Aug 072018
 

Apple recently became the first US company to surpass $1 trillion in market value, wowzers! 😀 It’s hard to imagine that merely 2 decades ago the company was on the verge of bankruptcy. But then Steve Jobs came back as CEO and turned the whole company around. I didn’t have the foresight to buy Apple stocks in 1998 when it was less than $1/share. Amazon and Alphabet (Google) shares are probably next in line to breach the trillion dollar milestone.

We’re living in a digital world where technology companies today have become like utility companies in the past. I have owned all 3 for many years now and will continue to add more tech stocks to my portfolio over time. A devastating tech crash like in 2000 shouldn’t happen again because the big companies today actually have sales and profits to backup their market value. 🙂 The only major risk, albeit not very likely, is a prolonged, global internet blackout or some other technological black swan event.

As North American stock markets climbed in July so did my investments.

Liquid’s Financial Update

*Total Income: = $7,500

  • Full time job = $4000
  • Part time job = $1100
  • Freelance = $600
  • Dividends = $900
  • Interest = $900
*Total Spending: = $4,300
  • Food = $300
  • Housing = $1200
  • Utilities = $100
  • Miscellaneous = $1800
  • Additional Debt Interest = $900

*Net Worth: (ΔMoM)

  • Assets: = $1,228,900 total (+6,400)
  • Cash = $11,600 (+1100)
  • Canadian stocks = $173,000 (-600)
  • U.S. stocks = $121,500 (+3700)
  • U.K. stocks = $21,900 (-300)
  • Retirement = $115,000 (+1800)
  • Mortgage Funds = $33,900 (+600)
  • P2P Lending = $32,000 (+100)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $430,000 total (-3,400)
  • Mortgage = $192,000 (-500)
  • Farm Loans = $182,400 (-500)
  • Margin Loans = $50,100 (-900)
  • TD Line of Credit = $1,500 (-500)
  • CIBC Line of Credit = $4,000 (-1000)

*Total Net Worth = $798,900 (+$9,800 / +1.2%)
All numbers are in $CDN. 

 

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Jul 272018
 

According to a Fox article, millennials now make up the largest generation in America, and we’re seeing some troubling trends as they are increasingly turning away from capitalism and favouring socialism instead. Based on a study of over 2,000 people, nearly 45% of millennials polled said that they would prefer to live in a socialist country compared to the 42% who said they preferred a capitalist one. Another 7 percent said that the preferred living in a communist country. Oh dear. 🙁

By comparison, most baby boomers polled favor capitalism, compared to 26% who said they prefer a socialist system. Socialism never works in the long run because you eventually run out of other people’s money to spend. For a recent example we can turn to Venezuela, which has a socialist government. Venezuela’s currency has lost 99.9997% of its value in the past 6 years. In the span of a few months, the International Monetary Fund (IMF) has gone from forecasting that Venezuela’s inflation rate would hit 12,875% by the end of the year to now saying that it will get to 1,000,000%. Yikes! The country’s economy is on the verge of collapse for the past year. People often struggle to find food, medicine, and other essential goods.

If socialism is better than capitalism then all the socialists should get together and redistribute their properties fairly among themselves. But that has never happened, lol. As Winston Churchill once said, “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent virtue is the equal sharing of misery.”

 

 

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Random Useless Fact:

Eating healthy can cost more money

 

 

Jul 102018
 

I transferred my pension from my previous employer to my personal investment account. The amount is about $20,000, which I currently hold in my TD RRSP as cash. This money exists because I saved 4% of my income and put it towards the company RRSP group plan for 7 years. It’s not a huge amount of money but if I invest all of it into something that can generate 5% return per year, I would earn $1,000 of tax deferred passive income without touching the principal. 🙂 I also have a Deferred Profit Sharing Plan (DPSP) that is awaiting to get paid out as well. But I’m not sure when I will receive that yet. It’s not as much as the RRSP amount though.

Liquid’s Financial Update

*Total Income: = $7,300

  • Full time job = $4000
  • Part time job = $1400
  • Freelance = $500
  • Dividends = $1000
  • Interest = $400
*Total Spending: = $3,600
  • Food = $300
  • Housing = $1200
  • Utilities = $100
  • Miscellaneous = $1100
  • Additional Debt Interest = $900

*Net Worth: (ΔMoM)

  • Assets: = $1,222,500 total (+17,500)
  • Cash = $10,500 (-2000)
  • Canadian stocks = $173,600 (-1500)
  • U.S. stocks = $117,800 (-1700)
  • U.K. stocks = $22,200 (-200)
  • Retirement = $113,200 (+21,900)
  • Mortgage Funds = $33,300 (+700)
  • P2P Lending = $31,900 (+300)
  • Home = $275,000
  • Farms = $445,000
  • Debts: = $433,400 total (-2,500)
  • Mortgage = $192,500
  • Farm Loans = $182,900 (-500)
  • Margin Loans = $51,000
  • TD Line of Credit = $2,000 (-1000)
  • CIBC Line of Credit = $5,000 (-1000)

*Total Net Worth = $789,100 (+$20,000 / +2.6%)
All numbers are in $CDN. 

