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.


Random Useless Fact:

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

Apr 272020

Building an Asset Column

There were three events that greatly impacted my financial life. This is part two of three, where I will be writing about asset columns. The main idea is to buy income producing assets that generate perennial money over time.

I first came across this concept when reading the 1997 book Rich Dad Poor Dad, by Robert Kiyosaki. The book primarily focuses on real estate. But stocks and bonds can also be included in an asset column. πŸ™‚


The book that changed my outlook on money

I picked up Rich Dad Poor Dad when I was 17 after a friend suggested it to me. Many of the concepts Robert discussed in the book such as taxes, inflation, and hard assets were completely new to me. But what fascinated me the most was the idea of financial independence. And also how to build wealth through investing in assets.

This was the first time I witnessed concrete examples of how to take actional steps to create a “column” of financial assets. A properly constructed asset column should grow by itself over time.

From learning about compound interest earlier that year I already knew how to make time work for me. And now thanks to Robert’s book, I learned how to get money to work for me. The two concepts combined lead to a breakthrough moment in my financial education. πŸ˜€ It completely changed my perspective about money.

Accumulate all the assets

Before I had thought of money as something people earn and spend in order to live. The idea of retiring early or becoming a multi-millionaire had never occured to me. But after reading the book, I began to see money from a completely different angle – one that involves assets and liabilities. I learned money isn’t only good for spending. It’s also good for generating more money. The poor and the middle class work for money. But the rich have money work for them. Robert explains how to multiply your investment returns with a fancy strategy call leverage. πŸ˜‰

I learned that the rich buy assets first. Then use the income generated from their asset column to buy wants and luxuries. Their lifestyle is funded by money working for them. Meanwhile the poor and middle class tend to buy luxuries first and don’t have much in terms of assets. So their lifestyle is funded by their own “sweat, blood, and children’s inheritance.”


Continue reading »

Apr 202020

I don’t trust millionaire gardeners. They’re always running some kind of pansy scheme. 😎 Fortunately there are more legitimate ways to build wealth. I recently watched a YouTube video where a young realtor in California named Graham Stephan explains how he became a millionaire in his 20s. He says just about anyone can become a millionaire in 10 years with the right attitude. In short here is his advice to others:

  • Get paid for your results, not your time.
  • Cut back on unnecessary spending.
  • Invest consistently and actively work on those investments to increase returns.

The mindset of a Millennial millionaire

Graham’s methods are simple and effective. He prefers to eat at home instead of going out. He drives a used car and buys clothing from the discount section of H&M. And he sticks to the same budget no matter how much extra money he earns. Graham also uses leverage to invest, and his portfolio consists mostly of real estate and stocks. Although we live in different countries, Graham and I seem to have a lot in common. πŸ™‚

If you want to build muscle, you have to lift weights. If you want to lose fat, you have to change your diet. Change requires commitment. Becoming a millionaire is no different. Graham explains that building wealth starts with the right mindset.

The only way you will change is if you believe the payoff is worth the sacrifice.Β Graham suggests a good way to begin is to ask yourself if living frugally for ten years is worth financial freedom for the rest of your life. Is one decade of living modestly worth not having to do something you don’t want to do ever again? Graham and I both answered this question ten years ago, and we categorically decided yes – it’s totally worth it. πŸ˜€ Admittedly it took me 12 years, not 10, to reach a million dollar net worth. Life doesn’t always go as planned. That’s why you also have to enjoy the journey. πŸ™‚

What makes you feel wealthy?

Wealth can come from both material possessions and financial security. I’m a big fan of the latter. I’ve always derived more joy from knowing that I could afford something, than actually buying it. And Graham seems to feel the same way.

But everyone is different. Although Tim Cook and Donald Trump are both super successful and wealthy, you just can’t compare the two. It’s Apples and oranges – if you know what I mean. πŸ˜‰

The mindset of most millionaires is one of frugality. But for many consumers, a frugal lifestyle would make life miserable, not better. Whatever drives someone to feel wealthy will motivate them to continue down that path. So knowing your mindset is paramount to living true to your values.


