Oct 032016
 

Not So Special 

Around this time last month I proclaimed that I had a million dollar in assets. At first I was really happy about my situation because I thought I was unique. 🙂 But as it turns out, a million dollars isn’t all that impressive in my neck of the woods.

I live in Metro Vancouver on the west coast of Canada. And according to Environics Analytics, the average net worth of Metro Vancouver households rose 7.1% last year in 2015 to reach $1,036,202. Yowzah! 😲

This means I’m only average. Le sigh. 😞 Lol. Actually, I’m even poorer than average because my household net worth is only about half as much as the average around here. I guess I’m not the special snowflake I thought I was, haha.

16-10-vancouver-lambo-white

Rising real estate values have pushed the average net worth of Metro Vancouver households up over $1 million, making it Canada’s first “city of millionaires,” according to a study. ~ CBC article.

According to the CMHC, single women have greatly contributed to the rising cost of homeownership in Canada. Thanks ladies. 😉 A report released last week by Swiss bank UBS said Vancouver is at greatest risk of a housing bubble in the world. But I don’t think that’s true. Property prices here are high, but still affordable for most people.

September was a pretty good month overall. There were no surprises. The market did fall into the red early on. But around the 3rd week of the month stocks began to rally again as investors grew more confident over the Federal Reserve’s sentiment to keep interest rates lower for longer. In the end, the markets finished the month pretty much flat.

I managed to lower my interest rate expense from $1300 per month, to $1200 per month by switching my margin account from TD to IB.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $800
  • Freelance = $900
  • Dividends = $600
  • Interest = $0
*Discretionary Spending:
  • Fun = $400
  • Debt Interest = $1200

*Net Worth: (MoM)16-08-fiscal-update-liquid

  • Assets: = $1,012,400 total (+6,200)
  • Cash = $14,900 (+2800)
  • Stocks CDN =$122,400 (+1500)
  • Stocks US = $74,600 (+1700)
  • RRSP = $71,600 (+100)
  • Mortgage Funds = $26,300
  • Venture Capital = $6,600 (+100)
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $474,900 total (-1,100)
  • Mortgage = $186,900 (-400)
  • Farm Loans = $193,400 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,700 (+100)
  • TD Line of Credit = $13,700  (-200)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,400 (-100)

*Total Net Worth = $537,500 (+$7,300 / +1.38%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

Looking ahead, October is when I receive my rental income from my tenant which is worth about $4,500. So I’m looking forward to deposit that and maybe buy some new investments with the money. 🙂

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Random Useless Fact:

16-10-things-normal-movies-not-real-life

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Financial Canadian
10/03/2016 7:00 am

Hey Liquid

Question for you – why so much cash? I am similar to you in the sense that I invest on margin, but I don’t keep so much cash on hand… I would prefer to pay down my margin loans. The great thing about margin loans is that they are revolving and you can withdraw from them at any time to get emergency capital. Would love to hear your thoughts on this.

Anon
Anon
10/03/2016 5:02 pm

“Property prices here [Vancouver] are high, but still affordable for most people.” Time to drop this blog — hard. It seems the author is becoming increasingly disengage from reality with an equally increasing rate of grossly misinformed postings. Average Vancouver Property Prices (Aug 2016) Detached house: $1,577,300 Attached house: $677,600 Condo: $514,300 Average Vancouver Income (2014; most recent, All Census Families): $76,000 gross/$65,000 net If an average family wants to buy an average condo they would require ~$27,000 at a minimum (closing costs incl.). Let’s say they somehow manage to scrape together that much while paying $1,400/month rent for a 1-bedroom apartment. They now have to pay only ~$2,300/month for their wonderfully affordable low-end condo. Since they now live in a condo, they now have to pay condo fees, which would be ~$300/month. In other words, 41% of their gross income. The rule of thumb is housing payments — principal, interest, taxes and insurance — should be 28%. Ah, no biggie, you say, what’s another 48% of after-tax income going to housing costs. You can still afford it! Oh, wait! The federal government just instituted a ‘stress test’ for insured-mortgage holders (e.g. 5% downpayment): “…all insured mortgages must undergo a… Read more »

Anon
Anon
10/04/2016 5:05 am

“…most Vancouverites own their own homes here, so that means they can afford to be owners.”

WHEN did they buy? 10, 15, 30 years ago? Could those same people afford or even qualify to be owners at current price levels? Nope.

