Jul 012019
 

Happy Canada Day! Since the beginning of the year my net worth has climbed by $172,000. 🙂 I have read many books and online articles on how to get rich. But I didn’t expect implementing those strategies I learned would be so effective. The whole idea of buying undervalued assets and holding them for many years really does work!

Speaking of buying assets, last month I purchased 2 new U.S. based stocks in my RRSP. I bought 50 shares of Advanced Micro Devices (AMD) for $29.20 US per share. I think this makes an excellent holding along with my existing Intel (INTC) shares which was purchased years ago. I also picked up 15 shares of Alibaba Group (BABA) at $154.59 US each. This is known as the Amazon.com of China, but it does a lot more than e-commerce. Alibaba also operates subsidiaries such as TaoBao, Alipay, TMall, Ant Financial, Alibaba Pictures, and others.

These 2 stocks have increased my foreign equities holding. My asset allocation now looks like this.

Eventually I would like my Foreign stocks to expand to 15% of my portfolio. I want to also reduce my farmland exposure to just 25% or less.

Liquid’s Financial Update

*Side Incomes: = $2,900

  • Part time job =$800
  • Freelance = $500
  • Dividends =$900
  • Interest = $700

*Discretionary Spending: = $2,200

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

*Net Worth: (ΔMoM)

  • Total Assets: = $1,353,000 (+17,800)
  • Cash = $7,500 (+4900)
  • Canadian stocks = $176,600 (+5500)
  • U.S. stocks = $130,800 (+5400)
  • U.K. stocks = $21,700 (-100)
  • Retirement = $133,000 (+1700)
  • Mortgage Funds = $36,000 (+100)
  • P2P Lending = $35,400 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $388,400 (-4,000)
  • Mortgage = $187,700 (-300)
  • Farm Loans = $164,200 (-1500)
  • Margin Loans = $36,500 (-2200)

*Total Net Worth = $964,600 (+$21,800 / +2.3%)
All numbers are in $CDN at 0.76/USD

 

After a stalled month in may, my net worth continued to climb in June thanks to strong stock market gains and higher precious metals prices. I also got a large bonus from work so that’s always nice. 🙂 My goal is to hit $1,000,000 net worth by the end of August. 🙂

 

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Random Useless Fact:

Jun 032019
 

There’s an old saying about sell in May and go away that highlights the historical underperformance of the stock market during the summer months compared to the generally better performance during the other half of the year. If investors use the sell and May and go away strategy, they would sell their stock portfolio in May, and reinvest everything again in the fall. Some people find this strategy more rewarding than staying in the market throughout the entire year.

This old adage does have some historical evidence backing it up. And it’s certainly relevant today if this year is any indication. Most stocks in my portfolio fell in May, as did other people. U.S. stocks were hit the hardest. It was the worst May since 2010. Even my European index fund dropped a few percentage points.

The beginning of a correction?

It’s hard to say if the stock market will continue to slide further going forward. But I don’t believe selling shares is a good strategy right now. Instead I continue to believe that a basket of medium term bonds can help provide stability in a portfolio when the stock market has no clear trend. The BMO bond fund I wrote about last month is one example of this simple approach. It climbed in value during May when most stock funds experienced a loss. If the equity market continues to fall throughout the summer, at least I’ll have some bonds to help counteract that negative impact. 🙂

Another winning asset class last month was cryptocurrency. 🙂 Bitcoin’s value jumped 50% to roughly $8,500 US per coin. I sold all of mine a couple of years ago but this is great news for anyone who still holds BTC or altcoins.

stock investors eyeing bitcoin and cryptocurrency jealous girlfriend meme

Although my investment portfolio took a net loss last month, I received a lot of extra income. I collected $5,300 in rent. I also received about $4,000 from the government. This is because last year I worked 5 different jobs. Each one had deducted too much payroll and income tax from my paycheques because they all assumed I was only working for them, and that I was going to be employed year round. Well I’m no longer working at 3 of those jobs anymore so that’s why I was owed some tax credits. 🙂

Overall my net worth remained pretty much unchanged from the previous month.