Do you need a high income to become a millionaire?

Income is important to build wealth. But similar to oxygen, it doesn’t become a problem unless you’re not getting enough of it. So how much is enough? As long as you can earn $75,000 a year or more, you should be able to become a millionaire within a decade. Don’t worry if you start off making less. My salary was $35,000 in 2008. But today I earn more than twice as much. Graham’s income started modestly low as well, but now he makes six figures annually from his real estate business. It’s not about where you start. It’s about where you can get to. πŸ™‚

Continue reading »

Apr 132020

Long term planning

There were three events that had a profound impact on my financial life. They helped me realize that when you choose to invest, you are not just picking up a new hobby or side hustle. You are actually choosing a lifelong career – a future. Much like a marathon, investing is for the long run. 😎

So today I’d like to start with part one of three – compound growth and long term planning. Compound interest is one of the most profound discoveries in human history and has the potential to change lives. Even Albert Einstein once declared it to be the most powerful force in the universe. πŸ™‚


It all started in high school

Financial education typically starts at home. I learned from my parents how to be a net saver. But grade 11 is when I really began to think about money and wealth.

It was the early 2000s. Linkin Park was on the radio. MSN Messenger was still relevant. I was 16 years old. My school offered Economics 11. Out of all the elective courses this one seemed to be the most practical so I decided to enroll. That might have been the single best decision I’ve ever made. πŸ™‚

One day during class we learned about compound interest. The textbook demonstrated the impact of time using an example with two people. I forgot their names, but let’s call them Stacy and Chad.

  • Stacy invests $2,000/year starting from the age of 19.
  • Chad also invests $2,000/year but starts 10 years later at age 29.

By the time they both retire at age 60 Stacy is a millionaire, while Chad only has $402,000. The book included a helpful table like the one below.

I couldn’t believe it. How can ten years make such a dramatic difference? I went home, copied the figures into Excel, and double checked the math myself. Sure enough, Stacy would end up with 2.5x as much as Chad. Furthermore if Stacy had only invested for the first 5 years and then stopped contributing to her account altogether, she would still end up wealthier despite investing only a fraction of the amount Chad had to save up. Here’s what that table looks like. Wow. It’s all because she started earlier.

This seemed unfathomable to me. In my naive teenage mind I had always thought that you can’t succeed on your own unless you work hard. You will never have good grades unless you study. You will never play in the basketball tournament unless you attend practice after school. You will never pwn your friends at GoldenEye 007 unless you have blisters from the N64 controller. But the economics lesson made me question everything. It turned my entire worldview upside down.

I used to believe that in order to accumulate more wealth you had to study harder in school, land a better job, and save more income. But Stacy proved there’s an easier way to achieve the same end result. She didn’t need a higher savings rate than Chad to retire with 2.5x his net worth. So the only thing you have to do to retire with more money is start investing early. That’s it. πŸ™‚

This idea of additional success without working for it created a paradigm shift in my way of thinking. I realized that it actually is possible to get something for nothing. From then on I tried to work smarter, not harder.

The only disadvantage of saving earlier is you have to delay your spending. But Stacy’s early start rewarded her with an extra $673,000 at retirement. So I think that far outweighs the downside of spending a little less in early adulthood.

After this epiphany in economics class I decided to follow in Stacy’s footsteps and invest as early as possible. I didn’t know what profession I would end up in. I wasn’t sure how much income I would earn. But I was certain that whatever money I do make, I would put away at least $2,000 a year.


