Apr 202020

I don’t trust millionaire gardeners. They’re always running some kind of pansy scheme. 😎 Fortunately there are more legitimate ways to build wealth. I recently watched a YouTube video where a young realtor in California named Graham Stephan explains how he became a millionaire in his 20s. He says just about anyone can become a millionaire in 10 years with the right attitude. In short here is his advice to others:

  • Get paid for your results, not your time.
  • Cut back on unnecessary spending.
  • Invest consistently and actively work on those investments to increase returns.

The mindset of a Millennial millionaire

Graham’s methods are simple and effective. He prefers to eat at home instead of going out. He drives a used car and buys clothing from the discount section of H&M. And he sticks to the same budget no matter how much extra money he earns. Graham also uses leverage to invest, and his portfolio consists mostly of real estate and stocks. Although we live in different countries, Graham and I seem to have a lot in common. πŸ™‚

If you want to build muscle, you have to lift weights. If you want to lose fat, you have to change your diet. Change requires commitment. Becoming a millionaire is no different. Graham explains that building wealth starts with the right mindset.

The only way you will change is if you believe the payoff is worth the sacrifice.Β Graham suggests a good way to begin is to ask yourself if living frugally for ten years is worth financial freedom for the rest of your life. Is one decade of living modestly worth not having to do something you don’t want to do ever again? Graham and I both answered this question ten years ago, and we categorically decided yes – it’s totally worth it. πŸ˜€ Admittedly it took me 12 years, not 10, to reach a million dollar net worth. Life doesn’t always go as planned. That’s why you also have to enjoy the journey. πŸ™‚

What makes you feel wealthy?

Wealth can come from both material possessions and financial security. I’m a big fan of the latter. I’ve always derived more joy from knowing that I could afford something, than actually buying it. And Graham seems to feel the same way.

But everyone is different. Although Tim Cook and Donald Trump are both super successful and wealthy, you just can’t compare the two. It’s Apples and oranges – if you know what I mean. πŸ˜‰

The mindset of most millionaires is one of frugality. But for many consumers, a frugal lifestyle would make life miserable, not better. Whatever drives someone to feel wealthy will motivate them to continue down that path. So knowing your mindset is paramount to living true to your values.


Do you need a high income to become a millionaire?

Income is important to build wealth. But similar to oxygen, it doesn’t become a problem unless you’re not getting enough of it. So how much is enough? As long as you can earn $75,000 a year or more, you should be able to become a millionaire within a decade. Don’t worry if you start off making less. My salary was $35,000 in 2008. But today I earn more than twice as much. Graham’s income started modestly low as well, but now he makes six figures annually from his real estate business. It’s not about where you start. It’s about where you can get to. πŸ™‚

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Apr 132020

Long term planning

There were three events that had a profound impact on my financial life. They helped me realize that when you choose to invest, you are not just picking up a new hobby or side hustle. You are actually choosing a lifelong career – a future. Much like a marathon, investing is for the long run. 😎

So today I’d like to start with part one of three – compound growth and long term planning. Compound interest is one of the most profound discoveries in human history and has the potential to change lives. Even Albert Einstein once declared it to be the most powerful force in the universe. πŸ™‚


It all started in high school

Financial education typically starts at home. I learned from my parents how to be a net saver. But grade 11 is when I really began to think about money and wealth.

It was the early 2000s. Linkin Park was on the radio. MSN Messenger was still relevant. I was 16 years old. My school offered Economics 11. Out of all the elective courses this one seemed to be the most practical so I decided to enroll. That might have been the single best decision I’ve ever made. πŸ™‚

One day during class we learned about compound interest. The textbook demonstrated the impact of time using an example with two people. I forgot their names, but let’s call them Stacy and Chad.

  • Stacy invests $2,000/year starting from the age of 19.
  • Chad also invests $2,000/year but starts 10 years later at age 29.

By the time they both retire at age 60 Stacy is a millionaire, while Chad only has $402,000. The book included a helpful table like the one below.