Liquid’s Financial Update

*Side Incomes: = $7,900

  • Part time job =$700
  • Freelance = $300
  • Dividends =$800
  • Interest = $800
  • Farm rent = $5300

*Discretionary Spending: = $2,400

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

*Net Worth: (ΔMoM)

  • Total Assets: = $1,335,200 (-18,000)
  • Cash = $2,600 (-8800)
  • Canadian stocks = $171,100 (-3900)
  • U.S. stocks = $125,400 (-6400)
  • U.K. stocks = $21,800 (-700)
  • Retirement = $131,300 (+1000)
  • Mortgage Funds = $35,900 (+500)
  • P2P Lending = $35,100 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $392,400 (-17,900)
  • Mortgage = $188,000 (-400)
  • Farm Loans = $165,700 (-12500)
  • Margin Loans = $38,700 (-5000)

*Total Net Worth = $942,800 (-$100)
All numbers are in $CDN at 0.74/USD

 

I was able to renew my farm loan in May. But the interest rate went up and the best I could get was 5.04%, which is a bit higher than I expected. So I decided to make a lump sum payment of $12,000 towards the balance. I also paid down some margin debt in anticipation of a potential major stock market correction. Luckily I had enough savings in my bank account to pay down these debts thanks to the abundance of income that I received during the month.

If investments don’t go down once in awhile there wouldn’t be opportunities to buy on the dips. 🙂 But hopefully things will be better in June.

 

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Random Useless Fact:

According to HuffPost, men and women generally have different types of dreams.

Men’s dreams tend to consist of:
Strangers, success or failure
Sex with unknown partners
Physical aggression
Cars and roads
Violence
Shorter dreams
Less color
Competition

Women’s dreams tend to consist of:
Family members, relationships
Kissing, flirting with someone, or sex with someone known to the woman
Verbal aggression
Emotional expression
Loss of loved ones
Longer dreams
More color
Conversation

May 062019
 

Another Strong Month for Stocks

The age of monetary tightening is on pause, at least for now. Central banks have pumped the brakes on increasing interest rates. This has been great for the U.S. and Canadian stock markets, which have both hit new highs in April. But does that mean it’s time to sell and take profits?

Probably not. It’s really hard to predict market movements, and record high stock prices can continue to climb higher before starting to fall. So I’ve opted to go for another strategy; Park some savings in bonds and wait for a better opportunity to jump into stocks again. 🙂

So at the end of last month I used about $25K of my cash savings in my RRSP to purchase 1500 units of BMO Mid Corporate Bond Index ETF (ZCM.)

It has a 3.2% yield, so I shall be earning an additional $67/month of investment income going forward. Not a big change, but better than nothing. 😀 The cash in my RRSP to make this investment came from my old work pension. I transferred the money to my personal retirement account after I was let go.

Liquid’s Financial Update

*Side Incomes: = $2,800

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

*Discretionary Spending: = $2,300

  • Food = $400
  • Miscellaneous = $500
  • Interest expense = $1400

*Net Worth: (ΔMoM)

  • Total Assets: = $1,353,200 (+13,100)
  • Cash = $11,400 (-800)
  • Canadian stocks = $175,000 (+3600)
  • U.S. stocks = $131,800 (+7200)
  • U.K. stocks = $22,500 (+800)
  • Retirement = $130,300 (+1500)
  • Mortgage Funds = $35,400 (+500)
  • P2P Lending = $34,800 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $410,300 (-700)
  • Mortgage = $188,400 (-400)
  • Farm Loans = $178,200 (-400)
  • Margin Loans = $43,700 (+100)

*Total Net Worth = $942,900 (+$13,800 / +1.5%)
All numbers are in $CDN at 0.75/USD

 

I’m not selling any stocks because despite the uncertain direction in the relatively volatile equity market I’m still earning nearly $1,000 in dividends every month, and I don’t want to sacrifice real dividend income for a hypothetical crash that may not happen in the near future. So it makes sense to buy some fixed income assets such as the corporate bond fund, ZCM. My intent is to hold ZCM for the 3.2% annual interest income. Then sell this fund, and replace it with stocks once the stock market goes into a correction. 🙂

Continue reading »

Apr 022019
 

Getting out of 21st Century Fox 

Five years ago I wrote about purchasing 26 FOXA shares for $34 USD each. At that time the stock was trading at 20 times earnings, so it wasn’t exactly cheap. However I saw great potential in this company because it had a lot of popular brands and intellectual properties. I had planned to hold this stock for decades. But I didn’t have to.

Fox shareholders approved the acquisition by Disney, and last month I was forced to sell all my FOXA stocks for $1,843 CAD. That’s a tidy 83% return on investment, before even adding on the dividend income I received over the years. 🙂 Plus, there’s no capital gains tax because it was held in my RRSP. Yay!

Overall March has been a really positive month for my finances. All my liquid assets went up in price.

