Mar 022020
 

Panic in the Streets

The global stock market fell more than 10% recently. Over five trillion dollars ($5,000,000,000,000) of value was wiped out. And just like that – I have lost my seven figure net worth. I’m now a commoner once again, lol. It was fun while it lasted. ๐Ÿ˜› But I am not disheartened – because my mind these days is focused on more exciting things! ๐Ÿ™‚

New Real Estate Investment

The truth is, I’ve actually had a great start to the year so far. After selling my farmland in January I purchased a new residential property. I have been talking about wanting to do this since late last year. But now I have finally closed on a one bedroom rental condo in the Greater Vancouver area. I paid a 30% down payment (about $135,000) and financed the rest with a mortgage at 2.44%. ๐Ÿ™‚ Buying real estate isn’t easy. I kept myself motivated by listening to house music. ๐Ÿคฃ

Anyway, my balance sheet will look a little different going forward. On the asset side I have welcomed a new line item worth $450,000 – the property purchase price. Meanwhile the liabilities side will now include a brand new $315,000 mortgage. Yay, more good debt. ๐Ÿ™‚ I’ll post more details about this over the next couple of week.

I also made new plans to buy some stocks soon to take advantage of this recent market correction so there will be lots to write about over the next little while.

Liquidโ€™s Financial Update February 2020

*Side Incomes: = $2,500

  • Part time job =$900
  • Freelance = $200
  • Dividends =$1000
  • Interest = $400

*Discretionary Spending: = $1,800

  • Food = $400
  • Miscellaneous = $400
  • Interest expense = $1000

*Net Worth: (ฮ”MoM)

  • Total Assets: = $1,511,100 (-$290,100)ย 
  • Cash = $153,500 (-130,000)
  • Canadian stocks = $209,300 (-8,400)
  • U.S. stocks = $133,500 (-11,700)
  • U.K. stocks = $20,700 (-2300)
  • Retirement = $139,600 (-7000)
  • Mortgage Funds = $37,700 (-800)
  • P2P Lending = $35,800 (+300)
  • Home = $331,000 (assessed land value)
  • Rental Unit = $450,000 (purchase price) NEW
  • Total Debts: = $533,200 (+314,400)
  • Home Mortgage = $184,400 (-400)
  • Rental Property Mortgage = $315,000ย NEW
  • Margin Loans = $33,800 (-200)

*Total Net Worth = $977,900 (-$24,300 / -2.4%)
All numbers are in $CDN at 0.75/USD

new asset

I haven’t been in this much debt since 2013 after I bought those farms. Finally I’m back to having more than $500,000 of debt. It’s a familiar and comforting feeling to borrow so much money again – using new money that I don’t have to leverage my financial gains. Yay. ๐Ÿ˜€ Using other people’s money to get rich saves me so much time.

Here’s why I’m excited about this. Thanks to my new mortgage, I was able to buy a new property that pushed the total value of my assets to $1.5 million for the first time. ๐Ÿ™‚ If my assets can earn a mere 5% average return per year then my investments will gain an expected $75,000/year. Wow. How great is that? ๐Ÿ˜€

Of course borrowing money is not free. I’m currently paying about $14,000 a year of interest on my total debt. But that’s just a fraction of what I expect my investments to earn over the long run. ๐Ÿ™‚ This is essentially passive wealth creation – build up a large, diversified portfolio, even if you have to use some debt, and then simply be patient.

 

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Random Useless Fact:

The French sweet roll pain au chocolat can be served hot or cold.

Feb 032020
 

A rough start to the new year

January was such a bizarre month for world news. Bushfires scorched Australia. The U.S. assassinated a general in Iran nearly starting a war. Then out of nowhere Iran shot down a passenger plane full of civilians. Firefighters in France set themselves on fire and fought the police. Britain officially left the European Union. A deadly virus from China caused partial or full lockdowns of entire cities directly affecting over 50 million people. Landslides hit Indonesia causing deaths, mayhem, and displacing thousands of people.

But despite all this, the financial markets don’t seem to be fazed much. Global stocks are down, but the Canadian market is up. ๐Ÿ™‚ As long term investors we have to simply ignore the current events and continue to execute our long term plans. In terms of building wealth we can control how much we save, what to invest in, and when we retire. But we can’t control the market’s rate of return. So let’s top up our tax advantaged accounts, find ways to cut back spending, and look for new ways to make money. ๐Ÿ™‚

Real Estate Drop

Unfortunately my home fell in price according to the official BC Assessment. Every year in January the assessed value is updated, and mine fell about 10% in 2020. ๐Ÿ™ That’s in line with other properties around Metro Vancouver. Lending Loop also wrote off $2,000 worth of my portfolio due to bad loans. Overall my net worth took a beating this past month. But we can’t expect things to go up all the time.

