Sep 052016
 

New Addition to my Asset Column

After blogging about my exciting new investment in a startup company, I’ve decided to categorize this equity holding as a new asset class in my net worth updates. ūüôā¬†High net worth¬†investors are continuing to move their investments¬†into uncorrelated assets such as private companies and I plan to grow my investments using a similar strategy. There is no way to eliminate market volatility entirely, but it’s possible to¬†minimize its effect on my¬†portfolio. ūüėČ

Liquid’s Financial Update

*Side Incomes:

  • Part-Time =¬†$1200
  • Freelance = $900
  • Dividends =¬†$600
  • Interest = $200 (from Western Energy bonds)
*Discretionary Spending:
  • Fun =¬†$200
  • Debt Interest = $1300

*Net Worth: (MoM)16-08-fiscal-update-liquid

  • Assets:¬†= $1,006,200 total¬†(+6,800)
  • Cash = $12,100¬†(-3000)
  • Stocks CDN =$120,900 (+1400)
  • Stocks US = $72,900 (+1600)
  • RRSP = $71,500 (-2700)
  • Mortgage Funds = $26,300 (+3000)
  • Venture Capital = $6,500 (NEW!)
  • Home = $263,000
  • Farms = $433,000
  • Debts: =¬†$476,000 total¬†(-1,400)
  • Mortgage = $187,300 (-500)
  • Farm Loans = $193,900 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,600 (+200)
  • TD Line of Credit = $13,900 ¬†(-600)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,500

*Total Net Worth = $530,200 (+$8,200 / +1.57%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

Say hello to my new asset: Venture Capital. ūüôā I think calling it VC is more accurate than private equity. As mentioned in my post from last week, I now have over $1 million in assets! Let’s break down¬†some of the numbers.

  1. Cash holdings decreased because I used some savings to purchase my startup investment.
  2. Both Canadian and U.S. stock portfolios grew.
  3. I purchased $3K of new mortgage funds in my RRSP.¬†I transferred¬†the $3K value from my “RRSP” category into “Mortgage Funds” instead.
  4. No updates to home and farmland values.

Overall August was a pretty good month. For September I plan¬†to invest¬†in some renewable energy. I found an Ontario based company that suits my investor profile, so I’ll explain what my plans are for that in a future post. ūüėČ

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Random Useless Fact:

Smartphone cameras use LEDs for flash.

16-09--forget-to-turn-off-flash

Aug 042016
 

Bull Market Continues

July was another¬†fantastic¬†month for stocks! Earnings from technology companies held up to expectations which drove up the Nasdaq composite by 6%. The other major US indexes and even the Canadian stock market increased a bit as well,¬†although it’s hard to understand why since other than the tech sector, most companies had stagnant profits. ūüėē Nevertheless, the increase to my investment portfolio is much appreciated as my gross assets are now worth almost $1 million!¬†ūüėÄ

Instead of investing in new stocks¬†in July¬†I decided to pay down some of my higher interest debt. This is because I don’t see any good investment opportunities right now. I paid down my TD Line of Credit balance by $5,000. My Line of Credit charges a 4.95% interest rate. This means I receive a guaranteed return on my $5,000, which saves me¬†about $20 a month moving forward. ūüėÄ The dilemma¬†of making new investments vs paying down debt all comes down to interest rates, growth opportunities, and the¬†investor’s confidence. ūüėČ

Making Money on Weed

Also in July, one¬†of the more risky stocks that I reviewed and bought last year, Canopy Growth Corp (CGC), made its transition from the smaller Venture exchange to the larger Toronto Stock Exchange. This is a pretty big deal since it signals that people’s view of cannabis is shifting. CGC shares surged after becoming the first marijuana producer in North America to graduate to a major exchange. Investors who already own CGC don’t need to do anything. Today Canopy Growth Corp is trading at roughly $4 per share. It’s very uplifting to see my speculative buy of 300 CGC shares climb more than 50% already! ūüėÄ As the federal government makes plan to legalize pot for all Canadians in the near future, I have a feeling CGC might reach $5 per share by summer of 2017. But keep in mind that I’m kind of biased because I already have skin in the game. ūüėČ

Liquid’s Financial Update

*Side Incomes:

  • Part-Time =¬†$1200
  • Freelance = $1100
  • Dividends =¬†$700
  • Interest = $300
*Discretionary Spending:
  • Fun =¬†$200
  • Debt Interest = $1300

