May 042015
 

April has turned out to be one of the best months of the year so far. 😀

-Stock markets climbed roughly 2% in Canada and the U.S. (27% annualized return)
-The bond market is paying higher interest rates. Great for new fixed income investors. 🙂
-Real estate market continues to stand strong. What bubble? 😛
-Canadian dollar strengthens against other currencies such as the USD & Euro. This means more purchasing power for fellow Canucks.
-FCC released its annual farmland report which states Saskatchewan farmland value increased 18.7% in 2014, more than any other province!

All this growth in the markets simply equates to a $40K+ increase to my existing financial assets. Holy pumpernickel! There has never been a better time to be a diversified investor in the North American economy. 😀

I will be updating my farmland values in this month’s net worth update. As usual I’ll use a 50/50 blend of the CPI inflation rate of the previous year (1.9%) and Farm Credit Canada’s report to revalue my farmland. Thus, the average increase is 10.3% or about $38,000 more!

* Side Income:

  • Part-Time Work = $600
  • Dividends = $600
  • Selling Options = $0
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1500

*Net Worth: (MoM)

  • Assets: = $898,500 total (+43,100)
  • Cash = $4,400 (+900)
  • Stocks CDN =$96,500 (+3000)
  • Stocks US = $59,400 (+700)
  • RRSP = $53,200 (+500)
  • MICs = $15,000
  • Home = $259,000
  • Farms = $411,000 (+38000)
  • Debts: = $512,600 total (-2,500)
  • Mortgage = $194,300 (-300)
  • Farm Loans = $201,600 (-500)
  • Margin Loan CDN = $29,200
  • Margin Loan US = $25,200 (-700)
  • TD Line of Credit = $28,600  (-400)
  • CIBC Line of Credit = $10,000
  • HELOC = $18,200
  • RRSP Loans = $5,500 (-600)

*Total Net Worth = $385,900 (+$45,600 / +13.4%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.82 USD

Over the past 7 years I have been very fortunate to accumulate $400,000 of wealth starting from a negative net worth. But of course not everyone can be so lucky. Here are the 3 major factors that I credit to my current financial situation.

  1. Low interest rates. – When the expected return of a balanced basket of investments is 8%, and money can be borrowed at 4% or lower, there’s a really good chance that over time borrowing to invest will net a positive outcome.
  2. Market Timing. – Dow Jones and the S&P 500 U.S. stock market indexes doubled in value since 2008. Farmland in North America, Europe, and Australia have also soared. Housing market is also much more expensive now than in 2008, especially in cities with growing a population like San Francisco, Vancouver and Toronto. The last 7 year period has been nothing but good fortune. 😀
  3. Leverage. – By borrowing to invest the returns can be multiplied by 5 or 10 times. If this continues it means one can retire in 8 years  or less of working and saving instead of 40 years.

It’s imperative to realize that all 3 things in this list have to happen simultaneously for rapid wealth creation. Number 1, cheap money, is what gives me the ability to take on investment debt without struggling with high debt servicing costs. Number 2, the bull market, is what makes Number 3, Leverage, work so darn well! On the other hand purchasing assets in a bear market would be a nightmare. 5 times leverage means losing 50% of one’s investments when the market only drops 10%.

Today, about 20% of working Americans work at part-time jobs. And most households are living paycheck to paycheck. Not only has employment benefits shrivelled up, but the portion of employees with workplace pensions has also fallen over the years. When it comes to financial support young people are in most trouble. 34% of those aged 25 to 34 have less than $1K in any type of savings, including retirement accounts, according to the Employee Benefit Research Institute.

My plan is to continue building up my investments until I have over $1 million and become financial free. Your’s could be something different. But it’s important for everyone to have a retirement plan. If we don’t have our own plans, than we’re going to become a part of someone else’s.

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Random Useless Fact:

15-05-cooking-skills

 

 

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27 Comments on "Fiscal Update – Apr 2015 – Net Worth Jumps $45,600"

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PC
Guest

Almost hitting the $400k mark! That’s truly amazing in 7 years. If you put your mind to it, you shall conquer. Your freedom 35 certainly seems plausible now! You got another 7 years left? By then, I’m certain you’ll reach a million!

Investing Pursuits
Guest

Liquid,

Congrats on the monthly increase. The 10.3% estimated increase in the farms values is spectacular.

Tawcan
Guest

Very impressive increase. Congrats!

Clarisse @ Make Money Your Way
Guest

Wow, you have an impressive month! Congratulations!

roadmap2retire
Guest
roadmap2retire

Congrats on the fantastic progress, F35. Thats pretty awesome!

R2R

stephenleblanc3
Guest
stephenleblanc3

Congrats on the huge month! I think your stats are slightly skewed though since the farmland appreciation was cumulative over the previous year wasn’t it? You’re only just recognizing it in this month, which I think would go against GAAP if I’m not mistaken? Your shareholders would lose faith! haha, I kid, except on the congrats!

Mariposa
Guest
Mariposa

I am turning green on your accomplishments 🙂

TheEighthDigit.com
Guest

Wow nice increase !

Any plan to sell some farmland and cash in your gain or do you expect more upside ?

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[…] 35 @ $744,546 ($898,500 […]

DivHut
Guest

That’s an incredible jump in one month. Congrats to you. Of course, not to be a Debbie Downer, we should be more focused on our income generation via dividends, options, premiums, lending, rent, etc. rather than overall net worth growth. While nice seeing a rise in our net worth it’s nicer seeing a growing income stream without having to sell any assets. Thanks for sharing.

Carla
Guest
Carla

You are doing really well! However the market is getting quite high again. Do you plan to sell before a correction or just ride it out when it happens? And how would you deal with the leverage at that point? I’m not criticizing, just very interested as I’ve considered investing with leverage in the past. I just worry what would happen in this scenario.

Financial Independence
Guest

Congrats on the amazing progress. Although I am quite curious, why there is no similar inflation on the groceries, if farmland went in price by 18.7%. Surely, there is a correlation.
I could not wait till your retire at 35, to enjoy the outcome of hard work you put in.

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[…] $38K – Farmland appreciation. I adjusted my farm’s price by a conservative +10% for 2015. […]

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