I will be looking at how to invest the extra $20K. Maybe I will buy some U.S. dividend stocks. The Bank of Canada is also expected to raise interest rates later this week. It’s about time. If the cost to borrow money remains at current levels then in 5 years from now home prices in large cities would likely be 25% higher than today. Higher interest rates will help keep inflation tame so home prices don’t climb too much.

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Random Useless Fact:

It’s hard for attractive nurses to take accurate pulse readings.

Jul 042018
 

Five years ago I acquired a variable rate mortgage from CIBC. It was the cheapest rate I could find at the time. I was quite pleased with the rate but that mortgage term expired a couple of months ago. So I shopped around to see if I can find another good deal.

I expected my mortgage to become more expensive. Surely rates would have climbed over the last 5 years right?

But no. To my surprise I found a lender that offered me an interest rate that’s lower than my previous mortgage by 43 basis points. 😀 CIBC was not able to match this offer so I switched. The new financial institution I am with is not one of the big 5 banks in Canada. It is a lesser known company called National Bank.

I was paying 3.05% with CIBC. This was a variable rate 5 year mortgage at prime minus 0.40%. This was the best CIBC could do.
But my new mortgage with National Bank is only 2.62%. This is also a variable rate 5 year mortgage term. Except the rate is Prime minus 0.83%

A 0.43% difference in interest rates doesn’t sound like a lot. But my mortgage balance is around $193,000. So I will be saving roughly $4,000 over the next 5 years because I switched to a cheaper mortgage provider.

However there are costs associated with changing lenders. Appraisal costs $600, and legal documents from a notary public was $800 in my case. Luckily National Bank has a $750 rebate program for transferring over an existing mortgage. 🙂

In the end the cost of changing banks was worth the extra savings in my case.

Even though most Canadians are choosing fixed rate mortgage I still believe that variable rate is the way to go if you want to save money. The increase in fixed rate mortgages locked in by most home buyers this year is “seen as a response to rate hikes, and fear of higher rates in the future.” But critics have been calling for higher rates for over a decade. Yet rates haven’t actually gone up much. In fact, mortgage rates have dropped over the past 5 years as shown in my post today. That’s why we have to be informed of economic conditions so we can make our own financial decisions, instead of following others. 🙂

I have been a homeowner for almost 10 years. During this time my mortgage interest rates fluctuated from 2.3% to 3.2%. It doesn’t look like rates will climb significantly any time soon. Until we see increasing mortgage rates, I would expect Canadian housing prices to climb even higher.

 

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Random Useless Fact:

30 years ago only 5% of the population admitted to being chronic procrastinators compared to 25% today. Some believe technological advances is the main cause of this change.

Jun 152018
 

Lifestyle inflation is when we spend more money when our income increases. This can feel natural because the more we earn the more we can afford to spend. But this can make it very difficult to save for retirement or meet other financial goals. Lifestyle inflation is what causes many folks to get stuck in the rat race instead of being able to retire sooner. Here are some ideas to help curb lifestyle inflation when we get that big raise next time. 🙂

  1. Visualize the net amount of a raise after paying payroll and income tax.
  2. We don’t necessarily deserve nice things. But we deserve to be happy – which can be jeopardized if we overspend on nice things by sacrificing financial security.
  3. Hang out with friends who have similar spending habits to ourselves.
  4. Pay ourselves first. Set up an automatic transfer for a fixed amount of money from our bank account to an investment account every month.
  5. Define our goals and only spend new money if it will get us closer to those goals.
  6. Have inexpensive hobbies such as reading, blogging, hiking, playing music, and cooking.
  7. Realize that success doesn’t equate to material possessions. Better indicators of success are health, love, friends, family, and experiences. We should be happy with our quality of life without feeling the need to prove it to others.

Reaching a good balance of spending and saving is a personal journey for everyone. There are some people who save too much without enjoying life as it comes. There are others who impetuously spend too much without thinking of their future. Finding the sweet spot between the two extremes will bring us financial happiness. 🙂 Happiness is like peeing our pants. People around us can see it, but only we can truly feel the warmth of it. 😀 Live for today but don’t forget to plan for tomorrow.

 

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Random Useless Fact:

QiZai is the only giant brown panda in the world left. He is literally one of a kind.