*Net Worth: (MoM)16-08-fiscal-update-liquid

  • Assets:¬†= $999,400 total¬†(+5,900)
  • Cash = $15,100¬†(-1600)
  • Stocks CDN =$119,500 (+2900)
  • Stocks US = $71,300 (+2500)
  • RRSP = $74,200 (+1900)
  • Mortgage Funds = $23,300 (+200)
  • Home = $263,000
  • Farms = $433,000
  • Debts: =¬†$477,400 total¬†(-6,500)
  • Mortgage = $187,800 (-500)
  • Farm Loans = $194,400 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,400 (+300)
  • TD Line of Credit = $14,500 ¬†(-5000)
  • CIBC Line of Credit = $9,500 (-500)
  • HELOC = $17,500 (-300)

*Total Net Worth = $522,000 (+$12,400 / +2.43%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.77 USD

Hopefully by the end of August I will¬†reach 1 million dollars in assets that have financial value. Also, due to the consequences¬†of Britain leaving the E.U., the British Pound has dropped compared to the Canadian dollar. And it fell¬†again today as the Bank of England slashed interest rates to a record low of 0.25% this morning in an attempt to boost its economy. Since I don’t have a lot of UK or European stocks¬†yet I think later this year will be a good time for me to accumulate some more foreign investments across the pond. ūüôā We’ll see how it goes. I’m currently saving up money for a more immediate investment opportunity related to private businesses,¬†which I’ll write about later this month.

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Random Useless Fact:

According to the Pew Research Center, nearly half (49%) of Americans say they have tried marijuana at least once.

16-07-change-subject-high

Jul 042016
 

 New Milestone 

It has been a surprisingly eventful month in the markets. Volatility was high during the last week of June but in the end North American stock markets ended¬†relatively flat. The Dow Jones was up slightly, but the Nasdaq fell. The TSX Comp in Canada dropped by about 1%. However my mining stocks performed really well so they lifted up the rest of my portfolio and I managed to make a 2.65% positive return overall according to my brokerage statement. ūüôā This has pushed my net worth to over $500K for the first time ever!

16-06-june-return-td-bank-monthly

Liquid’s Financial¬†Update

*Side Incomes:

  • Part-Time =¬†$1200
  • Freelance = $1500
  • Dividends =¬†$600
  • Interest = $200
*Discretionary Spending:
  • Fun =¬†$400
  • Debt Interest = $1300

*Net Worth: (MoM)16-05-networthiq_chart-may-2016-freedom35

  • Assets:¬†= $993,500 total¬†(+8,800)
  • Cash = $16,700¬†(+5200)
  • Stocks CDN =$116,600 (+2500)
  • Stocks US = $68,800 (-700)
  • RRSP = $72,300 (+1800)
  • Mortgage Funds = $23,100
  • Home = $263,000
  • Farms = $433,000
  • Debts: =¬†$483,900 total¬†(-2,500)
  • Mortgage = $188,300 (-400)
  • Farm Loans = $194,900 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,100 (-400)
  • TD Line of Credit = $19,500 ¬†(-500)
  • CIBC Line of Credit = $10,000 (-500)
  • HELOC = $17,800 (-200)

*Total Net Worth = $509,600 (+$11,300 / +2.27%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.78 USD

A big help in June was the rise of commodity prices. The price of silver increased over 20%. My Silver Wheaton shares gradually¬†went up¬†from $18 to $30 per share over the course of the month. This change alone added about $2,000 of value to my net worth. Next month’s goal is to increase my gross assets to $1 million. ūüôā

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Random Useless Fact:

16-06-how-british-people-shower

Jun 022016
 

Markets at a Glance

The Canadian economy shrunk 0.2% in the last month of the 1st quarter. Despite a disappointing Q1 the S&P/TSX Composite index still managed to climb higher this month, as did the major indexes in the U.S.

I don’t know what’s keeping the stock market afloat these days but it can’t all be fundamentals. The Dow Jones index managed to post its 4th straight monthly gain in May despite poorer jobs numbers, worse manufacturing data, a weak U.S. economy, and 3 straight quarters of contracting profit growth for corporate earnings. It doesn’t make much sense to me how the stock market continues to move higher when there are hardly any good indicators out there. But just like living in North Korea, I can’t complain. ūüėÄ As an investor, market¬†returns make me happy regardless of the reason. ūüôā But even though I now have a quarter million dollars rolling around in the stock markets it actually doesn’t feel like very much at all, because my portfolio is merely based on the perceived value of large¬†companies, which can be fickle at times.

