Male, late-twenties, residing in Metro Vancouver, Canada. Planning to become financially independent by beating market returns, which I have been consistently doing. In the last six years that I’ve lived on my own I’ve managed to pay off $15,000 of student loans, quadruple my home equity, build up a $200,000 stock portfolio, and acquire over $300,000 worth of additional investments like farmland, mortgages, and silver bullion, all using my own savings, plus bank loans. I’ve shared my income tax statements from previous years to demonstrate that even an average salary like mine can be used to create great wealth with the proper strategy and leverage I’m Liquid Independence, and welcome to my freedom 35 blog (^_^)
I don’t have a dramatic rags to riches story. I grew up in a typical middle class household. When I was going through college my generous parents contributed $10,000 towards my tuition I’ve received no other financial aid from them since then. After graduating at age 21 I began my humble career in 2008 with a $35,000 starting salary. Still living with my folks at the time I was easily able to save $13,000 within one year and purchased a $230,000 apartment, and moved in right away.
As soon as I was living on my own I began to discover the powerful nature of what money is. I realized that in today’s world money represents power, potential, security, influence, hope, and of course freedom. So I vowed to make saving and investing my top priorities because I wanted to retire early and comfortable, and have unlimited free time After all, isn’t that the most valuable commodity in life? Time. When I go to work I’m trading my time for someone else’ money. And when I spend money, such as on a restaurant meal, I’m essentially buying back my time because I don’t have to cook. And being financially independent just means I would have all the time in the world to do anything I want That was my Eureka moment, and my financial journey to freedom 35 has begun.
In 2009 the apartment I bought was my first major investment. My research showed home prices would continue to increase and I didn’t want to miss out on the gains. A couple years later my apartment’s value had indeed risen by $40,000 above my purchase price. Boom! I made over 300% return on my $13,000 real estate investment in just two years! Today in 2014 the assessed value of my home is even higher
In 2010 and 2011 I invested heavily into the Canadian and U.S. stock markets, even borrowing money to buy high quality companies like banks, energy companies, and technology giants such as Apple, Google, and Amazon. My 2 to 1 leverage proved to be fruitful as I was able to double the performance of the stock markets during the bounce back from the great recession.
In 2012 I ventured into more exotic investments like farmland because I explained how it was a greatly undervalued asset class. I blogged about spending $20,000 of my own money to purchase a $150,000 farm, and secured a long term loan for the remaining balance. Farmland values in Saskatchewan increased on average by 19% in 2012, which means my farm had appreciated by over $28,000. Boom! That’s more than 100% return on my initial $20,000 investment!
In 2013 I purchased another piece of farmland, and continued to invest in the financial markets in Canada and the U.S. By this time mainstream investors were also throwing money into Canadian farmland which pushed land prices up 28% in 2013. However thanks to my 8 to 1 leverage ratio I was able to make over 200% annual return on my farmland investment. Meanwhile my leveraged U.S. margin account outperformed the S&P500 index and returned a whopping 75% for me I share all the holdings in my U.S. account under the “Portfolio” menu near the top of the site.
In 2014 I started to invest in mortgage backed securities, which I think are great options for many investors. I also bought individual bonds as a way to diversify my portfolio. My plan for this year is to continue investing in stocks, fixed income, and other opportunities whenever they present themselves
I have built up over $800,000 of financial assets over the last six years, but after living expenses I could only save about $18,000 per year. What this means is most of my investments were purchased using bank loans I don’t save up and wait to invest. I invest first, then wait It takes money to make money, so using leverage has allowed me in the last several years to make 100% annual return or more on my capital. Finding lucrative investment opportunities and using other people’s money to work for me is how I’m currently growing my net worth by over $100,000 per year.
I don’t have a secret formula to get rich. But here are some guidelines I follow: Buy undervalued assets, invest using leverage if the cost is affordable, stay in the game, build up a strong asset column, and think outside the box. One must be willing to seize opportunities when other are reluctant to do so. For example, you don’t get rich by paying down debt. You get rich by buying appreciating assets If I had paid off my student loans before buying a home then I would have saved maybe $2,000 of student loan interest, but would have also missed my opportunity to make over $50,000 of tax free gains in the growing real estate market in Vancouver. More often than not investing should take priority over paying down low interest debt.
Whenever I invest in something new I usually explain on this blog my decision process, and demonstrate step-by-step exactly how I did it with documentation. This keeps me accountable as I can’t make up random numbers, and it gives other people a chance to try out my strategies, if they so choose, at their own risk and discretion of course I DO NOT give financial advice on this blog and my methods are known to be highly controversial. But having said that, I don’t have any special connections or accredited status so all the strategies I blog about can be copied by pretty much anyone else.
There are other finance bloggers who also have a relatively high net worth for their age. But most of them earn a really high income, which gives them a huge advantage over the middle class. But I don’t have an impressive engineering or finance degree. I had a summer job working at Safeway as a teenager, and I dropped out of university to pursue a career in the not so lucrative arts industry. At my full time job today in 2014 I’m still making less than the average wage of $26/hr for my age group. I’m not a frugal person either because I currently spend over $3,000 a month. I believe it’s okay to be in debt, to have a life, to enjoy spending money, and to still retire early without being a workaholic.
Income does not equal wealth. Instead of using large amounts of savings to become rich, my philosophy is to save a modest amount each year and use market forces to drive up returns. It’s not necessary to make a six figure income if we can make double or even triple digit investment returns every year
Life is too short to stress over money matters. I believe in finding a fulfilling job that one enjoys, but may not pay a lot of money. And then supplement one’s financial security by making wise investment decisions, and creating simple stress test models to take care of debts, inflation, retirement, and other financial worries in life
These are my life long goals
-Become financially free
-Donate at least a million dollars to charity
-Become part of the 1% wealthiest people in the country
-Start a company and create jobs for my community
-Qualify and become an accredited investor
-Fly into space