Jun 012020
 

Energy sector bounces back

The human brain can often exaggerate negative emotions in the midst of uncertainty. It’s why otherwise calm drivers are susceptible to road rage behavior. Similarly, a stock market crash can cause investors to fixate on the bad news, lose perspective, and extrapolate recent trends into a dreadful future. Here’s a business headline from mid March.

But this type of thinking, although understandable, can lead to some costly mistakes. That’s why I suggest a more rational approach to managing money. First, we should realize that this time is not different. This isn’t the first worldwide economic shock. And it won’t be the last. Given the assumption that things will go back to normal we next have to look for opportunities in financial markets – where we can find mispriced, long term assets. So when stocks fell 30% earlier this year I suggested it was a time to buy, not sell.

A couple of months ago oil fell to $20/barrel. In the past 70 years this has only happened one other time so it’s a very rare phenomenon. I blogged about investing while the price of oil was unsustainably low. And in March I disclosed buying 1300 shares of Suncor (SU), and 500 shares of Canadian Natural Rss (CNQ) – two of the largest Canadian energy companies.

Today oil has climbed back up to $35/barrel and my combined ROI on those two stocks is 37.3%. That’s a gain of roughly $12,000 in two months. Bear markets don’t happen every year. That’s why when opportunities like this arise, it’s important to pay attention and take action. πŸ˜‰ I haven’t sold these oil stocks so there’s no realized profit yet. But it’s still nice to see a climbing net worth.

 

Liquid’s Financial Update May 2020

*Side Incomes: = $4,600

  • Part time job =$800
  • Freelance = $100
  • Dividends =$1300
  • Interest = $600
  • Rent = $1,800

*Discretionary Spending: = $1,800

  • Food = $300
  • Miscellaneous = $600
  • Interest expense = $900

*Net Worth: (Ξ”MoM)

  • Total Assets: = $1,530,200 (+$19,400)Β 
  • Cash = $53,300 (+5400)
  • Canadian stocks = $301,200 (+7,200)
  • U.S. stocks = $149,900 (+4300)
  • U.K. stocks = $18,900 (+200)
  • Retirement = $153,100 (+1000)
  • Mortgage Funds = $36,200 (+1100)
  • P2P Lending = $36,600 (+200)
  • Home = $331,000 (assessed land value)
  • Rental Unit = $450,000 (2020 purchase price)
  • Total Debts: = $521,800 (-4,000)
  • Home Mortgage = $181,800 (-400)
  • Rental Property Mortgage = $312,800 (-700)
  • Margin Loans = $27,200 (-2900)

*Total Net Worth = $1,008,400 ($20,400 / +2.1%)
All numbers are in $CDN at 0.73/USD

 

Getting back to normal

Unfortunately Suncor has cut its dividends by 55% since my last purchase. But both SU and CNQ are profitable long term so I will continue to hold these names in my portfolio.

We still don’t know the final outcome and repercussions of this pandemic. The economy is slowly starting to open up again. But life for average folks will lag significantly behind the financial markets. According to the CFIB, half of all small businesses cannot pay their June rent unless the government steps in with more financial aid.

Europe is starting to remove some lockdown measures. Japan lifted all of its national emergency controls last week. As the world cautiously returns to normal there will probably be more unexpected news and economic hiccups. But volatility is part of the process, and the world will get through this one way or another. All we can do as individuals is to manage our own personal finances so that we’ll have a healthy, robust investment portfolio on the other side of this. πŸ™‚

 

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Random Useless Fact:

Dogs are often good judges of character.

May 042020
 

Road to Recovery

The S&P 500 climbed 13% in April, gaining back most of the losses from March. I picked up some new stocks during the low points in the first quarter so the V-shaped recovery is nice to see. πŸ™‚Β  Leading the bounce back are technology stocks. Amazon just announced it made $75 billion in Q1 revenue, beating expectations as more consumers are shopping from home. AMZN shares hit an all time high recently. I’m brushing up against the elusive $1 million net worth once again. πŸ™‚ Things are looking up. But is it too soon to celebrate?