Liquid’s Financial Update

*Side Incomes: = $3,300

  • Part time job =$700
  • Freelance = $600
  • Dividends =$1200
  • Interest = $800

*Discretionary Spending: = $2,400

  • Food = $300
  • Miscellaneous = $700
  • Interest expense = $1400

*Net Worth: (ΔMoM)

  • Total Assets: = $1,340,100 (+8,200)
  • Cash = $12,200 (+1000)
  • Canadian stocks = $171,400 (+800)
  • U.S. stocks = $124,600 (+4000)
  • U.K. stocks = $21,700 (+900)
  • Retirement = $128,800 (+1000)
  • Mortgage Funds = $34,900 (+200)
  • P2P Lending = $34,500 (+300)
  • Home = $367,000 (assessed land value)
  • Farms = $445,000
  • Total Debts: = $411,000 (-900)
  • Mortgage = $188,800 (-300)
  • Farm Loans = $178,600 (-500)
  • Margin Loans = $43,600 (-100)

*Total Net Worth = $929,100 (+$9,100 / +1.0%)
All numbers are in $CDN at 0.75/USD

 

Preparing for Interest Rates to Drop

It’s been several years since the Bank of Canada lowered interest rates. The last cut was in 2015. Central banks around the world dropped rates near zero as a reaction to the global finance crisis in 2008 and rates have been low since. Policy makers expected the economy and rates to rebound back to normal in short order. But they discovered an inconvenient truth to the markets; low interest rates are addictive. Once consumers get a taste of easy credit, it’s very difficult for them to pull back.

Continue reading »

Mar 042019
 

Slowing Economy and Rising Insolvencies

It was a pretty good month for stocks. The Dow Jones actually gained 11% during the first 2 months of 2019, its best 2 months in a decade. 🙂

But not everything is looking positive. Bond yields have been falling since December, suggesting slower growth. And the number of Canadians who filed for insolvency rose dramatically last year due to higher interest rates and mounting household debt. 🙁 The Bank of Canada governor Stephen Poloz has stopped hiking rates since October of last year to give debtors some breathing space. But it may already be too late. According to the Office of the Superintendent of Bankruptcy, 125,266 Canadians became legally insolvent in 2018, the second highest number since 2011. The Canadian Association of Insolvency and Restructuring Professionals (CAIRP), which represents 90% of Canada’s licensed insolvency trustees, said Canadian bankruptcies are set to spike in 2019. It appears that some people weren’t aware that there is always a lag between interest rate changes and the impact on household finances.

Overall February was a pretty good month for myself, with an above average net worth increase. This was mostly due to the strength in the financial markets. 🙂

Liquid’s Financial Update

*Side Incomes: = $3,200

  • Part time job =$1200
  • Freelance = $500
  • Dividends =$1000
  • Interest = $500

*Discretionary Spending: = $2,300

  • Food = $300
  • Miscellaneous = $600
  • Interest expense = $1400

*Net Worth: (ΔMoM)

  • Assets: = $1,331,900 total (+10,600)
  • Cash = $11,200 (-600)
  • Canadian stocks = $170,600 (+4400)
  • U.S. stocks = $120,600 (+3700)
  • U.K. stocks = $20,800 (+200)
  • Retirement = $127,800 (+2500)
  • Mortgage Funds = $34,700 (+100)
  • P2P Lending = $34,200 (+300)
  • Home = $367,000 (2019 assessed land value)
  • Farms = $445,000
  • Debts: = $411,900 total (-5600)
  • Mortgage = $189,100 (-400)
  • Farm Loans = $179,100 (-500)
  • Margin Loans = $43,700 (-4700)

*Total Net Worth = $920,000 (+$16,200 / +1.8%)
All numbers are in $CDN at 0.75/USD

The higher cost of debt has personally increased my monthly interest payments. 🙁 However, it has also increased my interest income from certain investments. Hurray for interest rate hedging. 🙂 For example, below is a part of an email I received last week from one of the private mortgage funds I’m invested in.

As interest rates increase and loan losses remain historically low our top-up dividend was growing close to 1%. We are expecting the rate of return to shareholders for the year ending June 30th 2019 to be higher than last year.” – Portfolio Manager of Antrim MIC

I made a lump sum payment towards my margin account to pay down some of my margin loan. I would like to get my total debt balance to below $400,000 by the summer. This is to prepare for future rate hikes that could be coming later this year.

 

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Random Useless Fact:

It looks like someone used a black marker to draw glasses on the left kid’s face.