Jul 052017
 

In an interesting turn of events the Canadian dollar is showing signs of strength. It gained against the US dollar and the British pound. This is a double edged sword. The good news is my wealth is greater since I have more purchasing power. 🙂 The bad news is my net worth in Canadian dollars went down. 🙁

Since I have investments in foreign currency my assets fell in value. Oh well. I’m not cashing out any time soon so I will continue to hold and see what happens. Energy companies also lost value in June, following lower oil prices. I also purchased a vehicle in cash that cost over $1,000. It was expensive, but it’s important to have a life. 🙂

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $900
  • Freelance = $800
  • Dividends = $800
  • Interest = $200
*Discretionary Spending:
  • Fun = $1500
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,113,700 total (-6,300)
  • Cash = $5,300 (+2100)
  • Canadian stocks = $146,400 (-200)
  • U.S. stocks = $91,600 (-4600)
  • U.K. stocks = $20,100 (-1300)
  • RRSP = $82,600 (-2800)
  • Mortgage Funds = $31,000 (+300)
  • Peer-to-Peer Lending = $20,900 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $486,000 total (-5,500)
  • Mortgage = $182,900 (-500)
  • Farm Loans = $188,800 (-500)
  • Margin Loans = $60,300 (-3200)
  • TD Line of Credit = $13,000  (-600)
  • CIBC Line of Credit = $25,000 (-500)
  • HELOC = $16,000 (-200)

*Total Net Worth = $627,700 (-$800 / -0.13%) 
All numbers above are in $CDN. 

 

This is the worst month I’ve had in over a year, lol. It looks like my fixed income assets performed well at least. Hopefully I can turn things around in July and get back to increasing my net worth.

 

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Random Useless Fact:

Canada produces over 80% of the world’s maple syrup.

Jun 052017
 

U.S. Unemployment Rate Drops to 4.3%

U.S. job growth slowed in May, which suggests the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3%. The problem with the unemployment number is that it doesn’t account for people who are out of the workforce because they gave up trying to find a job. Finding work usually isn’t very difficult, especially if one has some marketable skills. But finding the right one can often be difficult. In Canada for example, many have chosen to not accept a job that pays minimum wage because they think their time is worth more. Here’s a breakdown of minimum wage across the country.

  • Alberta ‑ Currently, the minimum wage is $12.20 an hour, but it rises to $13.60 this year and $15 Oct. 1, 2018.
  • B.C. – $10.85 now and $11.25 or more later this year.
  • Manitoba – $11, with plans to raise it every year along with the rate of inflation.
  • New Brunswick – $11. Adjusted annually relative to the consumer price index.
  • Newfoundland & Labrador – $10.75 rising to $11 on Oct. 1, 2017.
  • Northwest Territories – $12.50
  • Nova Scotia – $10.85. Adjusted annually April 1 based on the consumer price index.
  • Nunavut – $13. Adjusted annually April 1.
  • Ontario – $11.40.
  • Prince Edward Island – $11.25.
  • Quebec – $10.75, rising to $11.25 per hour May 1.
  • Saskatchewan – $10.72. Adjusted annually Oct. 1 relative to the consumer price index and average hourly wage.
  • Yukon – $11.32. Adjusted annually April 1 based on the consumer price index.

May was an average month. Stock market went up a little. I’m still waiting for the crash that some people have been talking about for years, but hasn’t happened yet.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $600
  • Freelance = $700
  • Dividends = $700
  • Interest = $400
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,120,000 total (+7,200)
  • Cash = $3,200 (-1000) 
  • Canadian stocks = $146,600 (-200)
  • U.S. stocks = $96,200 (+900) 
  • U.K. stocks = $21,400 (+700)
  • RRSP = $85,400 (+6500)  ~ purchased 200 units of BMO high yield bond fund (ZHY)
  • Mortgage Funds = $30,700 (+100) 
  • Peer-to-Peer Lending = $20,700 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000
  • Debts: = $491,500 total (-3,300)
  • Mortgage = $183,400 (-400)
  • Farm Loans = $189,300 (-500)
  • Margin Loans = $63,500 (-1100)
  • TD Line of Credit = $13,600  (-600)
  • CIBC Line of Credit = $25,500 (-500)
  • HELOC = $16,200 (-200)

*Total Net Worth = $628,500 (+$10,500 / +1.75%)
All numbers above are in $CDN. 

 

 

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Random Useless Fact:

Just because something is legal doesn’t mean it’s ethical.

