Oct 252017
 

Canada’s trade deficit rose to a disappointing $3.4 billion in August, one of the highest ever recorded. Economists had predicted $2.6 billion, lol. They were way off. Both imports and exports were down, which suggests the entire economy may be in trouble.

It doesn’t help either that Canada’s currency has advanced 7% over the past 6 months, largely due to the 2 interest rate hikes earlier this year. According to insolvency firm MNP, 40% of Canadians fear they will be in financial trouble if rates increase again. And 42% say they are only “$200 or less away from financial insolvency, with little cushion to pay unexpected bills or expenses at the end of the month.” This is troubling news. 😔 Consumers will have to be more careful about how they spend their money going into 2018.

With domestic spending expected to fall, and an extended period of large trade deficits, a slowdown in our growth domestic product (GDP) is inevitable. Canada is essentially buying more stuff than we’re selling, which basically means we’re spending beyond our means and going into debt. Due to these factors, we can expect negative repercussions in the financial markets as well. Slower domestic spending means lower sales for domestic producers and their stock prices.

“Given enough time, investors will realize fewer investment opportunities domestically and begin to invest in foreign stock markets, as prospects in these markets will be much better. This will lower demand in the domestic stock market and cause that market to decline.” ~Investopedia

Economists are anticipating annualized GDP growth of about 2.5% for the third quarter. That sounds too optimistic to me. Given the numbers we have today I would expect a more modest growth rate of 1.6% annualized for Q3, 2017. I guess we shall wait and find out later this year.

It can be difficult to find investments in a slow growing environment. But we can always look for opportunities outside of Canada. 🙂 Afterall, if we search globally, we will likely find more bargains, and probably better bargains, than in any single country. This is why I invested in Germany through Dream Global (DRG.UN) a couple of years ago. Canada’s real estate prices were too expensive, so I looked elsewhere for a bargain, and I found one! Dream Global is a Canadian REIT but conducts most of its business in Germany. Hurra! 😀 If we use the iShares S&P/TSX Capped REIT Index ETF (XRE) as a benchmark for Canadian REITs, then since my purchase in 2015, DRG.UN has outperformed XRE by over 30%. Yay! Property prices in developed countries around the world, including in Germany, have risen a lot over the past 2 year and are no longer cheap. But I believe there are still other undervalued sectors around the world today. 🙂

 

——————————————————————–
Random Useless Fact

Muhammad Ali reportedly went 2 months without sex before a big fight, claiming it made him stronger in the ring.

 

 

Jun 012013
 

Lady luck has blessed me with a bunch of serendipity again this month \(^_^)/  The financial markets did relatively well (appears we didn’t have a “Sell in May” year,) the US dollar increased, and I was able to bring home $1000 from extra income sources like dividends and a side job. It was also a great first quarter for the North American economy. Canada’s GDP grew at a rate of 2.5% annualized, and the US performed similarly at 2.4%. Here’s the fiscal update.

Capital Readily Available to deploy for the Farmland Fund: $15,000 out of $25,000 needed 😀 This is mainly thanks to savings, selling stocks, and rental income so far.

——————————————————–

*Side Income:chart_apr13
  • Part-Time Work = $600
  • Dividends = $400
  • Farm Rent = $2,600

*Discretionary Spending:

  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)

  • Assets: = $569,900 total (-$7300)
  • Cash = $3,200 (+1700)
  • Stocks CDN =$74,500 (-$6300)
  • Stocks US = $38,800 ($1700)
  • RRSP = $31,600 ($1000)
  • Home = $252,000 (same)
  • Farm 1 = $152,500 (same)
  • Farm 2 deposit = $17,300 (same)
  • Liabilities: = $396,800 total (-14,300)
  • Mortgage = $202,800 (-$400)
  • Farm 1 Loan = $110,700 (-$200)
  • Margin Loan CDN = $26,200 (same)
  • Margin Loan US = $22,100 (-$800)
  • TD Line of Credit = $22,000  (-11,900)
  • CIBC Line of Credit = $13,000 (-1000)

*Total Net Worth = $173,100 (+4.2%)
All numbers above are in CAD. Conversion rate used: 1.00 USD = 1.04 CAD

Earlier this month I wrote about how I received my first cheque for $2,657 from my tenant 😀 Good thing I traveled to Saskatchewan last year to do some research and bought a farm with just $20,000 of my own money in cash (and borrowed the rest.) And now I’m collecting rent twice a year (over $5000 annually) in perpetuity 😀 Go passive income! The US dollar also strengthened in the month of May (up 3%) compared to $CAD. This means all my stocks is USD (about $39,000) is worth over $1,000 more when I consolidate the currencies to calculate my wealth 😀 Good thing I invested in Disney, Target, Starbucks, and other US companies earlier this year in a USD account :0) Go US dollar!  Stocks did well overall, but I sold about $8,000 near the end of the month (GCL, RET, HAL, TEVA) to pay down my line of credit and some other debts. However I will be re-borrowing the $8,000 again later this summer when my property transaction completes. Go debt!

