Aug 302015
 

Sunshine Blogger Award Nomination

I’ve been recently nominated for a blogging award by roadmap2retire. Thanks R2R. 🙂 The person being tagged has to share some information about themselves, based on the questions posed by the person nominating. Let’s begin.

1. Name the top three experiences from your past, that help form who you are today. 

  • In the past I’ve played a handful of online role-playing games like Runescape. You earn money by doing jobs and spend money on food, and weapons to make your character stronger. It taught me the basic principles of economics and the importance of saving up to buy expensive things – useful skills I still use today. 😀 I don’t play them anymore because they are a huge time sink, lol.
  • I started investing in 2009, when the markets were on sale. The S&P 500 stock market index is 140% higher now than in 2009 so it’s hard to lose money investing over this period. I’ve never experienced a bear market before and have no idea how I would react in the middle of one. My lucky timing has given me an unrealistic expectation towards long-term investing.
  • I worked at Safeway making $8.50/hr when I was a teenager. My boss at the time told me he was once in my shoes and worked his way up to become the manager. I learned that it doesn’t matter who you are or where you start from. Anyone can become successful if they try hard enough. This belief gave me the confidence to pursue early retirement and start this blog. If I had continued to work at Safeway I’d probably be a mid-level manager today and earn $60,000 a year.

2. If you have one piece of advice for investors starting out, what would it be?

  1. Have a purpose for your investments so you can find the appropriate assets to put into your portfolio. Investing isn’t scary if you understand what you own, and know why you own it.

3. What was your worst investment so far in your life? How do you avoid making the same mistakes?

I spent $7,000 on university tuition and never even graduated. I enrolled because it’s the socially acceptable thing to do for young adults. I enjoyed the university experience, but the applied sciences program I was in has nothing to do with my career now. Today I practice purposeful financial management. I only spend or invest money if I believe there is a good reason for me to do so, not because everyone else is doing it. 😛

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May 282015
 

Economics is the only profession where you can gain great eminence without ever being right. Remember earlier this year when just about everyone anticipated higher interest rates, but then the Bank of Canada slashed rates instead? If mainstream economic predictions were right interest rates would be a lot higher by now, our wages would have grown to keep up with the cost of living, and Vancouver real estate would become more affordable. But that is clearly not the world we live in today. Nobody has a crystal ball to see into the future. If they did, the only people winning the lottery would be fortune tellers. It’s funny how the same people who laugh at fortune tellers take economists seriously. 😛 Okay, enough bashing on economists. They are actually good and respectable professionals. And we need them to make weather forecasters look good. 😛 Sorry.

Economics is complicated, but it doesn’t have to be hard. One way to understand the current situation we’re in is to read more history, and fewer forecasts. If we’re going to buy a specific stock we can look at its historical chart and determine what events caused it to move higher or lower. Reading stories or biographies of famous investors like George Soros, Peter Lynch, or Benjamin Graham can give a sense of how the smart minds think about situations and prepare us for when history repeats itself.

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Financial markets have a very safe way of predicting the future. They cause it. 😀 But don’t count on anyone to tell us when and how the next recession is going to happen. My Apple shares are up 50% over the last year, some bulls believe it still has room to rise. But bearish pundits think the stock market could correct at any moment. Some think the Canadian real estate market will remain elevated, while others below the bubble will burst so it’s better to rent than to buy right now. At the end of the day all of those are just peoples’ opinions. They’re only right until they’re wrong.

There will always be conflicting forecasts. Markets can rise and fall, but not do both at the same time. There are two sides to the same coin. When advocates of one side are right the other side loses. But there’s actually a third side to the coin that not everyone knows about; the edge! That’s where we want to be. We want to straddle the edge so we can take advantage of both sides, be it bullish or bearish, and spread out our financial risk. We can’t predict the future but we can sure prepare for it. 🙂

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Random Useless Fact

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Jul 022014
 

Achieving Blog Notoriety

So I Googled my blog for fun, to see if it shows up on the front page. Well in doing so I have discovered something else that’s quite interesting. It appears people on the internet who aren’t bloggers have been talking about my site. 😀 So I’ve decided to share some of those comments with you guys today. I’m too lazy to type out everything so I just took snippets of screenshots instead. Below are some examples of what people on different forums and message boards had to say about Freedom 35 Blog.

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Apr 222014
 

In 2002 I didn’t have any money of my own yet. But today, I have over $750,000 in gross investments. Sometimes I feel like I don’t value money as much as I used to. I guess a lot can change in 12 years.

Do you ever get the feeling that the more you learn about the world around you, the less you realize you actually know about it? Throughout my adolescent years my view on personal finance was restrained to over simplified rules and models, taught by the public education system, which for practical life purposes meant very little 🙁 Isn’t it interesting that we learn how to dissect frogs and solve polynomial, algebraic, and transcendental functions in highschool, but are never taught how to buy or sell a home, how to use a credit card, or what kind of investments can be placed into a Roth IRA? 😕

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Luckily education doesn’t have to just come from schools. Over the past 6 or so years I have exposed myself to regular doses of financial knowledge from newspapers, business shows, and of course, the internet. And now, in my mid twenties, I have a completely different view on finance. I used to think that money was just a medium of exchange that I could earn, spend, and save. While that’s not necessarily wrong, it doesn’t tell the full picture.