May 042017
 

Stocks Continue to Climb

Technology stocks in the U.S. have recently performed exceptionally well. The Nasdaq index (full of technology stocks) reached a new high, passing 6,000 points. Stock markets reaching new highs is actually quite common. On average, this happens about once a month. But unlike the tech bubble of 2000, this time I believe technology giants such as Amazon, Apple, and Alphabet are here to stay. The industry has matured now and high tech companies have become similar to utilities. Just imagine an entire week without using any of Google’s services or any iPhones or Apple products lol.

Over the years I’ve written about why AMZN, AAPL, and GOOG are some of the best companies to own for long term investors. I hold all 3 of course. Although I am primarily a dividend investor, I will put money into growth oriented stocks as well if there’s a profitable opportunity. Amazon is up 25% so far this year. Apple is up 27%. And Alphabet (Google) is up 20%. Not bad for a span of only 4 months. 😀

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $500
  • Freelance = $800
  • Dividends = $700
  • Interest = $500
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,112,800 total (+14,900)
  • Cash = $4,200 (+2000) ~ Saving up to make a major purchase in May.
  • Canadian stocks = $146,800 (+1100)
  • U.S. stocks = $95,300 (+5200) ~ Strong gains here partly due to a lower $CAD
  • U.K. stocks = $20,700 (+1100)
  • RRSP = $78,900 (+2500) ~ I have many U.S. stocks in there.
  • Mortgage Funds = $30,600 (-200) ~ Most MICs lost ground in April.
  • Peer-to-Peer Lending = $20,500 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000 (+3000) ~ Increasing farmland value due to inflation. 
  • Debts: = $494,800 total (-400)
  • Mortgage = $183,800 (-500)
  • Farm Loans = $189,800 (-500)
  • Margin Loans = $64,600 (+1800)
  • TD Line of Credit = $14,200  (-600)
  • CIBC Line of Credit = $26,000 (-500)
  • HELOC = $16,400 (-100)

*Total Net Worth = $618,000 (+$15,300 / +2.5%)
All numbers above are in $CDN. 

I am so glad I have investments outside of Canada in April. The British Pound gained a lot of strength boosting my U.K. stocks by about 6% in $CDN terms. The United States dollar and stock market also went up a lot. My U.S. stock portfolio gained $5,200. Sweet! But on the flip side, my U.S. margin loan increased by about $1,800. This is the reality about buying U.S. stocks on margin; it’s great for my investments when the U.S. currency appreciates, but it also means I owe more money when everything is converted back into $CDN, lol. Oh well. I hope everything will work out in the long run. 🙂

 

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Random Useless Fact:

Apr 032017
 

When Long Term Planning Works Out

Thanks to my recent investment in Lending Loop I am now making an additional $2,000 per year of interest income. This brings my total passive income to $24,000 per year. Sweet peaches and cream! 😀 Here’s a breakdown.

  • $9,000 dividends
  • $9,000 rent
  • $6,000 interest

Passive income is the best kind of income for 3 important reasons:

  1. It’s stable and requires no effort from the investor.
  2. It has the capability to be tax efficient, eg: by earning it inside a tax advantaged account.
  3. It’s inflation protected. eg: My current passive income from dividends, rent, and interest would all increase under inflationary pressure.

But it takes time to build up $24,000 of annual investment income. Rome wasn’t built in a day, and neither is passive income. It took me about 9 years of saving and investing to reach this milestone. Dividend income was my first passive income stream and it’s starting to really pay off now. 🙂 Many other bloggers are using this popular strategy for early retirement as well.

My current level of passive income by itself is still not enough for me to live on. However, my projection is to grow my passive income by $3,000 per year over the next 5 years so I will be financially independent when I’m 35 years old in 2022, making about $40,000 per year from my investments. 😀

Increasing my passive income by $3,000 a year is actually easier than it sounds due to my special circumstance. I have 3 lucky advantages that most people my age don’t have.

  1. I have over $1,000,000 of investments under my control. Dividend growth stocks increase payments to shareholders over time. Land tends to appreciate in value and extract higher rental income in the long run. Through inflation this $1,000,000 asset portfolio will grow by an estimated 2% a year to keep up with the cost of living. This works out to $20,000 of annual appreciation. We can easily convert any tangible asset into a perpetual passive revenue stream by using the 4% rule. Therefore, I can expect my passive income to increase by $800 by next year simply by continuing to hold $1+ million of productive assets. ($20,000 x 4%)
  2. I do not spend the $24,000 of passive income I currently make. So all of it can go back into buying more investments. $24,000 will generate about 5% of income for me with a combination of high yield income securities and dividend stocks. So that’s another $1,200 of newly created passive income for me to look forward to by next year. ($24,000 x 5%)
  3. Tax efficiency. Nearly all my dividend producing investments qualify for the federal dividend tax credit so I effectively pay only 6% tax on the income they produce. My rental income is offset by my mortgage interest so I pay less than 4% tax on this rental income. As I’ve written about in the past my profits are kept low. Nearly all my other passive income are sheltered in my RRSP and TFSAs, which accounts for more than $150,000 worth of stocks, bonds, mortgages, and other interest producing assets. This means I pay minimal tax on the $24,000 passive income I make.

