Jan 072019
 

 

Changes in the Financial Markets in 2018

  • Currencies:
  • Canadian dollar weaken from 0.80 to 0.73 USD.
    (Less purchasing power and more expensive imports, such as food from the U.S.)
  • U.S. dollar index up to 96 from 92.
    (Non Americans pay a higher premium to buy U.S. investments.)
  • Stock Markets:
  • Most markets around the world dropped in 2018, especially Emerging and Asian markets.
  • Canadian S&P/TSX stock index fell about 12%
  • U.S. stock market fell about 6%
  • Canadian Aggregate bond index ETF (ZAG) total return = 1.8%

It wasn’t a great way to end the year but on the whole I’m pretty happy with my situation. The last quarter has been the worst for my net worth performance so far. But the good news is I’ve still gained $96K overall in 2018 thanks to a great first half of the year. 🙂 Below is my net worth update for December.

Liquid’s Financial Update

*Side Incomes: = $3,400

  • Part time job =$1100
  • Freelance = $800
  • Dividends =$1000
  • Interest = $600

*Discretionary Spending: = $2,000

  • Food = $300
  • Miscellaneous = $800
  • Interest expense = $1300

*Net Worth: (ΔMoM)

  • Assets: = $1,211,300 total (-14,300)
  • Cash = $20,400 (+600)
  • Canadian stocks = $155,800 (-6800)
  • U.S. stocks = $112,700 (-4700)
  • U.K. stocks = $19,400 (-1000)
  • Retirement = $114,900 (-2500)
  • Mortgage Funds = $34,500 (-200)
  • P2P Lending = $33,600 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $418,800 total (-1400)
  • Mortgage = $189,900 (-400)
  • Farm Loans = $180,000 (-400)
  • Margin Loans = $48,900 (-600)

*Total Net Worth = $792,500 (-$12,900 / -1.6%)
All numbers are in $CDN at 0.74/USD

At the end of 2018 my net worth has grown to $792,500. This is a $95,900 increase from the previous year’s end when I had $696,600. It’s not a smooth progression, but I’m grateful to be going in the right direction overall. 🙂

2018 was a bit of a strange year. I lost my job, stocks entered into a bear market, and interest rates climbed 3 times. This series of events has never happened to me before so it’s been fun trying to navigate the new economic landscape.

In terms of what I want to do for 2019, I will be changing my financial strategy a bit. Here are some themes I plan to focus on.

  • Preparing for higher interest rates. Should the Bank of Canada continue to increase rates this year I will be drastically reducing my debt.
  • Buying more bonds. It wasn’t until the recent stock market correction that I truly realize how fixed income investments can keep volatility at bay. Investment grade bonds rated A and BBB currently pay over 4% coupon. It’s not a bad alternative to equities these days.
  • Reassess how I calculate the value of my primary residence. My initial method of using my purchase price + inflation isn’t keeping up with reality anymore. How do you guys value your real estate when calculating your net worth? Do you use the government assessed value, or get someone to come appraise the property?

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Random Useless Fact:

Dec 062018
 

A lot has happened globally in the last few weeks that makes me weary about the growth of the financial markets over the next 1 to 2 years. Inflation in France sparked violent protests. The U.S. federal budget deficit for fiscal year 2019 is projected to be nearly $1 trillion. It will be hard to find borrowers who are willing to buy all those treasury bonds. The 2 largest foreign holders of existing U.S. debt are China and Japan. And both have become net sellers. The economic tension between the U.S. and China is momentarily on hold, but 3 months from now the trade war could escalate.