I couldn’t believe it. How can ten years make such a dramatic difference? I went home, copied the figures into Excel, and double checked the math myself. Sure enough, Stacy would end up with 2.5x as much as Chad. Furthermore if Stacy had only invested for the first 5 years and then stopped contributing to her account altogether, she would still end up wealthier despite investing only a fraction of the amount Chad had to save up. Here’s what that table looks like. Wow. It’s all because she started earlier.

This seemed unfathomable to me. In my naive teenage mind I had always thought that you can’t succeed on your own unless you work hard. You will never have good grades unless you study. You will never play in the basketball tournament unless you attend practice after school. You will never pwn your friends at GoldenEye 007 unless you have blisters from the N64 controller. But the economics lesson made me question everything. It turned my entire worldview upside down.

I used to believe that in order to accumulate more wealth you had to study harder in school, land a better job, and save more income. But Stacy proved there’s an easier way to achieve the same end result. She didn’t need a higher savings rate than Chad to retire with 2.5x his net worth. So the only thing you have to do to retire with more money is start investing early. That’s it. πŸ™‚

This idea of additional success without working for it created a paradigm shift in my way of thinking. I realized that it actually is possible to get something for nothing. From then on I tried to work smarter, not harder.

The only disadvantage of saving earlier is you have to delay your spending. But Stacy’s early start rewarded her with an extra $673,000 at retirement. So I think that far outweighs the downside of spending a little less in early adulthood.

After this epiphany in economics class I decided to follow in Stacy’s footsteps and invest as early as possible. I didn’t know what profession I would end up in. I wasn’t sure how much income I would earn. But I was certain that whatever money I do make, I would put away at least $2,000 a year.


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Apr 062020

Monitoring the Outbreak

Over a million confirmed people have been infected by the virus. Many countries are starting to see the curve flatten so maybe the worst is behind us. Even so, we should continue to practice physical distancing and regular hand washing. Make sure to stock up on food that won’t spoil quickly. Lately I’ve been telling my friends about the health benefits of eating dried grapes. It’s all about raisin awareness. 😎

Investment Performance

The TSX dropped 18% in March. In the U.S. the Dow Jones fell by 14%. It has been the worst Q1 ever in U.S. stock market history. Ouch. But that’s why we diversify. πŸ™‚ On March 1st only 40% of my assets were tied up in the stock market. I’ve also been buying companies at their recently reduced prices which lowers my overall entry cost. Furthermore, a higher U.S. dollar has resulted in certain parts of my portfolio making gains this month. As a result, my net worth only fell by 5.3% in March. I’m disappointed to see my net worth decline three months in a row. But it could have been a lot worse.

I’m expecting more volatility ahead. Just three trading days into April and the stock market is already down 4%. Oof.

On the bright side I am able to work from home so my job income isn’t at risk. And since interest rates have been slashed 1.5% I’m saving thousands of dollars annually on my mortgage and margin debt compared to last year.

Liquid’s Financial Update March 2020

*Side Incomes: = $4,800

  • Part time job =$600
  • Freelance = $200
  • Dividends =$1200
  • Interest = $1000
  • Rent = $1,800

*Discretionary Spending: = $1,600

  • Food = $300
  • Miscellaneous = $400
  • Interest expense = $900

*Net Worth: (Ξ”MoM)

  • Total Assets: = $1,455,700 (-$55,400)Β 
  • Cash = $42,500 (-111,000)
  • Canadian stocks = $266,000 (+56,700)
  • U.S. stocks = $128,300 (-5,200)
  • U.K. stocks = $17,800 (-2900)
  • Retirement = $150,100 (+10,500)
  • Mortgage Funds = $33,900 (-3800)
  • P2P Lending = $36,100 (+300)
  • Home = $331,000 (assessed land value)
  • Rental Unit = $450,000 (2020 purchase price)
  • Total Debts: = $529,400 (-3,800)
  • Home Mortgage = $182,900 (-1500)
  • Rental Property Mortgage = $314,300 (-700)
  • Margin Loans = $32,200 (-1600)

*Total Net Worth = $926,300 (-$51,600 / -5.3%)
All numbers are in $CDN at 0.71/USD



I’m happy overall with my diversification strategy. But due to the recent correction I only have 34% of my assets in the stock market. I would like to increase this back up to 40% of my asset allocation. So for the near future I will be looking at investing my savings into equities, primarily blue chip Canadian companies that pay dividends. πŸ™‚ Here’s a pie chart showing the breakdown of my assets today.