So here’s a better explanation of what money TRULY represents to me.

When I look at money today I see POWER. When I look at my net worth I feel POTENTIAL. When I save money I insure my future SECURITY. When I spend money I’m buying INFLUENCE, and I’m buying back my TIME, which is the most precious commodity in the world! When I read about money I gain KNOWLEDGE & UNDERSTANDING about society. When I invest money I facilitate jobs, wealth, hope for others, and create MEANING to this world. When I waste money I squander my LIBERTY and INDEPENDENCE. When I invest money into stocks I’m buying POSSIBILITIES. When I blog about money I share and disseminate CONFIDENCE. And when I eventually reach financial independence I will experience FREEDOM like never before.

Money gives me perspective and context. By associating money with powerful words it’s easy to understand the importance of financial literacy, not just from a materialistic point of view, but also in terms of reconciling our emotional and personal well being with the modern world we all live in. The more we understand how money works the more dominion and authority we’ll have over all the dimensions of our lives. By controlling our money we control our fates! 😉

Will it take a lot of work to reach financial enlightenment? Maybe. But will it be worth it? Definitely! 😀

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Apr 042013
 

I started this blog in 2010 and have written a lot on how I’m investing for the future.  But I’ve just realized I haven’t written much about my financial experiences prior to 2010. You probably won’t learn anything new from this post today but for anyone who might be interested, this entry is about how my road to financial freedom began in 2008, and how it progressed in 2009 and 2010. I’ve dug up and scanned my old tax statements from each year to give an idea of my financial back story.

2008 – The Road to Adulthood

In the beginning of 2008 I was just your average student attending a vocational school in Vancouver. I lived at home with my parents to save money. The only real job I had previously was working at a Safeway in 2007 to help pay for my education. It took all my savings, plus student loans to finally graduate in February 2008. At this time I didn’t know anything about the true value of money or how to properly invest it. My main focus, like any other recent graduate’s, was to find employment. Luckily the school I graduated from was looking for part time teaching assistants, so I applied and started to work there during the evenings and weekends. But I still needed to find a permanent full time job. After a couple months of tirelessly sending out resumes and writing cover letters, I was beginning to lose hope and even considered going back to my old retail job. Keep in mind this was in the middle of the 2008 recession. But with $15,000 of student loan debt I couldn’t afford to give up so easily (>_<) Finally after half a dozen different interviews at various companies I landed a job in my field of study, graphic art and design, in May 2008.  The pay was $35,000, so not bad for a starting salary. After tax it worked out to be about $2,400 per month 🙂 I was finally making some decent money compared to the lousy $8.75/hr at Safeway before. I couldn’t help but beam like this ●o● when I received my first direct deposit in the bank. I decided to keep my part time job since it didn’t interfere with my new full time work 🙂

Beginning of 2008 summary:
Income $0 (attending school full time)
Expenses $100/month (cell phone and bus pass)
Assets: $0 (I had no financial assets 🙁 )
Liabilities: $15K (student loans)
Net Worth: -$15K 

At first I wasn’t sure what to do with all the new money I was making. I remembered in high school we learned about compound interest so I thought I should probably start investing while I’m young. Not only can I take advantage of time, but investments are also really cheap to buy due to the recession. So I followed the news everyday and learned more about what the stock market is. I talked to a financial advisor later in the year to help me make a financial plan and he convinced me to buy some mutual funds. Which turned out to be my first investment ever 😉 Since I was working, I figured I could afford to live on my own. But should I buy or rent? I decided to buy because of the low interest rates. But that meant I had to save up for a downpayment, so I did.

End of 2008 summary:
Net Income: $3K/month (about $2,400 from full time work, and $600 from part time)
Expenses: $100/month (my parents cooked at home so I didn’t need to ever buy lunch. Thanks for saving me money, mum 🙂 )
Assets: $12K ($7K in savings to buy a home and $5K in mutual funds)
Liabilities: $10K (remaining student loans)
Net Worth: $2K ($17K more than a year ago :D)

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2009 – Home is Where the Money is