Anon
Anon
10/04/2016 6:57 pm

“Can you help me understand why someone who bought a home a decade or two ago can’t afford to buy the same Vancouver home now when interest rates are lower and they’ve had many years to pay down their initial mortgage?” If they were going to, as you state, “purchase a similar home, or just re-buy the one…sold at the same fair market value”, then there is no difference and no reason to even consider these people in the equation. They are selling an apple and buying an apple, which would simply be a waste of time and money. Or they could attempt to upgrade. And this is where the problem is. There is ZERO upward mobility in Vancouver residential real estate. Digging deeper, we see that ~65% of Van residents are “homeowners”. However, ~15% of these families (as stats refer to them) live in piece of sh!t houses (even worse than the infamous ‘Vancouver Crack Shacks’) which will sell for much lower than market value and/or are paying 50%+ of their income in housing costs. Thus, we are now knocked down to a 50% “ownership” rate. As well, ~15% of all ‘homeowners’ have secondary suites in their dwellings. They… Read more »

Taking over my portfolio
Taking over my portfolio
10/04/2016 12:01 pm
Reply to  Anon

Even if they bought 10-20-30 years ago, the value of their homes went up the same as everyone else, so they would be able to sell and buy at fair market price today.

If your talking about the young people coming into the market now, the salaries today are higher than the salaries 10-20-30 years ago, so I don’t see what the problem is there either. Plus, they get the advantage of very low interest rates on their mortgage.

Here is what happened to me:
20 years ago, I was making 24k a year. I got a mortgage for 100k and had 6.5% interest rate on it.
My mortgage was $670 per month

Today, I am making 56k a year. I have a mortgage @ 200k and have 2.5% interest.
My mortgage is $896 per month

If 20 years ago I couldn’t afford a house, then I certainly wouldn’t be able to afford one now, but then again, It would have given me 20 years to save up to have a bigger down payment so maybe I would have.

Anon
Anon
10/04/2016 5:48 pm

re: ‘If your talking about the young people coming into the market now, the salaries today are higher than the salaries 10-20-30 years ago, so I don’t see what the problem is there either. Plus, they get the advantage of very low interest rates on their mortgage.” Just in case you don’t want to scroll up: If an average family wants to buy an average condo they would require ~$27,000 at a minimum (closing costs incl.). Let’s say they somehow manage to scrape together that much while paying $1,400/month rent for a 1-bedroom apartment. They now have to pay only ~$2,300/month for their wonderfully affordable low-end condo. Since they now live in a condo, they now have to pay condo fees, which would be ~$300/month. In other words, 41% of their gross income. The rule of thumb is housing payments — principal, interest, taxes and insurance — should be 28%. Ah, no biggie, you say, what’s another 48% of after-tax income going to housing costs. You can still afford it! Oh, wait! The federal government just instituted a ‘stress test’ for insured-mortgage holders (e.g. 5% downpayment): “…all insured mortgages must undergo a “stress test” that ensures a borrower’s ability to… Read more »

Phil
Phil
10/04/2016 7:38 pm

Beautiful curve 😉 – Cheers

Passive Income Dude
10/05/2016 11:47 am

Great work Liquid. LOVE the car picture choice!

Anon
Anon
10/05/2016 10:00 pm

Quite a few years ago I read a research paper which included a detailed section on why young males in particular are so heavily drawn to fast cars (the Vancouver street racing scene featured heavily). The reason being is that, for most of them, the car is their only source of power and control. Elsewhere in society they have no wealth, no position, no status, no authority, nothing but the car. Ergo, these powerless young individuals like to speed because it makes them feel powerful. Unfortunately, a lot of them remain in this immature state for life. Such is modern life.

Phil
Phil
10/07/2016 4:59 am
Reply to  Anon

Ahhhh… to be young and foolish again… When we could finally afford the Porsche I always dreamed of owning, we decided we were ready for a kid ;)… Anon, you are hilarious… – Cheers!

Anon
Anon
10/08/2016 7:00 am
Reply to  Phil

I’m only hilarious when this blog gets laughable.

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DivHut
10/07/2016 4:16 pm

It’s nice that $600 in dividend income can be considered just a ‘side’ income. Looks like thinks are rocking and rolling up north and B.C. is continuing to blow up real estate-wise. Assets up, debts down. What’s not to like about this report. Thanks for sharing.

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