Some people might be concerned to discover that Vancouver real estate makes up half of my total asset’s value. Doesn’t that seem a little risky? I have heard that real estate here is overpriced and we are due for a major correction any day now. But then I crunched the numbers for myself. Compared to alternatives, I realized that Vancouver home prices were actually justified which I discussed in detail last month. That’s why in December last year I bought real estate instead of stocks.

But of course these days the equity market is down 25% from the peak. So that’s why recently I’ve been loading up on high quality stocks at discounted prices, increasing my forward dividend income by over $7,000 a year.

And I’m not the only one shopping around these days. Other personal finance bloggers such as genymoney.ca have been loading up on dividend stocks as well. She increased her annual dividend income by 75% year over year.Β When assets go on sale, you buy more. πŸ™‚ It’s about finding bargains in a financial world that’s constantly changing. When the stock market’s P/E ratio eventually expands again, those who bought into the downturn will be glad they did. πŸ˜‰


Buy low, sell high and hold

A reliable path to reach financial independence is to build a stream of passive income to pay for all living expenses. No matter if it’s real estate, dividend stocks, or bonds – the basic premise is to buy income generating assets. Then simply hold them for their investment income. Re-invest the proceeds over time and investors will be greatly rewarded for being patient.Β  You don’t need a lot to get started. But you have to start to end up with a lot. πŸ˜‰


Random Useless Fact:

No one was safe from the 1918 flu pandemic. No one.

Feb 172020

What should your net worth be?

Author Thomas J. Stanley, first published his Wealth Equation in the book, Marketing to the Affluent. He states that your household’s net worth should equal 10% of the age of the primary breadwinner times your household’s annual realized income.
So your expected net worth = (Age)x(0.1)x(Income)

If you are in the Balance Sheet Affluent category, also known as “prodigious accumulators of wealth”, then your net worth should be twice the expected value.

In short, you will be considered affluent if your net worth is 2x the expected result based on this equation. πŸ™‚ This is not a perfect indicator of affluence as it usually becomes easier to accumulate wealth as people progress further in their careers. But it’s a good place to start looking at how you measure up to others in similar situations. Give the Stanley Wealth Equation a try for yourself and see where you land. πŸ™‚

When it comes to reaching a net worth of a million dollars by age 60, a good rule of thumb is to save and invest 5% of your income in your 20s, 10% in your 30s, 15% in your 40s, and 20% or more during your 50s.


A passive way to increase your wealth

Wouldn’t it be awesome to grow your net worth without having to think about it? Well there’s a practical way to do this. πŸ˜€

According to Stanley, to build up a large amount of wealth you can simply live in a neighbourhood where your income is among the highest. For example, if your household income is $120,000 then you should live in an area where the median value of a home is less than $400,000. By doing so there’s a good chance that your income will be in the top 20% in that neighbourhood. Then you can live and consume as though your income was 20% or 30% lower than it actually is. Save the difference. Accumulate your wealth. And you will not feel like you’re missing out on anything in the meantime. πŸ™‚

Living on less than you earn is pretty easy in this situation because people who live in the same area tend to have comparable fixed costs anyway. For example, many families who on the same block will pay similar rent. Property tax rates are also similar. Many residents will drive similarly priced cars, and shop at the same local grocery stores. Do you want to be the only household on the street with a $240,000 McLaren GT parked in the driveway while everyone else drives $30,000 sedans or $50,000 SUVs? Probably not. You’ll stand out like a sore thumb. Your neighbors will be jealous and think you’re a total snob. And you’ll be the designated target for any neighbourhood crimes such as vandalism, theft, property damage, or burglary.

