Mar 042015
 

The owner of the company showed up to the office one day in a fancy new sports car. One of his employees complimented him on the new vehicle. “Well,” replied the business owner, “if you set goals, show determination, work really hard and put in the long hours, I can get an even better one next year.” :D

The moral of this short story is simple. If we want to drive nice cars we have to own companies. But not everyone is suitable to become an entrepreneur. Well thankfully the securities exchange commission requests any corporation with over 500 shareholders to become a publicly traded company. This means anyone can own a piece of the company and be entitled to its future profits and dividends. :)

Owners of companies in major stock markets around the world rejoiced as stocks gain in February. Dividend stocks have been particularly strong in South East Asia recently. The Indonesia stock market hit an all-time high. U.S. stock market indexes are up 5% month over month. Earlier this week the Nasdaq went over 5000 points for the first time in 15 years! This is why I’m heavily invested in stocks (company ownership) and don’t keep a lot of cash sitting in the bank. When the Canadian stock market gained 3% in February, my portfolio gained thousands of dollars!

*Side Income:

  • Part-Time Work = $700
  • Dividends = $500
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1500

*Net Worth: (MoM)15-01-networth-update-jan

  • Assets: = $854,600 total (+7,300)
  • Cash = $4,000 (+800)
  • Stocks CDN =$90,900 (+2500)
  • Stocks US = $59,100 (+3000)
  • RRSP = $53,600 (+1000)
  • MICs = $15,000
  • Home = $259,000
  • Farms = $373,000
  • Debts: = $514,600 total (-2,100)
  • Mortgage = $195,000 (-400)
  • Farm Loans = $202,600 (-400)
  • Margin Loan CDN = $26,800
  • Margin Loan US = $25,800 (-500)
  • TD Line of Credit = $29,500  (-300)
  • CIBC Line of Credit = $10,000
  • HELOC = $18,200
  • RRSP Loans = $5,900 (-500)

*Total Net Worth = $340,000 (+$9,400 / +2.8%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

“Over the last decade,” says automotive economist Dennis DesRosiers, “the luxury market for new vehicles has increased by about 50%” in Canada. And if we look at the chart of the Canadian stock market index (TSX Composite) over the same 10 year period, we’ll see that it has gained by about 50% as well. In 2005 the index was at 10,000 points. Today it’s around 15,000 points. So there we are; a direct correlation between business ownership and luxury car sales. :) It wont be long before I can afford to buy a new sports car myself. :D

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Random Useless Fact:

Both versions exist

15-03-the-dress-white-gold-blue-black

Jan 312015
 

January is one of my favourite months because I tend to benefit from the New Year’s bump phenomenon which earns me a lot of money without requiring me to do any work. A typical monthly net worth increase for me is roughly $4,000. But in January this number can easily double. This annual boon is the product of two main factors. 1) High quality financial assets that I often write about like my recent REIT investment. And 2) natural market forces that occur at the beginning of every year. :)

*Side Income:

  • Part-Time Work = $700
  • Dividends = $600
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1500

*Net Worth: (MoM)15-01-networth-update-jan

  • Assets: = $847,300 total (+9,900)
  • Cash = $3,200 (+400)
  • Stocks CDN =$88,400 (+500)
  • Stocks US = $56,100 (+2800)
  • RRSP = $52,600 (+1200)
  • MICs = $15,000 (same)
  • Home = $259,000 (+5000)
  • Farms = $373,000 (same)
  • Debts: = $516,700 total (-1,100)
  • Mortgage = $195,400 (-300)
  • Farm Loans = $203,000 (-500)
  • Margin Loan CDN = $26,800 (-100)
  • Margin Loan US = $26,300 (+1200)
  • TD Line of Credit = $29,800  (-200)
  • CIBC Line of Credit = $10,000 (-400)
  • HELOC = $18,200 (same)
  • RRSP Loans = $7,200 (-800)

*Total Net Worth = $330,600 (+$11,000+3.4%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