The good news is after selling the farmland I’m now holding a big chunk of cash which I can invest in something new. I actually made a real estate purchase recently but I will cover that transaction next month as it’s not completely finalized yet.

 

Liquidโ€™s Financial Update January 2020

*Side Incomes: = $2,600

  • Part time job =$700
  • Freelance = $200
  • Dividends =$1200
  • Interest = $500

*Discretionary Spending: = $2,200

  • Food = $400
  • Miscellaneous = $800
  • Interest expense = $1000

*Net Worth: (ฮ”MoM)

  • Total Assets: = $1,221,000 (-$213,300)ย 
  • Cash = $283,500 (+234,000 sold farmland)
  • Canadian stocks = $217,700 (+33,700)
  • U.S. stocks = $145,200 (-1100)
  • U.K. stocks = $23,000 (-400)
  • Retirement = $146,600 (+2700)
  • Mortgage Funds = $38,500 (+600)
  • P2P Lending = $35,500 (-1,800)
  • Home = $331,000 (-36,000 assessed land value 2020)
  • Farmland = $0 (-$445,000 sold it)
  • Total Debts: = $218,800 (-186,000)
  • Mortgage = $184,800 (-400)
  • Farm Loans = $0 (-161,300)
  • Margin Loans = $34,000 (-300)
  • Farmland sales cost = $0 (-$24,000)

*Total Net Worth = $1,002,200 (-$27,300 / -2.7%)
All numbers are in $CDN at 0.76/USD

Ouch. A $27K cut to net worth is not a good way to start the year. One month does not make a trend. But there’s an old adage that says, “as goes January, so goes the year.” A gain or loss in January has correctly predicted stock market’s overall movement for the entire year with great historical accuracy. We’ll have to wait and see how the rest of 2020 plays out. But in the meantime I’ve replenished my Canadian stocks. I also contributed to my TFSA for 2020, but haven’t decided what to buy with the money yet. ๐Ÿ™‚

 

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Random Useless Fact:

The average time spent by recruiters looking at someone’s resume is 5 to 7 seconds.

Jan 062020
 

Happy New Year! ๐Ÿ˜Ž As a personal finance blogger, I celebrated New Year’s Eve properly in the traditional fashion – by looking up the new value of my home on the BC assessment website. ๐Ÿ˜€ Needless to say my condo’s assessed value for 2020 has dropped. I will update my net worth next month to reflect the new value, but today’s post is meant to highlight my December 2019 finances.

A bullish decade

The U.S. stock market has been on a bull run for 130 months now – a historical record. But who would’ve guessed? In 2010 the dreadful malaise of the great recession was still lingering on investors’ minds. The stock market was still recovering. And many people felt uneasy and hopeless as the S&P 500 index returned virtually nothing from 2000 to 2009.

But it was a completely different story over the next 10 years. From 2010 to 2019 investors saw steady gains on Wall Street, with relatively low volatility and few setbacks. The S&P’s annualized return in the 2010s was 13% according to the NY Times. Not too shabby. The 29% return last year in 2019 really helped out any boomers who are retiring this year.

On the labour front, the unemployment rate dropped from 9.9% in 2010 to just 3.5% now. Real median household incomes rose 12% during that time.

Canadians have much to celebrate as well. The TSX Composite gained around 6.7% annualized. It’s not great, but also not bad. The MLS price index shows homes are now worth 67% more across the country than 10 years ago. But that varies a lot depending on location and type of home. Bond portfolios rallied around the world as central banks competed to see who can lower their interest rates the most. Overall it had been an economically fruitful decade for many people. ๐Ÿ™‚

Increasing my cash holdings

I remember that 2018 was a rough year where the stock market fell 12% in Canada, and 6% in the U.S. But since we entered into 2019 on a fairly low point, this past year has been an absolute blessing. The market rebounded and helped to propel my wealth upwards by $261K in a single year. Which isn’t all that impressive once you take into consideration that I already had $1.2 million worth of assets going into 2019, and that all asset classes I owned went up in value. It was just a great year for investors in general. ๐Ÿ™‚

I made some adjustments over the past month in order to get ready for the new year. My plan is to increase my liquidity for a potential real estate purchase in the lower mainland in 2020. My price range is between $400K to $700K so I would require a sizeable cash amount for the down payment.

