Jun 022014
 

May was another great month. Net worth increased by $5,600, mostly thanks to my tenant’s $5K rental payment 🙂 This represents half the year’s annual rent. The other half is due in October. The first farm I bought in 2012 using $20,000 of my personal savings is now worth $50,000 more. Luckily my aggressive 8:1 leverage has paid off and has earned me over 100% ROI every year so far. I don’t think it’s too late to buy farmland today, as long as investors plan to hold it for 10+ years 😉

But how would rising interest rates affect farmland prices in the future? I don’t try to time the market or predict when rates will rise. But I believe higher interest rates will be caused by higher growth and inflation in the economy, which means higher commodity prices, which could mean even higher farmland values. In my humble opinion hard assets generally perform well under inflationary periods. Of course I could be wrong. I’m still cash flow negative so my farmland investment is only speculation at this point 😐 And if you noticed groceries costing more, sorry. It’s because people like me have been speculating and driving up the cost of farmland, and farmers are paying higher rent.

 

*Side Income:

  • Part-Time Work = $400
  • Dividends = $400
*Discretionary Spending:
  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)chart_14apr

  • Assets: = $818,900 total (+9,000)
  • Cash = $10,300 (+10,000)
  • Stocks CDN =$88,800 (-900)
  • Stocks US = $51,000 (-100)
  • RRSP = $41,800 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $531,300 total (+2,900)
  • Mortgage = $198,400 (-400)
  • Farm Loans = $206,500 (-500)
  • Margin Loan CDN = $31,000 (+3000)
  • Margin Loan US = $26,100 (-200)
  • TD Line of Credit = $33,000  (-400)
  • CIBC Line of Credit = $13,500 (-100)
  • HELOC = $19,800 (+2000)
  • RRSP Loan = $3,000 (-500)

*Total Net Worth = $287,600 (+2.17%)
All numbers above are in CAD. Conversion rate used: 1.00 USD = 1.08 CAD

I’m pretty happy with May’s results, even though it’s not as exciting as my $53,000 wealth increase in the previous monthly update 😛

After depositing the $5K rent, I borrowed an additional $2K from my HELOC and $3K from my Margin account, so now I have $10K total in cash. I have written a cheque for $10,000 made payable to a company called Canadian Western Trust for a major purchase coming up. I need to keep the $10K in my bank account until the transfer goes through. I normally don’t keep this much cash idling around though. I like Warren Buffett’s analogy that cash is like oxygen. It’s important to keep enough of it around, but you don’t need excessive amounts of it, lol. It’s much better to hold profitable businesses or productive real estate than to keep a lot of cash on hand. I hope everyone else also had a great month financially 🙂

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Random Useless Fact: Hedgehogs are lactose intolerant

hedgehogs fiscal update