Overall, that’s a $7,000 net worth increase in one month so I’m certainly not complaining since that’s more than twice what I make from my 9 to 5 job (^.^)  I almost feel guilty because most of those good things just happened automatically without me even doing anything special 🙂 Good thing I usually post about what investments I buy so others can do the same if they wish or at least be inspired to reach their own financial goals 😀

————————————————————————
Random Useless Fact: Health tip:13_05_healthyeating

Dec 042012
 

The tables are turning in North America. Canada’s economy, known to be one of the strongest ones in the developed world, has hit a road bump (o_O) And the US in turn is going full steam ahead! Real GDP in Canada in the 3rd quarter (July to Sept) only grew by 0.6% annualized. That means our economy pretty much stayed stagnant 🙁 This GDP slow down was unexpected by most economists.  By comparison,  GDP in the United Sates grew by 2.7% in the same time.

Big congrats to all my friends south of the border 🙂 You guys worked hard during the last several months so you deserved it. GDP of course measures the total economic output, or money, that people are making in an economy. If the number of workers in Canada doesn’t increase, but our GDP grows by 10% then that means on average, each Canadian worker is making 10% more money :0) And more income leads to a better quality of life :0)

GDP slow down

At first it might not seem like good news for Canadians that the US is growing at 4.5 times faster than us. But there’s actually an opportunity here to make some nice investments :0)Right now US companies are lacking the confidence and sometimes the liquidity to invest, but there are many undervalued businesses there, sometimes laden with debt (like Hostess and their Twinkies brand.) So what we’re seeing lately is Canadian companies taking advantage of this opportunity and buying cheap US companies, before other potential buyers in the US can get a chance.  Saputo, Canada’s largest dairy producer, is acquiring US based Morningstar Foods LLC for $1.45 billion. And a Toronto based private equity firm called Onex Group is buying the US based Insurance Broker USI for $2.3 billion.  Thousands of US employees will soon be working for Canadian companies, Puah-ha-hah!! Go Canada. We have the last laugh now (⌒▽⌒) Smart Canadian businesses are picking up cheap US companies now at decent prices, so that when the US economy starts growing consistently at a more regular pace, which it might be starting to do now, then Canadian business will also benefit financially, since the US is still our largest trading partner.

How can you and I benefit from this trend? Don’t do the obvious and buy US companies, because it’s hard to pick which one will be a target for acquisition, and taxes on US equities aren’t favorable for Canadians unless they’re bought in a registered account. Instead I would buy Canadian companies with lots of cash on their balance sheets and are looking at buying assets outside of Canada. Saputo and Onex would be good examples. Our banks like TD, RBC, and Scotiabank are also really good at expanding their businesses outside of Canada and have benefited from external economic growth so far by buying other companies already in those other countries 😀 Yeah we rock! Canadian companies, and by extension their investors like myself, and maybe even some of you reading this blog, will one day take over the world, woo! But let’s keep that to ourselves for now 😉

My personal financial situation for the moment reflects the Q3 economic growth we’ve had in this country. Slow growth, but heading in the right direction at least.

——————————————————–net worth is still moving up but only steadily, much like the recent GDP slow down
*Side Income:
  • Part-Time Work = $600
  • Dividends = $300

*Discretionary Spending:

  • Eating Out = $100
  • Others = $200

*Net Worth: (MoM)

  • Assets:
  • Cash = $20,200 (+$1,100)
  • Stocks = $67,400 (-$500)
  • RRSP = $29,100 (-$1,100)
  • Home  = $248,000
  • Liabilities:
  • Mortgage = $204,800 (-$400)
  • Margin Loan = $20,900 (+$4000)
  • RRSP Loan = $1,000 (-$5,900)

*Total Net Worth = $138,000 (+1.3%

Borrowed some money from my margin account to pay down my RRSP loan. Stocks went down a little bit because the entire TSX composite was down in November. The “others” spending includes my Christmas shopping which is all done now. Luckily my list of people to give presents to this holiday is really short! 😀

* Numbers are rounded to the nearest $100.

Sep 162011
 

Our household net worth for the country is about $6.4 Trillion. On a per capita basis, the average person living in Canada has a net worth of $184,300. I am surprised at how low this number is but I think as the population ages, we should see this figure grow. If not, then we are in deep trouble.

What might be worrying now is seeing household debt continue to grow as a result of both higher mortgages and more consumer borrowing (this, I am guilty of.) I still have a long way to go before my net worth reaches the national average but I wonder how much of that number is over inflated due to the prolonged environment of low interest rates.

A big chunk of Canadians’ net worths are in our homes. Our housing prices are 7% higher year over year, but our GDP growth hasn’t even come close to that.  If rates continue to stay this low I wouldn’t be surprised if real estate prices grow by another 7% by this time next year. In any case it would certainly be nice to have at least a million dollars in investable assets before I retire.

Source: statcan