So what I plan to do going into 2019 is to keep more cash on hand. This will allow me to maneuver more easily as cash is very liquid. If interest rates become too high I will use the cash to pay down my debt. If stocks in general fall into a bear market I will be buying up more shares. 🙂

Liquid’s Financial Update

*Side Incomes: = $3,400

  • Part time job = $900
  • Freelance = $1200
  • Dividends = $900
  • Interest = $600
*Discretionary Spending: = $2,000
  • Food = $300
  • Miscellaneous = $500
  • Interest expense = $1200

*Net Worth: (ΔMoM)

  • Assets: = $1,225,600 total (+1400)
  • Cash = $19,800 (+2300)
  • Canadian stocks = $162,600 (-4500)
  • U.S. stocks = $117,400 (+300)
  • U.K. stocks = $20,400 (-300)
  • Retirement = $117,400 (+2700)
  • Mortgage Funds = $34,700 (+500)
  • P2P Lending = $33,300 (+400)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $420,200 total (-800)
  • Mortgage = $190,300 (-400)
  • Farm Loans = $180,400 (-500)
  • Margin Loans = $49,500 (+100)

*Total Net Worth = $805,400 (+$2,200 / +0.3%)
All numbers are in $CDN. 

 

 

Financial markets are stretched thin. The S&P 500 is still trading relatively expensive at 22x earnings, even after the pullback that started in October. There isn’t much room for growth in equities. Real estate markets around the world are softening. U.S. home building company Toll Brothers warned that the housing market slowed further in November, particularly in California. Home prices and sale volume in Canada, particularly in Vancouver and Toronto are going down. Prices will likely fall further into the upcoming spring. But Canada’s continued trade deficit and high energy prices mean the cost of living will probably climb higher. The theme for 2019 could very well be higher inflation but lower investment returns. If that turns out to be true then I would prioritize paying down debt and acquiring hard assets.

 

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Random Useless Fact:

Nov 052018
 

It was bound to happen sooner or later. October was a bad month for the stock markets. Some of my highest growing stocks in the technology sector such as Facebook, Amazon, Netflix, and Google (Alphabet) or FANG stocks fell into bear market territory, which means they’ve fallen by more than 20% from the top. Here is a look at how much stock indexes lost in the month of October.

  • TSX Composite -7.5% (Canada)
  • Dow Jones -5.9% (USA)
  • S&P 500 -7.9% (USA)
  • NASDAQ -10.7% (USA)
  • ASX 200 -6.0% (Australia)
  • FTSE 100 -5.4% (UK)
  • SSE Composite -6.2% (China)
  • Nikkei 225 -12.4% (Japan)

My investments weren’t able to escape this global stock market correction, and my net worth fell a bit. I hope the next couple of months will make up for it.

 

Liquid’s Financial Update

*Side Incomes: = $7,300

  • Part time job = $600
  • Freelance = $500
  • Dividends = $900
  • Interest = $600
  • Farm rent = $4700
*Discretionary Spending: = $2,100
  • Food = $400
  • Miscellaneous = $500
  • Interest expense = $1200

*Net Worth: (ΔMoM)

  • Assets: = $1,224,200 total (-15,900)
  • Cash = $17,500 (+4700)
  • Canadian stocks = $167,100 (-9700)
  • U.S. stocks = $117,100 (-9,800)
  • U.K. stocks = $20,700 (-900)
  • Retirement = $114,700 (-600)
  • Mortgage Funds = $34,200 (+100)
  • P2P Lending = $32,900 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $421,000 total (-2,700)
  • Mortgage = $190,700 (-500)
  • Farm Loans = $180,900 (-600)
  • Margin Loans = $49,400 (-100)
  • CIBC Line of Credit = $0 (-1500)

*Total Net Worth = $803,200 (-$13,200 / -1.6%)
All numbers are in $CDN. 

 

This was the first down month I’ve had in over a year. A few things saved my net worth from dropping further: My farmland paid me some rent. My fixed income all ended the month with positive returns. And despite being invested in the stock market for the past 9 years, stocks only take up about 34% of my assets. This means any changes in the overall stock market will probably affect my net worth by only 1/3rd as much. 🙂

 

 

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Random Useless Fact:

Some people say Elon Musk reached puberty in his 30s

Oct 012018
 

2018 is passing by quickly. We are already in the final quarter. 🙂 My stock portfolio’s value dropped a little in September. But I still managed to grow my net worth by half a percent for the month thanks to my multiple income streams. By January 2019 my goal is to have a net worth of $1 million. 🙂

A stock market dip in September is normal – perhaps even expected. Since 1896, when the Dow Jones Industrial Average was created, the Dow has lost an average of 1.03% in September. That compares to an average gain of 0.76% across all other months of the year. The funny thing is the Dow actually climbed higher this September. But it was the S&P/TSX Composite in Canada that dropped 1.8% lol.