In 2014 Elizabeth Holmes was named as “America’s richest self-made woman” with a net worth of $4.5 billion, as estimated by business magazine Forbes. This valuation was based on her 50% stake in a blood testing startup that she founded called Theranos. A blood test can take¬†a lot out of someone.¬†It can be a very draining procedure. ?¬†But recently Holmes’ business ran¬†into some regulatory trouble which puts into question the $9 billion valuation of her¬†private company. So earlier this week Forbes had revised her net worth all the way down to $0.¬†?¬†Wow, from $4.5 billion to being flat-out broke. It’s amazing how¬†quickly the perceived value of someone’s net worth can change. This is why we shouldn’t take our net worths for granted. It could all change. ūüėē

Liquid’s Net Worth Update

*Side Incomes:

  • Part-Time =¬†$900
  • Freelance = $400
  • Dividends =¬†$600
  • Interest = $200
*Discretionary Spending:
  • Fun =¬†$200
  • Debt Interest = $1300

*Net Worth: (MoM)16-05-networthiq_chart-may-2016-freedom35

  • Assets:¬†= $985,700 total¬†(+12,800)
  • Cash = $11,500¬†(+7300)
  • Stocks CDN =$114,100 (+200)
  • Stocks US = $69,500 (+3900)
  • RRSP = $70,500 (+2400)
  • Mortgage Funds = $23,100
  • Home = $263,000
  • Farms = $433,000
  • Debts: =¬†$486,400 total¬†(-1,100)
  • Mortgage = $188,700 (-500)
  • Farm Loans = $195,400 (-500)
  • Margin Loan CDN = $28,300
  • Margin Loan US = $25,500 (+1000)
  • TD Line of Credit = $20,000 ¬†(-600)
  • CIBC Line of Credit = $10,500 (-500)
  • HELOC = $18,000

*Total Net Worth = $498,300 (+$13,900 / +2.87%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

May turned out to be another great month. It would be nice to think¬†that hard work and personal sacrifice created the¬†$13,900 addition to my net worth this month, but I have to admit that most of this wealth gain¬†simply came from passive income and stock appreciation. ūüėÄ I received $4,500 in cash from my tenant in May. The government also gave me a $2K tax refund because I contributed a lot to my retirement savings account¬†last year (over $10K.) And my portfolio grew by about $4,100 on its own this month without me lifting a finger, thanks mostly to a stronger U.S. dollar.

16-05-canada-us-dollar

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May 022016
 

My net worth increased $64,000 so far in 2016 

Goodness gracious me! ūüėÄ That’s even more than my annual gross salary. Maybe I should quit my full time job already.¬†Haha. ?

But here’s the caveat. My net worth is measured in dollars. So I’m¬†only¬†becoming richer relative to the local currency. But as we shall discuss¬†below, currency depreciation can be a real PITA. ūüėõ Policy makers from around the world are covertly initiating inflation to see which country can print the most money to improve their economy’s competitiveness. But by doing so, the devastating¬†knock-on affects will financially destroy millions of lives in the years¬†to come.¬†?

Higher Living Expenses in 2016

If you’ve purchased car tires before you are probably familiar with inflationary pressures. ?¬†Inflation has been fairly¬†high in 2016 so far. The government won’t admit it for political reasons, but¬†regular folks like you and I have most certainly felt the effects of rising expenses in¬†our wallets.¬†Over the last year nearly all types of spending¬†in Canada¬†have become¬†more expensive.

16-05-inflation-cost-of-living-canada

Crude oil was trading at US $35 per barrel when the year started, but now it’s just over¬†$45, a 29% increase. Coincidentally¬†the price of silver bullion has also increased by 29% over the same 4 month period. The price of oil affects the price of many consumers goods, not the least of which is food, due to transportation costs. And since we use silver in photography, x-rays, solar panels, mirrors, cars, medicine, smart phones, and other consumer electronics, we can expect higher costs in these related fields moving forward.

Then there’s the largest monthly expense for most people – housing. ?¬†The most recent S&P/Case Shiller index shows that U.S. home prices in February grew 5.3% year over year. I don’t even have to mention how crazy hot the Canadian real estate market has been lately. ūüėõ CREA forecasts the national average price this year will probably¬†increase by 8%.

16-05-home-price-canada-crea-forecast

So house it going on the west coast?¬†you might ask.¬†Well let’s just say February was a record-shattering month for home sales in British Columbia, with a 45%¬†increase in volume compared to a year ago.

How Investors Hedge Against Inflation

A few years ago I wrote a post detailing¬†how prices of different goods¬†increased 100% to 200%¬†between 1990 and 2010. But if we were to store¬†our net worth 20 years ago in¬†real tangible assets such as oil, land, fixed properties, silver, and profitable businesses, instead of simply holding on to money or “savings,”¬†then we could keep all¬†of our purchasing power.

