Nov 032014

Last month was quite the roller coaster ride. But maybe all this market volatility is a good thing. The rich keep getting richer because the assets they own, like stocks and real estate, continue to grow in value. But this is a worrying signal because high levels of inequality have usually lead to recessions in the past.


For someone to make a lot of money it generally requires other people to work for it. For example, the CEO of a large company can’t earn a large salary if not for the hundreds of employees working under him. 🙂 And a real estate investor can’t make a living off his rental income if his tenants decide to move out or otherwise stop paying him. So in order for the wealthy to maintain their high standards of living they have to be supported by the larger base of the lower and middle class workers. But if the poor keeps getting poorer then eventually they’ll just give up supporting the wealthy. This is already starting to happen around the world as people are dropping out of the workforce. 🙁 In the U.S. the labor participation rate is only 62.8%, the lowest since 1978. But it’s also important to remember that employment circumstances are very localized. For example the unemployment rates in Oregon and Idaho are 7.1% and 4.5% respectively, which is quite a big difference, even though the two states are right beside each other. 😉

The recession in 2008 somewhat served as an equalizer of economic status where the people who owned the most financial assets lost more than anyone else, and the world became a little more equal. But the net worth gap between the rich and the poor has been growing again since 2010. So maybe a small stock market correction every now and then like we’ve seen in October is probably more favorable than having another large recession. It’s in society’s best interest to not let wealth inequality get out of control. The rich depend on the production of the working class to thrive, so if the working class becomes less productive then eventually everyone will be in trouble. 😕

At one point in mid October my stock portfolio was down by more than 4%. Luckily however the market decided to recover most of that loss. My existing investments are still down for the month but I saved some money from my income and paid down some extra debt to make up the difference. In other words both my assets and debts were down, but my debts lost more value so I still increased my wealth overall, albeit just barely. 😀

*Side Income:

  • Part-Time Work = $800
  • Dividends = $500
*Discretionary Spending:
  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)chart_14sept net worth graph market volatility inequality

  • Assets: = $832,000 total (4,000)
  • Cash = $2600 (-800)
  • Stocks CDN =$85,400 (-3300)
  • Stocks US = $52,600 (-300)
  • RRSP = $49,400 (+400)
  • MICs = $15,000 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $521,500 total (-4,200)
  • Mortgage = $196,300 (-600)
  • Farm Loans = $204,300 (-500)
  • Margin Loan CDN = $27,000 (-500)
  • Margin Loan US = $23,900 (-1000)
  • TD Line of Credit = $30,700  (-300)
  • CIBC Line of Credit = $11,400 (-200)
  • HELOC = $18,400 (-100)
  • RRSP Loans = $9,500 (-1,000)

*Total Net Worth = $310,500 (+0.10%)
All numbers above are in $CDN. Conversion rate used: 1.00 USD = 1.13 CAD

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May 122014

I read an article recently which suggests that single women make more money than single men in the U.S.

According to a study by Reach Advisors, in most major American cities the median income for single, childless women between 22 and 30 is 8% higher than that of their male counterparts 🙂

Research has shown that young women tend to be more educated than men, and are more likely to get degrees in the knowledge-based fields. Last year women earned the majority of Bachelor’s and Master’s degrees, and the same results are expected for this year. Young women also appear to be more career driven. About 67% of females between 18 and 34 rank their professionals goals as top priority, compared with only 59% for young men.

Looks like all the efforts by society to encourage gender equality, elevate female status and their economic independence is really paying off 🙂 It’s no surprise that more and more women are becoming the primary breadwinner for their households. It looks like young men like myself should be careful lest we get left behind in the job market, lol.

But earlier this year the U.S. president came out with the following statement.

Today, women make up about half our workforce. But they still make 77 cents for every dollar a man earns. That is wrong, and in 2014, it’s an embarrassment.
~Barack Obama

Hm, this seems to contradict the other study. Nevertheless, assuming this was true, why aren’t there more female employees working on Wall St and other knowledge-based industries?

14-05-womenpagap wage gap

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Jan 272014

Income inequality, or the gap between the rich and poor, is a major concern. A recent study discovered that the richest 85 people in the world have as much total wealth as the combined wealth of the poorest 50% of the world’s population (3.5 billion people.) Economic inequality is all around us. In last week’s article a few readers subtly brought up the income gap between men and women. However, just because something is statistically true doesn’t mean it has to be our reality.

Earlier this month General Motors, which is the 2nd largest automaker in the world, announced that its new CEO Mary Barra will be paid a salary of $1.6 million per year. She is the first female to head a global automaker. Woot! Girl power! 😀 She started her career inspecting fender panels on the ground floor of a Pontiac plant at only 18 years old. She used the money she saved up to complete her electrical engineering degree, and returned to GM to work as a senior engineer. She showed so much potential that GM sent her to Stanford Business School so she could get an MBA and become a manager at GM, which she did. In 2011 she was appointed senior vice president for global product development, and now in 2014, she is CEO and taking home the big money 🙂 Congrats Mary!

14-01-marybarra, economic inequality

It may have taken her 33 years to do it starting from the very bottom of the corporate ladder, but it shows that success is not as impossible as some might think. There are many articles out there that discuss the problems of income inequality or wealth disparity, but they don’t propose any good solutions. I don’t have a silver bullet either, but I think we can start by giving everyone the confidence and knowledge that “We can all choose how we want to live.

Economic mobility can depend on location, but for the most part it’s highly probable that if we consistently work hard then we can improve our financial lives regardless of what kind of background we come from 🙂 I don’t think Mary’s situation is unique to hard working individuals. I believe most people who work their butts off like Mary will become financially successful. The only exception is if they live in a developing region controlled by oppressive regimes. If you are Bongani Nkozanza living in Botswana, Southern Africa making $1.00 a day working at a diamond mine, then I’m sorry, but you probably have a better chance of winning the lottery than ever making a six figure salary 🙁 But chances are, you probably aren’t reading this article either.

We all know I don’t make 6 figures yet today. But if I started to save and invest more aggressively, then my total annual income (rent, dividends, wages, etc,) would be easily over $100,000 a year some time in my 30s. But Mary worked much harder than me. She survived the rigorous MBA at Stanford! She sounds really smart, unlike me. I can barely even spell MBA 😛 I have a friend who is a junior analyst at Raymond James Financial. He works harder than me and will probably make $200,000/yr by his 30s. Lots of medical school graduates make $300,000/yr in their 30s. If these young professionals continue to push themselves throughout their careers, then by the time they reach Mary’s current age (early fifties) they will easily make $500,000 a year, and some will even earn over a million like Mary. 14-01-grumpycatsixfigures, economic inequality

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