Liquid’s Financial Update

*Sidel Incomes: = $2,800

  • Part time job = $600
  • Freelance = $300
  • Dividends = $900
  • Interest = $500
  • Solarshare payment = $500
*Discretionary Spending: = $1,700
  • Food = $300
  • Miscellaneous = $500
  • Additional Interest = $900

*Net Worth: (ΔMoM)

  • Assets: = $1,240,100 total (+1,500)
  • Cash = $12,800 (+1600)
  • Canadian stocks = $176,800 (-1000)
  • U.S. stocks = $126,900 (+900)
  • U.K. stocks = $21,600 (unch)
  • Retirement = $115,300 (-500)
  • Mortgage Funds = $34,100 (+200)
  • P2P Lending = $32,600 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $423,700 total (-2,700)
  • Mortgage = $191,200 (-400)
  • Farm Loans = $181,500 (-400)
  • Margin Loans = $49,500 (-400)
  • CIBC Line of Credit = $1,500 (-1500)

*Total Net Worth = $816,400 (+$4,200 / +0.5%)
All numbers are in $CDN. 

Inflation in Canada is picking up. We are at roughly 3% this year compared to 2% in 2017. Higher inflation will have a positive impact on real estate prices. I’m thinking about buying another property either next year or in 2020. Home prices will likely continue to increase in Vancouver and Toronto, at least in the long run. So getting more real estate now is probably a good idea.

Due to the nature of my new job I will not disclose my annual salary from now on. I was able to negotiate a relatively high salary for myself, about 20% more than my previous employer which shut down recently. Lest any of my coworkers stumble upon this blog I don’t want them to know how much our company is paying me. But I’ll continue to share all other sources of income such as from investments and freelance graphic design. 🙂

 

 

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Random Useless Fact:

The hospital you were born in is the only building you leave without entering.

 

Sep 042018
 

We are now officially in the longest bull market in history. Hurray! 😀 Generally speaking a bull market begins when the market rises 20% from the end of a bear market. The last low set by the benchmark S&P 500 index in the U.S. was on March 9, 2009. It’s been 3,465 days of fairly steady growth since then, with the stock index climbing by more than 320% over that period. The previous record bull run was set between Oct. 1990 and March 2000 where the S&P 500 gained 418% between those 9.5 years!

Liquid’s Financial Update

*Total Income: = $6,000

  • Full time job = $3000
  • Part time job = $1100
  • Freelance = $500
  • Dividends = $900
  • Interest = $500
*Total Spending: = $3,500
  • Food = $300
  • Housing = $1200
  • Utilities = $100
  • Miscellaneous = $1000
  • Additional Debt Interest = $900

*Net Worth: (ΔMoM)

  • Assets: = $1,238,600 total (+9,700)
  • Cash = $11,200 (-400)
  • Canadian stocks = $177,800 (+4800)
  • U.S. stocks = $126,000 (+4500)
  • U.K. stocks = $21,600 (-300)
  • Retirement = $115,800 (+800)
  • Mortgage Funds = $33,900 (0)
  • P2P Lending = $32,300 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $426,400 total (-3,600)
  • Mortgage = $191,600 (-400)
  • Farm Loans = $181,900 (-500)
  • Margin Loans = $49,900 (-200)
  • TD Line of Credit = $0 (-1500)
  • CIBC Line of Credit = $3,000 (-1000)

*Total Net Worth = $812,200 (+$13,300 / +1.7%)
All numbers are in $CDN. 

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