By March of 2009 I had saved roughly $13,000 from working those 2 jobs mentioned earlier. Not to mention I got a raise at my full time position 😀 I have already paid off half my student loans and could easily pay off the other half, but decided to use my money to buy a home first because I believe investing in property is more important than paying down debt in a low interest rate environment.  By April I had purchased and moved into my own place which I bought for $230,000. Spent all my $13,000 on the downpayment and had to take out a line of credit to pay for the closing costs haha. Oh well. I was lucky my parents didn’t ask me to pay them rent, or kicked me out as soon as I started working because living with your folks is one of the best ways to save money 😀 If it wasn’t for their support at the time my financial situation today would probably be set back 6 months or so. I decided to sell my mutual funds and buy individual stocks instead to avoid the hefty management fees. This is when I started to learn about how certain stocks pay dividends, which lead to the idea of passive income, which eventually gave me the Eureka moment that if I had enough investments I could technically not have to work ever again 🙂 After many hours of research using the Google, I came to the conclusion that the idea of financial independence IS possible, even with someone making an average salary like me. I ditched my advisor and came up with my own financial plan lol. I bought RioCan, RCI.B, ENB, and a few other dividend stocks. By the end of the year I was making almost $300 in dividends annually! With some rudimentary calculations I figured I could be financially free sometime in my thirties if I continued to save and invest half my net income each year. Sounds almost too good to be true, but the math actually works out 😀 This was also when I started reading other personal finance blogs.

End of 2009 summary:
Net Income: $3.2K/month (slightly more than last year, still working 2 jobs)
Expenses: $1.7K/month (housing eats up over half of all expenses)
Assets: $247K (230K for new home, the rest is in stocks and cash savings)
Liabilities: $216K (99% of this is the mortgage, a small amount is LOC used to pay off student loans)
Net Worth: $31K ($29K more than last year yay 😀 )

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2010 – Leverage is the Name of the Game

When I received my apartment’s assessment in 2010, I was shocked that my home is now worth $245,000 on the market. $15,000 more than I paid for in the previous year. I suddenly realized, if I put up $13,000 for the downpayment last year to buy this property, and now it’s worth $15,000 more, I’ve technically made over 100% return on my money already 🙂 I thought if borrowing to invest in real estate turned out well, maybe I can do the same for other asset classes. So I learned about borrowing on margin for stocks. I received incremental raises to my income from both my employers and continued to invest in stocks. Not to mention I was making about $1000 a year in dividends at this time 🙂 I also started freedom 35 blog this year to write about my finances.

End of 2010 summary:
Net Income: $3.5K/month (slightly more than last year, still working 2 jobs, plus a little extra in dividend income)
Expenses: $1.8K/month (slightly more than last year due to lifestyle inflation)
Assets: $279K (237K for home, I didn’t use the $245K assessed value because I thought that’s too high. $42K in stocks and cash savings. )
Liabilities: $217K ($212K for the mortgage, and 5K for money borrowed to buy stocks)
Net Worth: $62K ($31K more than last year 😀 )

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2011 – Diversification is Key

In 2011 my home assessment was $270,000 which was $25K more than the previous year. To hedge my over exposure to the real estate market I focused on diversifying my assets in 2011. Throughout this year I invested in a lot of dividend paying stocks in different sectors of the economy. My dividend income more than doubled during 2011. I was also 4 years into my career so my salary increased a bit too. For my 9 to 5 graphic design job I was paid twice a month. Each paycheck worked out to $1,333 in net income, which is $32,000 annually. But my net worth in 2011 increased by more than that. This means even without a full time job my wealth would have still gone up.  By investing and holding onto appreciating assets using calculated leverage I was able to reach a level of financial security in just 4 years, that would have probably taken me over 10 or 20 years to accomplish otherwise. This is why it’s so important to invest.

End of 2011 summary:
Net Income: $3.8K/month (higher than last year, dividends almost make up 10% of total income)
Expenses: $1.8K/month (no change from previous year)
Assets: $318K (Almost $40K increase from last year, mostly from new stocks I bought. Used $243K for the value of my home instead of the inflated assessed value of $270K)
Liabilities: $216K ($209K for the mortgage, and 7K for money borrowed to buy stocks)
Net Worth: $102K ($40K more than last year 😀 )13-8-2011-income

2012 and Onward- You Know the Rest

I purchased some farmland in 2012 and by the end of the year my net worth was $140,000. Stocks, farmland, and Vancouver real estate continued to outperform and by the end of 2013 my net worth was at $209K. Most of the increase came from holding high quality financial assets. A year later in December 2014 my net worth has grown to $320K. Once again the majority of the year’s net worth growth came from investment decisions I’ve made in previous years like buying farmland and stocks. In 2015 I hope to end the year with $400K in net worth.

Obviously my salary now is higher than the $35,000 I started with almost 7 years ago. But it’s still pretty average. The median household income for the Metro Vancouver area in 2006 was $55,231, which is more than my current full time salary in 2015. So in summary, on my graphic designer’s income alone it would be very difficult to reach financial independence. However, by working a 2nd job, using leverage, and diversifying my investments, I’m able to use the help of multiple incomes streams from my dividends, rental income, and part-time work to supercharge my total income past that $55K median amount 😀 which makes it a lot easier to reach my goals. By using money wisely to buy strong stocks and other profitable investments one does not necessarily need to have a high paying  job to become a millionaire and retire early. 🙂  My most up to date net worth can be found on the Fiscal Updates page. Financial independence, here I come \(^_^)/

This was post was last updated in Jan 2015