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. 🙂
- Part-Time Work = $700
- Dividends = $600
- Fun = $200
- Debt Interest = $1500
*Net Worth: (MoM)
- 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.
- Cash = $7,000 (-3000)
- Stocks = $34,800 (+2300)
- Home = $243,000 (+6000)
- 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.
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. 😉
Random Useless Fact: