Fiscal Updates - Freedom Thirty Five Blog

Fiscal Update – Apr 2013

May 042013

April was a pretty eventful month financially. Gold had a big correction but has regained some of its loss now. Many companies which I own shares in such as Apple and Suncor reported their quarterly earnings. Most were good news Precious metals and other commodities were cheaper in April due to slower than anticipated growth in Asia. Canada’s S&P/TSX Composite index fell about 2% but the S&P500 in the US gained about 2%. Part of the reason why my portfolio didn’t do worse is because over $50K of my stocks are US companies I love investing in Canada, but it’s important to diversify.

I also did my income taxes and received a nice tax return of just under $1K. This is thanks to the large sum of RRSP contribution I made last year (about $10K.) Thank you CRA I will use this money wisely by not spending it on expensive souvenirs like I did last month.

But the biggest impact to my net worth in April was when I found out that farmland in Saskatchewan grew by nearly 20% last year and increased the value of my farm by $2,500. I love investing in stocks, but again, diversification is paramount :D

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*Side Income:

Part-Time Work = $400
Dividends = $400

*Discretionary Spending:

Eating Out = $100
Others = $2,400 (bought a silver coin)

*Net Worth: (MoM)

Assets: = $577,200 total (+$27,200)
Cash = $1,500 (-$700)
Stocks CDN =$80,800 (+$5,700)
Stocks US = $40,500 (+$1,700)
RRSP = $32,600 (+$700)
Home = $252,000 (same)
Farm 1 = $152,500 (+2,500)
Farm 2 = $17,300 (new)

Liabilities: = $410,100 total (+21,000)
Mortgage = $203,200 (-$300)
Farm 1 Loan = $110,900 (-$300)
Margin Loan CDN = $26,200 (+$3,700)
Margin Loan US = $22,900 (+$100)
TD Line of Credit = $33,900 (+14,900)
CIBC Line of Credit = $14,000 (+4000)

*Total Net Worth = $166,100 (+3.2%)
All numbers above are in CAD. Conversion rate used: 1.00 USD = 1.01 CAD

On the Assets side I’ve bought about $7K of new stocks in my Canadian portfolio for the swing trade which I started a couple weeks ago. Otherwise the portfolio would have decreased in value instead of increased. On the Liabilities side I’ve borrowed some money in my Canadian margin account for the swing trade. Borrowed about $19K between my two line of credits most of which was used to pay for the farm deposit which you all know about from my post earlier this week. I’m going to consolidate my debt later this year so it’s less messy

Overall, that’s a $5,200 net worth increase in one month so I’m pretty happy with that (^.^) Thank goodness for property appreciation, a tax return, dividends, diversification, a part-time job, and savings. I almost feel guilty because most of that stuff just happened automatically without me even doing anything

Fiscal Update – March 2013 – One Currency

Fiscal Updates 22 Responses »

Apr 012013

As per readers’ feedback from the previous month’s fiscal update I’ve decided to convert the value of all my USD assets into Canadian dollars when I calculate my net worth. By factoring in the exchange rate I hope to have a more accurate picture of my net worth Luckily the $USD is worth more than $CAD, so my US stock portfolio should be pretty happy about that

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*Side Income:

Part-Time Work = $1,100
Dividends = $300

*Discretionary Spending:

Eating Out = $100
Others = $1,800 (splurged on gold ಥ_ಥ)

*Net Worth: (MoM)

Assets: = $550,000 total (+$12,000)
Cash = $2,200 (+$500)
Stocks CDN = $75,100 (+$2,700)
Stocks US = $38,800 (+$8,300)
RRSP = $31,900 (+$500)
Home = $252,000 (same)
Farm = $150,000 (same)

Liabilities: = $389,100 total (+6,700)
Mortgage = $203,500 (-$300)
Farm Loan = $111,100 (-$300)
Margin Loan CDN = $22,500 (+$3,700)
Margin Loan US = $23,000 (+$4,500)
Line of Credit = $19,000 (-900)
Line of Credit CIBC = $10,000 (same)

*Total Net Worth = $160,900 (+3.4%)
All numbers above are in CAD. Conversion rate used: 1.00 USD = 1.02 CAD

March was a pretty good month overall as my wealth increased by a little more than $5K. I big part of this gain is thanks to the robust US stock market which is on a roll. My US portfolio saw a natural appreciation over 3% this month which is in line with the Dow and S&P indices, plus it also got a nice 2% gain from the conversion rate. I also purchased some additional Canadian and US stocks. I have a feeling I’ll see an even bigger net worth increase next month as the FCC will release their national farmland assessments and I can update my farm’s value in the asset column. All the investments I’ve accumulated over the last 4 years finally feel like they’re starting to pay off now And I will continue this process of taking the profits generated by my assets to make even bigger investments until one day I can leave the rat race forever So far so good.

Fiscal Update – Feb 2013 – US Stocks

Fiscal Updates 26 Responses »

Mar 022013

Real estate continues to soften in Canada but is picking up steam in the US. Stocks were relatively flat but overall nudged up slightly. I’ve decided to finally add my US trading account to my net worth. There’s not much in there. It’s only worth maybe $30K, made up of different US companies like Starbucks, Caterpillar, and other stocks I’ve blogged about buying in the past, but it is practically all leveraged. For every dollar worth of stock I have in there I’ve pretty much taken on the same amount of debt lol. I used my CIBC line of credit for the initial funding of $10K last year and then borrowed the remaining $20K on margin. So it’s basically a completely leveraged portfolio of US stocks :0) I have to pay about 3.5% a year after tax from my own pocket to maintain this portfolio at the moment. But I think there’s a pretty good chance I’ll get a 3.5% after tax return or higher on my stocks this year, so that’s why I’m doing it! Yay for low interest rates.