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Jan 112015
 

When the Toronto stock exchange dropped  8% in the first 2 weeks of December I thought 2014 was going to end on a down month. But fortunately confidence came back to the market and investors pushed stocks back up. In the end it was a pretty flat month with minor gains in some sectors. :) Had the TSX stayed down at 8% below November’s close, my net worth would be down $13K right now instead of actually being up by $3,300 for the month. Phew. 8-)

*Side Income:

  • Part-Time Work = $700
  • Dividends = $500
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1500

*Net Worth: (MoM)14-11-fiscal-update-net-worth

  • Assets: = $837,400 total (+1,700)
  • Cash = $2,800 (+800)
  • Stocks CDN =$87,900 (+500)
  • Stocks US = $53,300 (-500)
  • RRSP = $51,400 (+900)
  • MICs = $15,000 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $517,800 total (-1,600)
  • Mortgage = $195,700 (-300)
  • Farm Loans = $203,500 (-400)
  • Margin Loan CDN = $26,900 (-300)
  • Margin Loan US = $25,100 (+700)
  • TD Line of Credit = $30,000  (-400)
  • CIBC Line of Credit = $10,400 (-400)
  • HELOC = $18,200 (same)
  • RRSP Loans = $8,000 (-500)

*Total Net Worth = $319,600 (+1.0%)
All numbers above are in $CDN. Conversion rate used: 1.00 USD = 1.18 CAD

Overall it’s been a terrific year. I’m almost worth $320K now. Yay! Here’s a comparison to last year.

Dec 2014 Dec 2013
Assets $837,400 $742,500
Debts $517,800 $533,600
Net Worth $319,600 $208,900

 

So that’s a six figure annual increase. Not too shabby. It’s actually the best year for me so far. :D Most of this wealth surge in 2014 was due to the continuing increase of asset prices. About 5 years ago I went on a mission to build up my financial assets. By the beginning of 2014 I had accumulated about $750K of gross assets. Most of that amount is financed by long term bank loans.

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Nov 302014
 

14-11-oil-price-low

I’ve had a decent month resulting in a wealth gain of $5,800. Mostly thanks to my investment gains. I received $200 of interest payment this month from my Sherritt high yield bond, with an 8% coupon, which I blogged about how to buy earlier this year.

The price for a barrel of oil has fallen in the last 3 months from $94/barrel to just $66/barrel. This capitulation is no doubt caused by an oversupply of oil on the global market and a slowdown of demand in Europe and Asia. It looks like oil exporting countries are facing a crude predicament. ;) Last week the Organization of the Petroleum Exporting Countries (OPEC) held a meeting to discuss its operation plans. OPEC is an oil cartel, represented by 12 countries in the middle east, Africa, and South America. Together this organization produces about 1/3rd of the oil supply in the world. Due to its large influence OPEC can single handedly change the price of oil in the world by increasing or decreasing its member’s oil output. During its recent meeting the cartel has decided to maintain its production levels at 30 million barrels a day. OPEC is trying to price North American oil producers out of the market.  

The decision was largely unexpected by investors. Keeping oil production high means more oil supply on the market so this news has caused a large drain on Canadian and U.S. oil stocks. I hear drilling for oil tends to be a boring job. :D But if these low energy prices continue then we could see less hiring in the oil sands and Bakken area, which will stifle economic growth. :(  I’m not in any rush to buy more into energy companies just yet. I think low oil price will be the norm until middle of 2015 at least. Instead I am looking at other sectors of the economy for growth opportunities. Financials and telecommunication stocks on average are both up 8% over the last month alone. That’s almost 100% annualized return. The consumer cyclical industry is doing well too, up 13% in November alone. These are companies like retail, drugs, food, beverage, etc. such as Dollarama and Tim Hortons. :)

*Side Income:

  • Part-Time Work = $500
  • Dividends = $400
  • Interest = $200
*Discretionary Spending:
  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)14-11-fiscal-update-net-worth