I sold all of my TD e-Series mutual funds worth about $13K and closed my fund account. I had started investing in the e-Series funds a long time ago in order to demonstrate to readers how to set up the account and how to operate it. This was before Vanguard ETFs came to Canada. So I was basically showing people how to buy index funds in 2013 before it was cool, haha. ๐Ÿ˜€ I gradually put more money into the fund over the years but have now decided to sell everything. ๐Ÿ™‚ Index funds have become too mainstream anyway.

I also sold $20K of REITs and other stocks in my TFSA and withdrawn the cash to my chequing account. I will put the $20,000 back into my TFSA this year, along with an additional $6,000 of new contribution.

Farmland Update

My farmland has been sold. I am still waiting to receive the final adjustments and paperwork by mail from my lawyer in Saskatchewan. But there shouldn’t be any issues. The total commissions and fees related to the sale add up to about $24,000 – which I’m including in today’s net worth update. ๐Ÿ™‚ Technically I didn’t pay the fees until January, so I’m including the amount as a December liability below for best accounting practices. I will write a detailed post on my farmland sale in the upcoming weeks. ๐Ÿ™‚

Liquidโ€™s Financial Update December 2019

*Side Incomes: = $2,900

  • Part time job =$1100
  • Freelance = $200
  • Dividends =$1200
  • Interest = $400

*Discretionary Spending: = $2,500

  • Food = $400
  • Miscellaneous = $800
  • Interest expense = $1300

*Net Worth: (ฮ”MoM)

  • Total Assets: = $1,434,300 (+27,700)ย 
  • Cash = $49,500 (+36,300)
  • Canadian stocks = $184,000 (-16,500)
  • U.S. stocks = $146,300 (+5800)
  • U.K. stocks = $23,400 (+700)
  • Retirement = $143,900 (+900)
  • Mortgage Funds = $37,900 (+200)
  • P2P Lending = $37,300 (+300)
  • Home = $367,000 (assessed land value 2019)
  • Farmland = $445,000
  • Total Debts: = $404,800 (+22,700)
  • Mortgage = $185,200 (-400)
  • Farm Loans = $161,300 (-600)
  • Margin Loans = $34,300 (-300)
  • Farmland sales cost = $24,000 (new)

*Total Net Worth = $1,029,500 (+$5,000 / +0.5%)
All numbers are in $CDN at 0.77/USD

Many analysts thought 2019 would be a bad year for the S&P 500 given all the worries about trade wars and recessions, but the market actually closed out its best year since 2013. January is often an accurate bellweather for the rest of the year. I’m looking forward to see what new market events 2020 will bring. ๐Ÿ™‚

 

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Random Useless Fact:

Nov 042019
 

I hope everyone had a good weekend. Many people turned back their clocks 1 hour marking the end of this year’s daylight saving time. But time wasn’t the only thing that fell back. Economic growth in the U.S. pulled back to just 1.9% for the 3rd quarter of 2019, lower than the previous 2 quarters. Last month I wrote about anticipating this GDP number, and warned that if it continues to fall (which it did) then we may be close to a U.S recession. The Canadian economy is also in trouble, managing to eke out a 0.1% gain in the latest month.

Yet somehow the U.S. stock market reached an all time high at the end of October. Senior citizens must be thrilled to see their retirement funds performing so well. ๐Ÿ˜€

So economic output is slowing down, but investors have never been more optimistic – pushing stocks to record highs. How does this happen? It’s basically the result of the U.S. Central Bank’s monetary policy. In late October the Fed lowered interest rates again, trying to stimulate the overall economy. However, all it did was push investors to buy stocks over bonds because bonds now pay lower interest/returns. But a higher company stock price doesn’t improve business hiring, productivity, or employee salaries. The average American worker doesn’t see any direct benefit from the Fed’s monetary stimulus. Only Wall St. does.

The result is a diverging economic reality between two worlds; the working class that’s just one paycheck away from financial ruin, and the investing class who continues to see growing asset prices. Over the last 10 years, the S&P 500 gave investors about 13% annualized return. So the fact is if someone put $1,000 into a low cost index fund in October 2009, then today he would have $3,400 – assuming he reinvested the dividends. Wow. And all this required zero effort on the investor’s part. Amazing. ๐Ÿ™‚

So the lesson here is simple. Focus on investing your savings, and be patient. Investing is like cooking a juicy steak; the less you touch it the better. Working hard at a job can only get you so far. But the real secret to financial success is to leverage the Central Bank’s policies, and invest in a diversified portfolio to build wealth the easy way. ๐Ÿ™‚

Although October was a good month for stocks, I had a major expense (property tax payment for my farms) that stifled my savings. In the end, I was able to grow my wealth by $8,300 for the month. Not bad, but I didn’t reach the $1 million net worth milestone I was aiming for. Oh well. Better luck in November. ๐Ÿ™‚