The market is getting back to a balanced state as volatility subsides. But it’s hard to say if the bottom of the bear market is already behind us. I’m concerned that this quick rebound in April could be a false signal and we are actually headed for a double dip correction in the months to come. So my current strategy is to buy only defensive stocks with a strong balance sheet. If sentiment continues to improve then I won’t miss out on the rally. If markets drop back down then my portfolio should hold up better than the general index. πŸ™‚

My earlier stock purchases from February and March are starting to pay off. For example, Telus Corp (TSE:T) paid me nearly $300 in April. That payment was used to purchase another 13 shares of Telus thanks to the DRIP program. Maybe next time I’ll receive 14 shares.

This is the best kind of passive income. It makes you money using the money it already made you. πŸ˜€ I’m now consistently earning over $1,000 a month in dividend income. This is the first year this has ever happened to me. Interest income from bonds, REITs, and other funds are growing as well. It’s exciting to watch my trading account get bigger by itself over time. πŸ™‚

 

Liquid’s Financial Update April 2020

*Side Incomes: = $4,600

  • Part time job =$500
  • Freelance = $100
  • Dividends =$1300
  • Interest = $900
  • Rent = $1,800

*Discretionary Spending: = $1,600

  • Food = $300
  • Miscellaneous = $400
  • Interest expense = $900

*Net Worth: (Ξ”MoM)

  • Total Assets: = $1,510,800 (+$55,100)Β 
  • Cash = $47,900 (+5400)
  • Canadian stocks = $294,000 (+28,000)
  • U.S. stocks = $145,600 (+17,300)
  • U.K. stocks = $18,700 (+900)
  • Retirement = $152,100 (+2000)
  • Mortgage Funds = $35,100 (+1200)
  • P2P Lending = $36,400 (+300)
  • Home = $331,000 (assessed land value)
  • Rental Unit = $450,000 (2020 purchase price)
  • Total Debts: = $525,800 (-3,600)
  • Home Mortgage = $182,200 (-700)
  • Rental Property Mortgage = $313,500 (-800)
  • Margin Loans = $30,100 (-2100)

*Total Net Worth = $985,000 ($58,700 / +6.3%)
All numbers are in $CDN at 0.72/USD

 

Stick to the plan

In March I wrote about waiting awhile before I buy any new investments. I wanted to wait for a clearer market direction. Well now there is. πŸ™‚ Last week the 10 day simple moving average (SMA) of the S&P 500 crossed back up above the 50 day SMA. This is a technical indicator which signals strength in the stock market. And we haven’t seen a circuit breaker halt trading activity in several weeks now – meaning the market has somewhat stabilized.

Some readers have asked me for stock tips. I don’t give specific financial advice. But recently while shopping I came across this stock on sale below. What a great deal. 😎

I didn’t buy any new financial assets in April. But going forward I will be looking to purchase new stocks in the energy and financial sectors. πŸ™‚ I still think dividend growth stocks are worth considering even though valuations are not as cheap as last month.

 

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Random Useless Fact:

In April, Toronto police issued fines ($750 each) to more than 470 people over social distancing rules.

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. πŸ˜› But I am not disheartened – because my mind these days is focused on more exciting things! πŸ™‚

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%. πŸ™‚ Buying real estate isn’t easy. I kept myself motivated by listening to house music.

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. πŸ™‚ 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.

Liquid’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: (Ξ”MoM)

  • Total Assets: = $1,511,100 (-$290,100)Β 
  • 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 = $315,000Β 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. πŸ˜€ 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. πŸ™‚ 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? πŸ˜€

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. πŸ™‚ 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. πŸ™‚ 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. πŸ™‚

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. πŸ™ 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.

 

Liquid’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: (Ξ”MoM)

  • Total Assets: = $1,221,000 (-$213,300)Β 
  • 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. πŸ™‚

 

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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! 😎 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. πŸ˜€ 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. πŸ™‚

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. πŸ™‚

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. πŸ˜€ I gradually put more money into the fund over the years but have now decided to sell everything. πŸ™‚ 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. πŸ™‚ 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. πŸ™‚

Liquid’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: (Ξ”MoM)

  • Total Assets: = $1,434,300 (+27,700)Β 
  • 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. πŸ™‚

 

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Random Useless Fact: