Jan 122017
 

What’s 6 inches long and gets Kim Kardashian excited? That’s right. It’s money. 😀 Especially the one with Benjamin’s face on it. There is certainly no shortage of liquidity in the world today thanks to central banks. As investors, our priority is to increase our expected returns while reducing our anticipated risks. A good way to go about doing this is by setting goals. Making smart decisions and taking appropriate action is easier if we have defined a target to aspire to. 🙂 If we don’t take control of our money, then someone else will inevitably try to use money to control us.

Here are my financial goals for 2017.

  • Grow my TFSA to $80,000.
    I currently hold $72,000 across all my tax free savings accounts. I have $3,000 contribution room remaining for the year. All the investments inside my TFSAs have performed well, except Bombardier stocks BBD.B. Overall I’ve been quite lucky with my stock picks. 🙂
  • Grow my RRSP to $100,000.
    I currently hold $86,000 in my RRSP. I have $10,000 contribution room remaining for 2017.
  • Grow my net worth to $750,000.
    I hope to grow my wealth by $180,000 this year. $60,000 of this increase could come from savings and debt reduction. The remaining $120,000 would ideally come from investment returns. 🙂 This isn’t an unreasonable expectation considering last year’s market performance, and I currently have over $1 million worth of assets.
  • Increase my passive income rate by $2,000/year.
    I plan to invest at least $35,000 into a mix of fixed income securities and dividend stocks. The average yield on new investments would be 4% to create $1,400 of new passive income per year. The remaining $600 growth should come from dividend increases from investments that I already have in my current portfolio.

That’s pretty much it. As usual, the likelihood for me to reach my goals will depend on many factors, including how the financial markets perform which is largely out of my control. We’ve had a great Q4 in 2016 to finish the year on a high note. But who knows how this year will turn out. Setting goals is important because it gives us something to focus on and look forward to. It guides our behavior so we feel a sense of purpose when making financial decisions. 🙂

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Random Useless Fact:

There’s a man in east India who has 39 wives, 94 children, and 33 grandchildren so far. They all live in a 100 room mansion. It takes 30 whole chickens, 132lb of potatoes, and 200lb of rice just to make a family dinner.

 

Jan 012016
 

Year End Review – 2015

I remember 2015 like it was yesterday. 😛 I hope everyone is having a great New Year so far. Let’s review some of the biggest financial news and stories from 2015.

  • Falling commodity prices. – The Standard & Poor’s GSCI commodities index plunged 34% in 2015, down 80% from its peak. It’s now at the lowest level since 1999. This doesn’t directly affect me since I don’t work in that field, but I like how this keeps inflation at bay. Cheaper oil, metals, and other natural resources mean I pay less for transportation, furniture, groceries, and other goods.
  • China’s slowdown. – The Dow Jones industrial average dropped 11% in August on fears that everyone had underestimated China’s troubles and their global impact. This isn’t necessarily a bad thing. High rates of growth is unsustainable. And a market correction is an opportunity to buy stocks at a discount.
  • Interest rate hike in the U.S. – The Federal Reserve raised the short-term rate by 0.25% in December. This increases the value of the U.S. dollar. Meanwhile, the ECB, Bank of Japan, and China continue to go in the reverse direction to expand their money-easing policies.
  • Slide in the Canadian dollar. – Canada’s economy was weak in 2015 due to lower oil prices and we spent half the year in a recession. So naturally our loonie’s value fell compared to the $USD. This is good news for me since I collect a lot of dividends in $USD. 🙂
  • Continuing expansion of the freelance economy. – Uber, Airbnb, Etsy, contract workers, and indie app developers have helped to create an economy where more people are working in a freelancing capacity rather than a regular job in a traditional workplace. Even old trades like construction is being effected because carpenters can sell their services on sites like Thumbtack. I like this trend of becoming a more free and open society with less red tape.
  • Massive corporate mergers. – Mergers and acquisitions worldwide totaled $4.8 trillion in 2015, a new record. This may not be a big deal to some, but it has real implications for stock investors. For example, it’s how I made a large profit when Burger King bought Tim Hortons back in 2014.
  • Lack-luster stock market returns. – According to the CBC, the Canadian stock market index was down 11%. The U.S. markets did better but both the Dow and S&P500 were down. The technology heavy Nasdaq however was up 6%.
  • 16-01-stock-return-for-2015

Personal Goals

At the start of 2015 I set 2 financial goals for myself; have a net worth of $400,000, and make at least $16,000 in passive income. 🙂 Fortunately I was able to hit both by the end of the year. I’ll post my net worth breakdown next week. My pre-tax passive income came from roughly $9K in rent, $5K in dividends, and $2K in interest.