 

Liquidโ€™s Financialย Update

*Side Incomes: = $5,400

  • Part time job =$600
  • Freelance = $400
  • Dividends =$1200
  • Interest = $500
  • Farm rent = $2,700

*Discretionary Spending: = $3,700

  • Food = $300
  • Miscellaneous = $2,100
  • Interest expense = $1300

*Net Worth: (ฮ”MoM)

  • Total Assets: = $1,384,500 (+7,000)
  • Cash = $9,100 (+300)
  • Canadian stocks = $195,100 (+2400)
  • U.S. stocks = $134,900 (+1400)
  • U.K. stocks = $21,900 (+500)
  • Retirement = $137,700 (+1900)
  • Mortgage Funds = $37,100 (+200)
  • P2P Lending = $36,700 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $385,100 (-1,300)
  • Mortgage = $186,100 (-400)
  • Farm Loans = $162,400 (-500)
  • Margin Loans = $34,800 (-200)
  • Line of Credit = $1,800 (-200)

*Total Net Worth = $999,400 (+$8,300 / +0.8%)
All numbers are in $CDN at 0.76/USD

This will probably be the last year I pay property tax for my farmland. I have been in contact with a realtor in Saskatchewan, and have already instructed him to list both my farms for sale. ๐Ÿ™‚

Agricultural land has not been immune to the wider real estate slow down across the country. But there does seem to be some interest in my farms so far. In terms of market pricing, my realtor says I can probably expect to sell my farmland for about $446,000 in 2019. That’s pretty close to the farmland value I’ve already been using to calculate my monthly net worth so I will stick with my existing number for now.

Farmland values have had a great run in Canada, but slowing economic growth, trade barriers, and changing local conditions suggest to me that it’s time to reduce my exposure to Canadian farmland.

 

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Random Useless Fact:

Oct 012019
 

Tight Race Ahead

In a few weeks Canadians will vote for a Prime Minister to lead the country. Who knows what kind of chicanery will ensue. According to the CBC poll tracker, which aggregates all publicly available polling data, the Conservatives hold a narrow lead over the Liberals. Looks like it’s going to be a close call. ๐Ÿ˜ฎ

canadian poll for 2019 election

Financial markets are always uncertain right before an election because policy changes can drive consumer incentives and business decisions. During the past quarter leading up to this month’s election the stock market has seen lower volumes of trading. Many companies put off hiring and investing until they know which political party is going to win.

Meanwhile south of the border, the United States economy is slowing down. Its 2nd quarter GDP growth dropped to 2%, down from 3% from the previous quarter. Manufacturing data also shows weakness and poor sentiment about businesses. Business earnings growth estimates have dropped from 7.6% last year to just 2.3% now. As a result the U.S. central bank dropped interest rates by 0.25% last month. This is good news for people who have floating rate debt in US dollars like myself. ๐Ÿ™‚ So now my investment expenses are slightly lower than before.

Markets were slightly positive in September bumping up my net worth to $991K. It’s nearly at the $1M mark. ๐Ÿ™‚ Below are my financial results ending September 30th.

Liquidโ€™s Financialย Update

*Side Incomes: = $2,700

  • Part time job =$700
  • Freelance = $400
  • Dividends =$1200
  • Interest = $500

*Discretionary Spending: = $2,200

  • Food = $400
  • Miscellaneous = $300
  • Interest expense = $1300

*Net Worth: (ฮ”MoM)

  • Total Assets: = $1,377,500 (+4900)
  • Cash = $8,800 (+1200)
  • Canadian stocks = $192,700 (+3200)
  • U.S. stocks = $133,500 (-1800)
  • U.K. stocks = $21,400 (+700)
  • Retirement = $135,800 (+1000)
  • Mortgage Funds = $36,900 (+300)
  • P2P Lending = $36,400 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $386,400 (-3,300)
  • Mortgage = $186,500 (-400)
  • Farm Loans = $162,900 (-500)
  • Margin Loans = $35,000 (-400)
  • Line of Credit = $2,000 (-2000)

*Total Net Worth = $991,100 (+$8,200 / +0.8%)
All numbers are in $CDN at 0.76/USD

Another month is in the bag. ๐Ÿ™‚ The Canadian dollar got stronger which is both good and bad. On one hand Canadians have stronger purchasing power globally so we can buy more things for cheap. But on the other hand our assets outside the country are worth less when converted back into $CAD.

 

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Random Useless Fact:

The hamburger got its name from a cut of beef in Hamburg, Germany, and doesn’t contain any ham.