The annual payment for my cash-back credit card also falls on the first month of the year.

Strong U.S. Dollar – The Canadian loonie lost 7% of its value in January relative to the $USD. This is great news for me since 1/3rd of my stocks are in the United States. 😀 Even though the U.S. stock market fell in January, my U.S. stock portfolio still gained in value when I convert everything back into Canadian dollars. Unfortunately this also means the debt I have in US dollars is also worth more now.

Real Estate – I update the value of my apartment every January. Canada’s inflation rate was 2% in 2014 so I increased the value of my home by $5,000 accordingly. 🙂

The New Year’s bump has consistently helped me throughout the years. Below was the result of my 2011 New Year’s bump.

  • Assets:
  • Cash = $7,000 (-3000)
  • Stocks = $34,800 (+2300)
  • Home  = $243,000 (+6000)
  • Liabilities:
  • Mortgage = $212,000 (-300)
  • Others = $0 (-4,000 )

Total Net Worth = $72,500* ( +15.26%)

So in the first month of 2011 my net worth shot up by $9,600. To give you an idea of what kind of income I was making, here’s a copy of my pay stub from 2011.

13-8-2011-income

I was basically making $44K a year gross. So despite taking home only $2,667 a month from my full time job my wealth nearly grew by 5 figures, more than 3 times my salary. This is how important the month of January can be to any investor.

Here’s a look at how other Januaries have affected my net worth over the years.

For anyone to benefit from the New Year’s bump all they have to do is buy high quality real estate and dividend paying stocks of profitable companies. Then sit back and let time take care of the rest. 🙂 It really is that simple. No secret techniques or complicated strategies necessary. There’s always risk involved with investing, but from my own experience I have to say the outcomes have been consistently positive so far. I’m also using leverage for some of my investments to improve their potential returns, but that may not be suitable for everyone.

Earning a high income helps one to become rich, but that usually requires hard work which is not my style. The way I plan to ultimately reach early financial independence is to primarily use my money to make more money. And the New Year’s bump shows that it works. 😉

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Random Useless Fact:

15-01-batman-billionaires

 

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19 Comments on "Fiscal Update – Jan 2015 – New Year’s Bump"

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Asset Grinder
Guest

I have a good new years bump too from my equities. All attributed to currency change and Apple stock. But hey I aint complaing! Net worth chart looking solid!

RICARDO
Guest
RICARDO
Hi LA I must say you are quite candid about your revenue. It does give an honest assessment or starting point for someone to see what can be done with a little savings and some dividends thrown in for good luck. I mainly track my dividends although I do look at end of year, Dec 31st, and mid yesr, end of June values just to keep my spirits up. What i like to see is the increase in dividends year to year. I hope for a 10% increase in dividend pay outs year to year. In other words if I got $10K last year i would hope for $11K this year. This comes from maxing out both my RRSP and TFSA as well as non-registered investment accounts tied to a HELOC and naturally the re-investment of the dividends. Last year I managed a 29% increase of dividend pay out from 2013 to 2014. That would be comparable to getting $2.9K instead of $1K in the example I gave. Quite happy with that. Naturally the subsequent year would require >$12K of dividends to meet the 10% increase in dividends year to year. For Jan 2015 I managed an 18% increase in… Read more »
Anonymous
Guest
Anonymous

That should have been a $1.2K, not $12K. Woudl be nice but a little out of line

RICARDO

Carla
Guest
Carla

Great post. You are doing well! I’m curious as to why you use the inflation rate to value your real estate investments rather than the Canadian Real Estate Association (CREA) House Price Index for your city? It can be possible to have high inflation but home prices go down.

Also, I looked through older posts but didn’t see your budget anywhere. You are obviously very frugal and I’d love to see how much you spend on food, utilities etc.

roadmap2retire
Guest
roadmap2retire

Nice. Congrats on the bump and the extra income for the month. The fall in loonie was good news for me too – bumped up my portfolio quite a bit since a lot of investments are in US-based companies.

R2R

DivHut
Guest

Thanks for sharing your recent financial picture with us. There’s no doubt that the lower Canadian dollar is not only impacting returns for many, but it is also having an impact in Canadian stocks trading on U.S. exchanges. I for one see the Canadian banks tanking for this and other reasons. Bottom line is that you are doing very well and that chart is certainly headed in the right direction.

No More Waffles
Guest

Congrats on the increase, Liquid! The New Year’s bump does indeed to be a recurring theme in your portfolio.

My portfolio also grew by quite a lot after the Dollar kept climbing and the European Central bank officially announced QE for the Euro zone. Up, up, up!

Let’s hope the rest of the year goes as well as January,
NMW

Tawcan
Guest

That’s a nice jump. Keep it up! We do net worth calculation every quarter so next one will be in April. Should be interesting to see what our net worth is by then.

BeSmartRich
Guest

Wow! That was a huge gain, Exciting

Gen Y Finance Guy
Guest

Looks like you had a great January.

I too had a great month with Net Worth jumping 7.1%. Like you said above, if only that were every month. I have only recently started tracking and reporting Net Worth. But I dug up some history and 2014 was a great year with Net Worth finishing up 76.1%. With small numbers it is easier to have larger increases like that.

Looking forward to tracking your journey. And maybe a little healthy competition…I am about $130K behind you (I think our currencies are pretty close to parity).

Thanks for sharing!

Cheers!

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