  • Assets: = $835,700 total (+3,700)
  • Cash = $2,000 (-600)
  • Stocks CDN =$87,400 (+2000)
  • Stocks US = $53,800 (+1200)
  • RRSP = $50,500 (+1100)
  • MICs = $15,000 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $519,400 total (-2,100)
  • Mortgage = $196,000 (-300)
  • Farm Loans = $203,900 (-400)
  • Margin Loan CDN = $27,200 (+200)
  • Margin Loan US = $24,400 (+500)
  • TD Line of Credit = $30,400  (-300)
  • CIBC Line of Credit = $10,800 (-600)
  • HELOC = $18,200 (-200)
  • RRSP Loans = $8,500 (-1,000)

*Total Net Worth = $316,300 (+1.9%)
All numbers above are in $CDN. Conversion rate used: 1.00 USD = 1.14 CAD

My retirement fund was able to withstand the beating of oil stocks over these last few months because I maintain a diversified portfolio. I just want a large nest egg when I reach financial freedom. If one type of stock underperforms I’m sure another type will make up for it. Oils well that ends well. :)

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Random Useless Fact:
The Swiss are like Dwarves because they live in the mountains, collect gold, make intricate machinery, and aren’t concerned by the wars of men.

Nov 032014
 

Last month was quite the roller coaster ride. But maybe all this market volatility is a good thing. The rich keep getting richer because the assets they own, like stocks and real estate, continue to grow in value. But this is a worrying signal because high levels of inequality have usually lead to recessions in the past.

14-11-inequality-income-homeless

For someone to make a lot of money it generally requires other people to work for it. For example, the CEO of a large company can’t earn a large salary if not for the hundreds of employees working under him. :) And a real estate investor can’t make a living off his rental income if his tenants decide to move out or otherwise stop paying him. So in order for the wealthy to maintain their high standards of living they have to be supported by the larger base of the lower and middle class workers. But if the poor keeps getting poorer then eventually they’ll just give up supporting the wealthy. This is already starting to happen around the world as people are dropping out of the workforce. :( In the U.S. the labor participation rate is only 62.8%, the lowest since 1978. But it’s also important to remember that employment circumstances are very localized. For example the unemployment rates in Oregon and Idaho are 7.1% and 4.5% respectively, which is quite a big difference, even though the two states are right beside each other. ;)

The recession in 2008 somewhat served as an equalizer of economic status where the people who owned the most financial assets lost more than anyone else, and the world became a little more equal. But the net worth gap between the rich and the poor has been growing again since 2010. So maybe a small stock market correction every now and then like we’ve seen in October is probably more favorable than having another large recession. It’s in society’s best interest to not let wealth inequality get out of control. The rich depend on the production of the working class to thrive, so if the working class becomes less productive then eventually everyone will be in trouble. :?

At one point in mid October my stock portfolio was down by more than 4%. Luckily however the market decided to recover most of that loss. My existing investments are still down for the month but I saved some money from my income and paid down some extra debt to make up the difference. In other words both my assets and debts were down, but my debts lost more value so I still increased my wealth overall, albeit just barely. :D

*Side Income:

  • Part-Time Work = $800
  • Dividends = $500
*Discretionary Spending:
  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)chart_14sept net worth graph market volatility inequality

  • Assets: = $832,000 total (-4,000)
  • Cash = $2600 (-800)
  • Stocks CDN =$85,400 (-3300)
  • Stocks US = $52,600 (-300)
  • RRSP = $49,400 (+400)
  • MICs = $15,000 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $521,500 total (-4,200)
  • Mortgage = $196,300 (-600)
  • Farm Loans = $204,300 (-500)
  • Margin Loan CDN = $27,000 (-500)
  • Margin Loan US = $23,900 (-1000)
  • TD Line of Credit = $30,700  (-300)
  • CIBC Line of Credit = $11,400 (-200)
  • HELOC = $18,400 (-100)
  • RRSP Loans = $9,500 (-1,000)

*Total Net Worth = $310,500 (+0.10%)
All numbers above are in $CDN. Conversion rate used: 1.00 USD = 1.13 CAD

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