So living in an area where your income is in the top quintile almost forces you to live within your means and save more. The average savings rate in Canada is only 3%. It’s higher in the U.S. at roughly 8%, but still on the low side. Where you live matters a lot to your wealth building potential.Β  If you live in a modest neighbourhood compared to your income you can easily keep up with your neighbours, while still maintain a large savings rate. πŸ™‚


Random Useless Fact:

Pesticides can threaten biodiversity and are harmful to the environment.

Dec 022019

Best Bull Market Ever

Stock markets are at record highs. The year to date return of the S&P 500 is 25% – a staggering performance! But of course making money from companies isn’t just about percentages. Otherwise everyone would simply invest in hard liquor. Because where else can you get 40%? 😎

In 2008 my net worth was $0. But thanks to the strong market performance over the last 11 years I’m finally a legit millionaire! Hurray! πŸ˜€

I’m currently worth $1,024,500 πŸ˜€.Β  Apparently only 1% of self-made millionaires become wealthy before the age of 40. So I feel very fortunate to have this experience now. But my journey is far from over. In about 3 years I will be 35 yrs old. By then I hope to realize my ultimate goal of becoming financially free – hence this blog’s name. πŸ˜€

Every few years I update my financial freedom progress. The last time I fully inspected my finances was in 2017. During that update I calculated my net worth to be $610,000. I guess I should post another update soon to see if I’m still on track.

In terms of which investments got me to where I am, the biggest heavy hitters I have in my portfolio are stocks and real estate. πŸ™‚ Both asset classes have performed tremendously over the last decade. That’s the wonderful thing about investing. You don’t have to be highly educated or technically skilled. You can simply buy something and wait for it to go up. Then you automatically go along for the ride and watch your money grow. πŸ˜‰ As a buy-and-hold investor of dividend stocks and real properties I’m able to keep my trading and management fees to a minimum. Here is my current asset allocation breakdown.

Why have investments gone up so much in value since the great recession? It’s primarily thanks to the central banks. Around the world they have quadrupled the money supply in the financial markets from $5 trillion, to over $19 trillion. Apple cannot issue shares via a new IPO, and nobody is making new land out there. So nearly all the newly printed money is chasing after existing, finite resources. The result? Investors win. Investors who use other people’s money to invest win more. And savers lose.

Although my wealth hasn’t changed much month over month, there’s something visceral about that $1 million figure that makes me feel like a proper Bourgeoisie. πŸ™‚ Maybe it’s all in my head. But it feels pretty amazing to have this level of financial security.

However I have to be careful. With great wealth comes great temptations. The average millionaire goes bankrupt at least 3 times, haha. Both Henry Ford and Walt Disney lost all their money and filed for bankruptcy before achieving a more permanent level of success. I hope I can keep the moment going and continue to build up my portfolio. πŸ˜€ It would be nice to eventually earn a six-figure passive income from my investments.

Liquid’s Financial Update November 2019

*Side Incomes: = $3,200

  • Part time job =$800
  • Freelance = $500
  • Dividends =$1200
  • Interest = $700

*Discretionary Spending: = $2,400

  • Food = $400
  • Miscellaneous = $700
  • Interest expense = $1300

*Net Worth: (Ξ”MoM)

  • Total Assets: = $1,406,600 (+22,100)Β 
  • Cash = $13,200 (+4100)
  • Canadian stocks = $200,500 (+5400)
  • U.S. stocks = $140,500 (+5600)
  • U.K. stocks = $22,700 (+800)
  • Retirement = $143,000 (+5300)
  • Mortgage Funds = $37,700 (+600)
  • P2P Lending = $37,000 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $382,100 (-3,000)
  • Mortgage = $185,600 (-500)
  • Farm Loans = $161,900 (-500)
  • Margin Loans = $34,600 (-200)
  • Line of Credit = 0 (-1800)

*Total Net Worth = $1,024,500 (+$25,100 / +2.5%)
All numbers are in $CDN at 0.75/USD

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