Due to the 1st and 2nd reasons in the above list, my passive income should grow organically by $2,000 every year without me injecting any new capital into the portfolio. The remaining $1,000 of passive income (to make up my $3,000 increase per year) will come from savings. With an expected 5% income rate I will need to save $20,000 per year on average to make this happen. I think that’s a reasonable goal for me. 🙂

This whole plan all started in 2008. I’m just following through with it now and adding small changes as things move along. What truly amazes me is the fact that my passive income has now reached a point where it is growing at a faster rate than my active income. There is no way I can sustainably increase my salary and wages by $3,000 every year without sacrificing my health and risk getting burnt out. But my passive income can. 😀 This is why investing becomes more effective the longer one does it.

 

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $800
  • Dividends = $700
  • Interest = $100
  • SolarShare bonds = $500
*Discretionary Spending:
  • Fun = $500
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,097,900 total (+9,500)
  • Cash = $2,200 (+700)
  • Canadian stocks = $145,700 (+7500)
  • U.S. stocks = $90,100 (-700)
  • U.K. stocks = $19,600 (+300)
  • RRSP = $76,400 (+1500)
  • Mortgage Funds = $30,800 (+200)
  • Peer-to-Peer Lending = $20,300 (+200)
  • SolarShare Bonds = $9,800 (-200)
  • Home = $270,000
  • Farms = $433,000
  • Debts: = $495,200 total (+800)
  • Mortgage = $184,300 (-500)
  • Farm Loans = $190,300 (-600)
  • Margin Loans = $62,800 (+3200)
  • TD Line of Credit = $14,800  (-600)
  • CIBC Line of Credit = $26,500 (-500)
  • HELOC = $16,500 (-200)

*December Total Net Worth = $602,700 (+$8,700 / +1.5%)
All numbers above are in $CDN. 

I got my first SolarShare bond payment! This is the first of 30 total payments I will receive over the next 15 years.

Much like black holes, climate change can really suck. 😄 I invested in SolarShare last year because I wanted to make the world a greener place and earn a profit while doing it. 😀

Continue reading »

Mar 062017
 

Dow Jones trading over 21,000 points

It’s only the beginning of March and the stock market indexes are already up 6% to 9% year to date in the United States. The Dow closed over 21,000 points last Friday. Of course hitting new highs is nothing special for the stock markets. But who knows how long this momentum will last.  We have confirmation from the Federal Reserve that interest rates in the United States will increase next week by a small amount. I expect this will cool the financial markets. Afterall, since World War II, 77% of Fed tightening cycles had ended in recession.

It has been a fairly predictable month for myself. I’m slowly collecting passive income while paying down my debts.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $800
  • Freelance = $700
  • Dividends = $800
  • Interest = $200
*Discretionary Spending:
  • Fun = $500
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,088,400 total (+5,200)
  • Cash = $1,500 (+400)
  • Canadian stocks = $138,200 (-1000)
  • U.S. stocks = $90,800 (+4900)
  • U.K. stocks = $19,300 (+700)
  • RRSP = $74,900 (-100)
  • Mortgage Funds = $30,600 (+200)
  • Peer-to-Peer Lending = $20,100 (+100)
  • SolarShare Bonds = $10,000
  • Home = $270,000
  • Farms = $433,000
  • Debts: = $494,400 total (-1,800)
  • Mortgage = $184,800 (-400)
  • Farm Loans = $190,900 (-500)
  • Margin Loans = $59,600 (+300)
  • TD Line of Credit = $15,400  (-600)
  • CIBC Line of Credit = $27,000 (-500)
  • HELOC = $16,700 (-100)

*December Total Net Worth = $594,000 (+$7,000 / +1.2%)
All numbers above are in $CDN. 

Lucky me. It was another positive month in general for the markets. I’m very close to $600,000 now. 🙂

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Random Useless Fact:

 Our brains tend to find creative ways to be entertained when we’re bored.