What I learned from the past year is that it is harder than ever before to predict how the markets will change over the next 12 months. This is why it’s important to have financial protection in place and to diversify our investments. Canadian stocks and bonds as a whole did not perform very well last year. But according to the Real Estate Board of Greater Vancouver, the price for a detached house in Metro Vancouver climbed 22% from the previous year. The average condo price was up 14%. The stronger U.S. dollar suggests Canadians who invest in U.S. stocks should have seen some good returns as well. 🙂 So a diversified portfolio of equities, fixed-income, real estate, commodities, and other currencies would have actually performed okay last year despite the stagnant economy in most parts of the world. On average I was able to earn a double digit return in 2015 on my overall investments. I’ll make some new goals for 2016. But first, I need to do some bookkeeping. I haven’t looked at my bank account since last year. 😉

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Random Useless Fact:

16-01-lincoln-clooney-hanks-a-small-world

Nov 142015
 

Traits of Successful People

I found the following infographic on pinterest recently. It suggests qualities that successful people have compared to those who are unsuccessful. I think it makes some valid points about how our circumstances depend a lot on how we approach life. 🙂

Life-of-Successful-People-andUnsuccessful-People.

Success can often to a subject term. Even within the context of personal finance, becoming successful can mean different things to different people. There are as many definitions to success as there are goals and aspirations. Our objective is to discover what our version of success looks like, and figure out how to get there.

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Jan 082015
 

Professional football players are able to make oodles of money because they always have a goal in mind. 😀 But only 65% of Canadians feel confident they will achieve their financial goals in 2015, according to a recent CIBC poll. This is down from 76% in 2014. It appears we’re entering the New Year with a less optimistic financial outlook than last. Nevertheless it is still important to set those goals.

making-financial-goals

When we have goals to guide us, we’re happier and achieve more than we would without having them. It’s a psychological thing. 🙂 But it’s not always easy to come up with goals for yourself. That’s why I have asked some other personal finance enthusiasts from around the web to share their goals for the New Year and I have compiled the list below. So if you are having trouble coming up with your own goals, here are some ideas to consider. My own goals are listed at the bottom.

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Dec 302014
 

Financially speaking this has been the best year for me so far. Here’s a 2014 year end review and some updates about what’s been going on in my personal life.

Braces Removed

Earlier this year I decided to get braces for financial reasons. According to my research people with very straight teeth make more money than the average person. The total cost was $2,000 but I think this will turn out to be a great investment in the long run. So here’s an update. A couple of weeks ago I got them removed!

14-12-braces-food

My teeth look great and I’m more confident about my smile 😀 which, according to science, should help me earn more money. 😉 The only issue now is I have to wear a retainer pretty much all the time which makes me sound kind of funny when I talk lol.

Stock Markets Climb

Last year in 2013 the U.S. stock markets gained 30% so many investors decided to sit out in 2014 because they thought stock prices were overvalued. But the Dow in the U.S. gained 9% this year, and up here in Canada the TSX gained about 7%. These 2014 gains are on par with average historical stock market returns. This just goes to show that we should not try to predict future market performance using information from the previous year.

Buy stocks for the profitable companies they represent. For example, I posted my analysis for Dollarama, and explained with logical reasoning why this recession-proof business should outperform going forward. I also blogged about investing in Time Warner, and 21st Century Fox and discussed why these are excellent long term investments.

Today, Dollarama shares are up 34% from when I bought them. Both Time Warner and Fox shares have also returned double digits from my purchase price. No wonder my net worth has been growing like a weed. 🙂 It’s no big deal really. I’m not a stock picking wiz or anything. 🙄 Investing simply works for anyone who follows the basic principles of buying great companies at decent valuations! 😀

Oil Price Slump

Unfortunately, not everything is up this year. The one area of my portfolio that suffered lower prices was oil companies. Luckily I’m well diversified so the impact wasn’t that bad. The important thing is to hold onto large cap energy producers like Suncor and Canadian Natural Resources. Despite the oversupply of oil in the world Suncor shares are still worth more today, $37/share, than when I purchased it last year at $28/share. Large companies don’t get hurt as much when the sector in general underperforms.

Tim Hortons Resolution

Many of you have asked me what I plan to do with my 20 shares of Tim Hortons now that Burger King is buying them. There are usually a few options for shareholders when their company is being taken over. My 3 options, specifically in this case, are:

  1. Cash Tender – To receive $88.50 CAD for each common share of Tim Horton Incorporated tendered.
  2. Stock Tender – To receive approximately 3.0879 common shares of Holdings (to be renamed later) for each common share of Tim Horton Incorporated tendered.
  3. Cash & Stock Tender (Default Option) – To receive $65.50 CAD plus approximately 0.8025 of a common share of Holdings (to be renamed later) for each common share of Tim Hortons Incorporated tendered.

I am going with the default option number 3. I purchased Tim Hortons share for about $50 each back in 2013. Option 3 basically gives me an immediate 30% return on my investment, plus I’ll receive shares in the new holding company, which is a nice bonus. 🙂 I also don’t have to worry about taxes because the transition will take place in my Tax Free Savings Account.

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