Apr 122018

The ancient philosopher Seneca once said that, “luck is when opportunity meets preparation.” In other words, the more prepared we are the more chances we’ll have to take advantage of opportunities when they come our way. I believe this is true in many ways. But luck is probably a little more complicated than that.

I’ve recently come across a formula created by author Darren Hardy which breaks down luck into all its individual components. According to Hardy, anyone can become more lucky by focusing on this formula. 🙂

The Formula for Getting Lucky

Preparation + Attitude + Opportunity + Action = Getting Lucky

  • Preparation is all about personal growth – improving our skills, knowledge, expertise, and relationships – so we have the tools to take advantage of opportunities when they arise.
  • Having the right attitude or mindset is also important. Hardy says that, we can’t see what we don’t look for, and we can’t look for what we don’t believe in. Billionaire Richard Branson once said, “we are all lucky. If you live in a free society, you are lucky. Luck surrounds us every day; we are constantly having lucky things happen to us. I have not been any more lucky or unlucky than anyone else. The difference is when luck came my way, I took advantage of it.
  • Opportunity is the only part of the formula that we cannot control. Opportunity is when something positive happens that we didn’t plan for. The good news is that fortune comes to us everyday in many different ways, as Richard Branson said.
  • The last part of the getting lucky equation is taking action, or doing something about the situation that is presented to us. This is what separates self made millionaires from the average middle class citizen.

I can vouch for Hardy’s formula because I have seen it work for me. 🙂 I have been very lucky when it comes to my finances. Here are some moments from past blog posts where I expressed my acknowledgement and appreciation for my luck.

I always had a feeling that I was luckier than most people when it came to personal finance and wealth building. But I couldn’t figure out the cause before. Seeing the breakdown of Hardy’s luck formula really makes it clear. I was engineering my own luck all this time but just wasn’t aware of it until now, lol. I think one thing I can do to improve my luck even more is to focus on improving my preparation. 😀 We are surrounded by luck everyday if we look for it. I hope something lucky happened to you recently. 😉


Random Useless Fact

There’s something not quite right with this family tree.

Apr 032018

The stock market is starting to show signs of weakening. It fell in March. And my net worth would have dropped with it. But luckily my severance package came to the rescue. 😀

Job Update

As explained in my previous monthly update, I was laid off in February from my full time job. The company was restructuring and let go more than a quarter of its workforce. Fortunately I received a large severance package from the company worth about $10,500. 😮 Hurray! I deposited the money into my bank account in March and paid down some debts. Thanks to this major windfall my total monthly income was nearly $15K, higher than any previous month! 😀

After the lay off I accepted a new job offer at a different company and started receiving biweekly paychecks again. Here’s an example of my earnings from this new job. I’ve blacked out some private information for security reasons.

As good as this job may be I’ve decided to look for better opportunities elsewhere. So earlier in March I talked to my manager and gave my 2 weeks notice to resign from my position. I like the people there, and have gained a lot of useful experiences. But working there isn’t the best use of my time so I will be applying at other companies now. 🙂

Income Situation

Other than a full time wage I also earned income from my part time job and freelancing in March. In terms of passive income I received $510 from my solarshare bonds. This investment only pays twice a year, not monthly.

Here’s a look at my most recent TD bank transactions. I received $167.94 from my part time job, and $802.93 from my full time job – as presented earlier. I’ve blurred out both names of my employers. 

At the end of the month I transfered $700 to my CIBC bank account to help make my next mortgage payment. Overall March was a terrific month, mostly thanks to a huge payout from my ex-employer. I never thought losing my job could be so helpful for growing my net worth. 🙂 Maybe I should get laid off more often, lol. Just kidding. 😛

The first rule of financial sustainability is to make more money than you spend. My part time job and other side incomes bring in about $2,500 per month. This means I only need to make an additional $500 to $1,000 per month to break even with my budget. Going forward this can be done either by finding a full time job, or by working harder on my side hustles. In any case, my financial statement for March is below.


Liquid’s Financial Update

*Total Income: = $14,900

  • Severance package from old job = $10,500
  • New full time job = $1,300
  • Ongoing part time job = $700
  • Freelance = $600
  • Dividends = $900
  • Interest = $400
  • Solarshare bond payment = $500
*Total Spending: = $3,200
  • Food = $400
  • Housing = $1100
  • Utilities = $100
  • Miscellaneous = $500
  • Additional Debt Interest = $1000

*Net Worth: (ΔMoM)

  • Assets: = $1,174,100 total (+5,300)
  • Cash = $6,600 (+5800)
  • Canadian stocks = $168,300 (+300)
  • U.S. stocks = $114,300 (-1300)
  • U.K. stocks = $21,400 (+300)
  • Retirement = $89,300 (+100)
  • Mortgage Funds = $32,200 (-200)
  • P2P Lending = $31,000 (+300)
  • Home = $275,000
  • Farms = $436,000
  • Debts: = $448,600 total (-4,900)
  • Mortgage = $179,400 (-400)
  • Farm Loans = $184,300 (-500)
  • Margin Loans = $53,100 (-2100)
  • TD Line of Credit = $4,100  (+100)
  • CIBC Line of Credit = $13,000 (-2000)
  • HELOC = $14,700

*Total Net Worth = $725,500 (+$10,200 / +1.4%)
All numbers above are in $CDN. 


So far April is not looking good for my investments. The stock market is down and some analysts predict this is the beginning of a new bear market. Without a secure full time job my net worth could drop this month, which it hasn’t done in years. But I’m optimistic that things will work themselves out. 🙂 We shall see what happens.


Random Useless Fact

Mar 302018

Peter Munk 1927 – 2018

The founder of the world’s largest gold mining company passed away a couple of days ago at the age of 90. Peter Munk came from humble beginnings. He fled his home country of Hungry during WWII when it was invaded by Nazi Germany. Soon after he boarded a boat from England and came to Canada when he was 20 years old.