Continue reading »

Apr 062020

Monitoring the Outbreak

Over a million confirmed people have been infected by the virus. Many countries are starting to see the curve flatten so maybe the worst is behind us. Even so, we should continue to practice physical distancing and regular hand washing. Make sure to stock up on food that won’t spoil quickly. Lately I’ve been telling my friends about the health benefits of eating dried grapes. It’s all about raisin awareness. 😎

Investment Performance

The TSX dropped 18% in March. In the U.S. the Dow Jones fell by 14%. It has been the worst Q1 ever in U.S. stock market history. Ouch. But that’s why we diversify. πŸ™‚ On March 1st only 40% of my assets were tied up in the stock market. I’ve also been buying companies at their recently reduced prices which lowers my overall entry cost. Furthermore, a higher U.S. dollar has resulted in certain parts of my portfolio making gains this month. As a result, my net worth only fell by 5.3% in March. I’m disappointed to see my net worth decline three months in a row. But it could have been a lot worse.

I’m expecting more volatility ahead. Just three trading days into April and the stock market is already down 4%. Oof.

On the bright side I am able to work from home so my job income isn’t at risk. And since interest rates have been slashed 1.5% I’m saving thousands of dollars annually on my mortgage and margin debt compared to last year.

Liquid’s Financial Update March 2020

*Side Incomes: = $4,800

  • Part time job =$600
  • Freelance = $200
  • Dividends =$1200
  • Interest = $1000
  • Rent = $1,800

*Discretionary Spending: = $1,600

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

*Net Worth: (Ξ”MoM)

  • Total Assets: = $1,455,700 (-$55,400)Β 
  • Cash = $42,500 (-111,000)
  • Canadian stocks = $266,000 (+56,700)
  • U.S. stocks = $128,300 (-5,200)
  • U.K. stocks = $17,800 (-2900)
  • Retirement = $150,100 (+10,500)
  • Mortgage Funds = $33,900 (-3800)
  • P2P Lending = $36,100 (+300)
  • Home = $331,000 (assessed land value)
  • Rental Unit = $450,000 (2020 purchase price)
  • Total Debts: = $529,400 (-3,800)
  • Home Mortgage = $182,900 (-1500)
  • Rental Property Mortgage = $314,300 (-700)
  • Margin Loans = $32,200 (-1600)

*Total Net Worth = $926,300 (-$51,600 / -5.3%)
All numbers are in $CDN at 0.71/USD



I’m happy overall with my diversification strategy. But due to the recent correction I only have 34% of my assets in the stock market. I would like to increase this back up to 40% of my asset allocation. So for the near future I will be looking at investing my savings into equities, primarily blue chip Canadian companies that pay dividends. πŸ™‚ Here’s a pie chart showing the breakdown of my assets today.

Some people might be concerned to discover that Vancouver real estate makes up half of my total asset’s value. Doesn’t that seem a little risky? I have heard that real estate here is overpriced and we are due for a major correction any day now. But then I crunched the numbers for myself. Compared to alternatives, I realized that Vancouver home prices were actually justified which I discussed in detail last month. That’s why in December last year I bought real estate instead of stocks.

But of course these days the equity market is down 25% from the peak. So that’s why recently I’ve been loading up on high quality stocks at discounted prices, increasing my forward dividend income by over $7,000 a year.

And I’m not the only one shopping around these days. Other personal finance bloggers such as have been loading up on dividend stocks as well. She increased her annual dividend income by 75% year over year.Β When assets go on sale, you buy more. πŸ™‚ It’s about finding bargains in a financial world that’s constantly changing. When the stock market’s P/E ratio eventually expands again, those who bought into the downturn will be glad they did. πŸ˜‰


Buy low, sell high and hold

A reliable path to reach financial independence is to build a stream of passive income to pay for all living expenses. No matter if it’s real estate, dividend stocks, or bonds – the basic premise is to buy income generating assets. Then simply hold them for their investment income. Re-invest the proceeds over time and investors will be greatly rewarded for being patient.Β  You don’t need a lot to get started. But you have to start to end up with a lot. πŸ˜‰


Random Useless Fact:

No one was safe from the 1918 flu pandemic. No one.