I’ve never added this US account to my net worth before because I thought my RRSP contribution room would be plenty to house all the US stocks I would ever want to buy. And it probably still is. But one thing I can’t do in an RRSP (401K equivalent) is use margin , and the reason my Canadian stocks are worth over $70,000 today is not because the TSX has done so well, but because I used lots of leverage. But the biggest reason I didn’t want to include it in my net worth is because I’m not sure how to consolidate 2 different currencies. The banks have done a great job of splitting my net worth so I have a balance for all my Canadian accounts, and then a separate balance for just my US accounts.

However I don’t want to have 2 separate net worths. Do I convert all USD to CAD when listing my assets and liabilities, or should I do the conversion at the very end when I calculate the final net worth? It’s not a huge issue right now because the Canadian loonie is worth almost the same as the US dollar. But in the future when the gap widens it could make for some very inaccurate calculations Nevertheless this USD account is becoming too large to simply ignore anymore, so starting from this fiscal update and onwards I will include it’s balance and the debt that goes along with it. Of course since it’s all leveraged, it doesn’t really affect my net worth

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*Side Income:

Part-Time Work = $1200
Dividends = $300

*Discretionary Spending:

Eating Out = $100
Others = $100 (renewed Costco membership)

*Net Worth: (MoM)

Assets: = $538,000 total
Cash = $1,700 (-$100)
Stocks CDN = $72,400 (+$300)
Stocks US = $30,500 (new)
RRSP = $31,400 (+$600)
Home = $252,000 (Same)
Farm = $150,000 (Same)

Liabilities: = $382,400 total
Mortgage = $203,800 (-$400)
Farm Loan = $111,400 (-$300)
Margin Loan CDN = $18,800 (-$100)
Margin Loan US = $18,500 (new)
Line of Credit = $19,900 (+$500)
Line of Credit CIBC = $10,000 (new)

*Total Net Worth = $155,600 (+2.0%)

About $3K gain from last month, which is about the same as February of last year. My side hustle and dividend income pretty much covered half of that total increase. So lucky I have 2 jobs in this economy (~_~) I calculated the net worth this time by simply adding up all the numbers both USD and CAD so the result is a mix of two currencies lol. I need to find a better solution going forward though. I wonder how other people calculate their wealth if they have financial assets in different countries.

Fiscal Update – Jan 2013 – New Year Bump

Fiscal Updates 33 Responses »

Jan 312013

January is when I adjust the value of my home. I determine the new price by taking my original purchase price in 2009 and add inflation to it every year. In 2012 the CPI in Canada for the entire year averaged out to roughly 1.6%.

2012 inflation rate in Canada, new year bump

Last year my home was $248,000. This year I’m going to add the 1.6% and increase my home value to $252,000 The government (BC Assessment) thinks my condo should be worth more but I’m using the inflation adjusted method to be on the cautionary side. January is also a month where I get a lot of quarterly dividends Furthermore, there is a little secret in the investing world called the January Effect. It describes the general increase in stock prices during the month of January. Nobody knows exactly why, but part of the reason might be that many people, especially workers on Wall St. often get big bonuses at the end of the year, so they buy a lot of stocks in January with that extra money which pushes the market up. This happens more often than you might think Below is a chart showing the S&P 500′s average monthly returns for the last 14 decades. Notice how January outperforms all other months.

historical stock performance, the new year bump

In a normal month my net worth would grow by about $2,000 or $3,000 depending on how much I save and how my investments perform. But because of the events described above January is often a special month where I see a big boost to my net worth which I like to call the New Year Bump. This happens almost every year.

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*Side Income:

Part-Time Work = $600
Dividends = $400

*Discretionary Spending:

Eating Out = $100
Others = $100

*Net Worth: (MoM)

Assets: = $506,700 total
Cash = $1,800 (+$800)
Stocks = $72,100 (+$3,400)
RRSP = $30,800 (+$1,000)
Home = $252,000 (+$4,000)
Farm = $150,000 (Same)

Liabilities: = $354,200 total
Mortgage = $204,200 (-$300)
Farm Loan = $111,700 (-$300)
Margin Loan = $18,900 (-$2,000)
Line of Credit = $19,400 (-$400)

*Total Net Worth = $152,500 (+8.7%)

This is why I love investing Just buy a broad portfolio of appreciating assets whenever you have extra cash and then sit back and let the market do all the work for you! In 2011, my New Year Bump was +$9,600. I remember being so excited (゜o゜) But last year in 2012, it was even higher at +$10,800. I didn’t think things would get any better than that. Yet this year in the month of January I became $12,200 wealthier thanks to the Bump ヽ(^o^)丿I can’t believe how lucky I am. Who would’ve thought just 4 years of investing would lead to this kind of payoff already. By regularly purchasing and holding profitable investments like farmland, a condominium unit, and a diverse spectrum of stocks from coffee companies to REITs, it appears this strategy works pretty well. Oh yeah, and leveraging helps a lot too. No way could I have accumulated over $500,000 of assets today by myself in such a short amount of time. That’s why I’ve taken advantage of the low interest rates and used the bank’s money to do most of the heavy lifting for me （＾－＾） I’ve been blogging about what kinds of investments I buy since 2010. If you are using a similar investment strategy for yourself then hopefully you’re benefiting from the New Year Bump as well

* Numbers are rounded to the nearest $100.

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