With no skills, money, or influence Peter and his family had to start from nothing in a foreign country. But that didn’t stop him from wanting to achieve great success. After graduating from the University of Toronto in 1952 Peter thrived in the business world. He helped to build multiple companies, including resorts, an electronic manufacturer, and mining companies. His biggest career move began in 1981 when he formed Barrick Investments, which would eventually become Barrick Gold (stock symbol ABX) the largest gold miner in the world. The company currently produces about 5 million ounces of gold per year across its many operations around the world.

Among other things, the billionaire entrepreneur is also known for being one of canada’s most significant philanthropists giving hundreds of millions of dollars to charity such as hospitals. He also established the Munk School of Global Affairs, the Munk Debates, amd was named a Companion of the Order of Canada, the country’s highest civilian honor.

Last year he was included in the New York Stock Exchange Wall of Innovators, alongside Warren Buffett, Jamie Dimon and Jack Ma. In a remark that captured the two leading pursuits of his life—business and philanthropy—Peter Munk said. “You can create wealth. You are entitled to the joy of this creation. But ultimately society makes it possible, and this wealth should flow back to society.”

Being independently wealthy is nice and all. But doing something meaningful with that money is more important. Having money doesn’t make our problems go away. It merely replaces one problem with another. For example Elvis Presley’s daughter inherited $100 million from her father’s estate in 1993. But that’s when the problems began. Through years of spending and mismanagement the funds have nearly dried out. This year only $14,000 remains of the initial $100 million fortune. Ouch. 🙁  Having a lot of money also created many problems for Jeane Napoles and her family. Peter Munk has 5 children and 13 grandchildren. I hope they can make their inheritance last longer. Financial management education is important for everyone, but especially so for children who come from wealthy families.

The idea that rich people don’t have money problems is a myth. Everyone has money problems from the single parent living on social assistance to the CEO of a large company. The difference is the CEO just has better money problems. Or maybe worse, depending on your perspective. 🙂


Random Useless Fact


Mar 202018

Most stock market investors will find it nerve-racking to see their portfolios drop by 50% or more. But a large stock market crash is usually beneficial for our long term finances and we should welcome a bear market sooner rather than later or even not at all. 😀

How an early stock market crash creates more wealth

During a stock market correction, all the new money we invest will be used to purchase assets at cheaper levels. 🙂 These investments can have more time to compound and grow.

Even if we somehow could avoid a bear market for the next 30 years, [our] retirement wealth would likely be substantially better if we instead experienced an immediate bear market. ~Mark Hulbert

Most people my age will probably retire around 60 years old. That gives us about 30 more years to save for retirement. I found a chart below, courtesy of Mark Hulbert from MarketWatch that shows how the timing of a stock market crash affects the value of a retirement portfolio. It assumes a constant annual rate of return for 30 years, except a brief period where the stock market crashes similar to what happened in the 2007/2008 global financial crisis.

The red bar at the far left of the graph represents the portfolio’s value at the end of 30 years if a stock market crash happens right now in 2018. The far right is when it happens near the end of the 30 year period. In all cases plotted on the graph, the average annualized return for the 30 year period is the same, which is 5.9%. The only difference is when that market correction occurred along the way. 😉

As we can clearly see, our portfolio’s value 30 years from now will be highest ($4.3 million) if a downturn happens immediately, and lowest ($1.9 million) if it happens right before we retire. Wow! We will have $2.4 million more if a major bear market breaks out now, rather than later, even when the overall annualized investment return is the same. That’s a huge difference. 🙂

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Mar 142018

A revolving line of credit is a very useful tool. It can be used to pay down higher interest credit card debts, cover business expenses, or pay regular household bills. To use a line of credit (LOC) properly we should understand how it works, and how the interest is calculated.

At the time of set up a new LOC account will start with a balance of $0. Unlike a mortgage, car loan, or other amortized loan, the interest cost on a LOC is only calculated based on the amount of outstanding balance we use. This means if we don’t use the LOC we don’t pay any interest. 🙂

Interest Calculation

The interest rate on a LOC will typically range from 3% to 12% depending on the borrower’s credit history and their relationship with their banks. Interest is calculated on a daily basis on the amount of principal balance. For example, let’s say we borrow $1,000 on March 1st. Then on March 10th we pay down half of the debt, $500, and don’t do anything else for the rest of the month. In this case interest will be charged on the $1,000 for 10 days, and on $500 for the remaining 21 days of March. The interest amount will be accumulated and charged at the end of every month.

Using 5% interest rate as an example, we can calculate the cost of borrowing in the example above.

Interest cost from March 1st to March 10th = 0.05 x ($1000)*(10/365) = $1.37
Interest cost from March 11th to March 31st = 0.05 x ($500)*(21/365) = $1.44

We add the two amounts together to get $2.81. This is how much interest will be charged for the month of March. If we pay down the remaining $500 principal, and $2.81 interest balance on March 31st and do not borrow anymore, then there will be no interest charges in April.

Different Ways to Use LOCs

Since LOCs often have lower interest rates than credit cards we can transfer balance from a LOC to a credit card to save on interest costs. I also like to use my LOCs for emergency liquidity to pounce on a time sensitive investment opportunity or to cover a major car repair. I have also used a LOC in the past to pay down my student loans which was at a higher interest rate.

LOCs can be accessed through online banking. We can use it pay bills online, or send Interac e-Transfers. We can even order cheque books for our LOC accounts so we can write cheques to anyone. My regular chequing account only allows up to 10 free withdrawals every month. So sometimes I would use my LOC to cover some bill payments if I don’t want to exceed my chequing account limit. 😀

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