The reality is that life doesn’t cost more over time. In the 1990s if we needed fuel, we could buy 2 or 3 barrels of oil with 1 ounce of silver. Today in 2016, we can still pretty much do the same thing. On the other hand, buying oil with dollars would cost us 150% more today than in 1990. In other words, the costs of time, labor, skills, commodities, goods and services, which are all things that have intrinsic¬†value, tend to stay fairly constant across multiple generations for the most part.¬†But it’s the currency that is usually the clear outlier and it tends to lose value over any extended period of time.

One way we can hedge against inflation is through investing.¬†Here are some¬†choices that I’ve made in the past that have made 2016 one of my best years so far!

  • Buying precious metals stocks:¬†I own metal mining stocks such as¬†Goldcorp (G) and Silver Wheaton (SLW) which have outperformed the general stock market recently. But I’m in no way a good stock picker. ūüėõ The Market Vectors Gold Miners ETF (GDX) on the NYSE¬†is an index fund that tracks the performance of global gold mining firms that are publicly listed in the U.S. This ETF has climbed 88% year to date! ?¬†So anyone who holds¬†a basket of gold/silver stocks or owns this GDX fund should be dancing on cloud nine right about now. ūüôā
  • Buying physical commodities: I occasionally¬†purchase silver and gold directly from the Royal Canadian Mint and bullion exchanges. For example, about half a year ago I bought a 100 oz silver bar¬†which has appreciated in value since then. ūüôā I also practice earning¬†silver wages, which basically means¬†I make a portion of my money in silver¬†to diversify my income. I’m not¬†suggesting everyone should go out and do this too. I’m just saying from my personal experience this has been profitable¬†for me.
  • Buying farmland: My¬†down payment was less than 15% so this¬†amplifies my return on investment by¬†many folds.¬†Canadian farmland prices have grown on average by 10% last year, which boosted my¬†net worth by more than $30,000 as I’ve explained last month.
  • Buying real estate: I purchased a condo here in Vancouver when many people warned of a real estate bubble. Maybe they’re right, maybe they’re wrong. All I know is Vancouver condos have increased in price by 10% over the last year, adding over $25,000 to the market price of my property.

As we can see all these investments represent¬†real, tangible assets that have economic value, and therefore do not suffer at the hands of inflation. Everyone wants to know the secret to investing. But it’s really quite simple. All we have to do is look at historical patterns in the economy¬†and apply common sense. ūüôā Piece of cake, right?¬†?

Liquid’s Net Worth Update

My investment¬†income is really starting to grow now thanks to 7 years of compounding. I received $360 in interest payments in April between my Air Canada bonds and Antrim MIC. Plus I made $720 in dividend income from my stock portfolio. That’s nearly $1,100 of passive income that I made without any effort. ūüôā

*Side Incomes:

  • Part-Time =¬†$800
  • Freelance = $700
  • Dividends =¬†$700
  • Interest = $400
*Discretionary Spending:
  • Fun =¬†$300
  • Debt Interest = $1300

*Net Worth: (MoM)16-04-stock-fiscal-update-networth

  • Assets:¬†= $971,900 total¬†(+23,900)
  • Cash = $5,200¬†(+2700)
  • Stocks CDN =$113,900 (+3800)
  • Stocks US = $65,600 (-3800)
  • RRSP = $68,100 (-1000)
  • Mortgage Funds = $23,100 (+200)
  • Home = $263,000
  • Farms = $433,000 (+22,000)
  • Debts: =¬†$487,500 total¬†(-2,800)
  • Mortgage = $189,200 (-400)
  • Farm Loans = $195,900 (-500)
  • Margin Loan CDN = $28,300 (-100)
  • Margin Loan US = $24,500 (-1400)
  • TD Line of Credit = $20,600 ¬†(-400)
  • CIBC Line of Credit = $11,000
  • HELOC = $18,000

*Total Net Worth = $484,400 (+$26,700 / +5.83%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

Stocks were pretty much flat in April. But my net worth increased by over $26,000 mostly due to the updated farmland value. The most recent FCC assessment report shows Saskatchewan farmland value rose 9.4% in 2015. The average inflation rate (CPI) in Canada in 2015 was about 1.4%. To be on the conservative side, I have adjusted the farmland value on my net worth statement by taking the average of these two figures, which is 5.4%, or an increase of about $22,000.

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