May 042017
 

Stocks Continue to Climb

Technology stocks in the U.S. have recently performed exceptionally well. The Nasdaq index (full of technology stocks) reached a new high, passing 6,000 points. Stock markets reaching new highs is actually quite common. On average, this happens about once a month. But unlike the tech bubble of 2000, this time I believe technology giants such as Amazon, Apple, and Alphabet are here to stay. The industry has matured now and high tech companies have become similar to utilities. Just imagine an entire week without using any of Google’s services or any iPhones or Apple products lol.

Over the years I’ve written about why AMZN, AAPL, and GOOG are some of the best companies to own for long term investors. I hold all 3 of course. Although I am primarily a dividend investor, I will put money into growth oriented stocks as well if there’s a profitable opportunity. Amazon is up 25% so far this year. Apple is up 27%. And Alphabet (Google) is up 20%. Not bad for a span of only 4 months. 😀

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $500
  • Freelance = $800
  • Dividends = $700
  • Interest = $500
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1100

*Net Worth: (ΔMoM)

  • Assets: = $1,112,800 total (+14,900)
  • Cash = $4,200 (+2000) ~ Saving up to make a major purchase in May.
  • Canadian stocks = $146,800 (+1100)
  • U.S. stocks = $95,300 (+5200) ~ Strong gains here partly due to a lower $CAD
  • U.K. stocks = $20,700 (+1100)
  • RRSP = $78,900 (+2500) ~ I have many U.S. stocks in there.
  • Mortgage Funds = $30,600 (-200) ~ Most MICs lost ground in April.
  • Peer-to-Peer Lending = $20,500 (+200)
  • SolarShare Bonds = $9,800
  • Home = $270,000
  • Farms = $436,000 (+3000) ~ Increasing farmland value due to inflation. 
  • Debts: = $494,800 total (-400)
  • Mortgage = $183,800 (-500)
  • Farm Loans = $189,800 (-500)
  • Margin Loans = $64,600 (+1800)
  • TD Line of Credit = $14,200  (-600)
  • CIBC Line of Credit = $26,000 (-500)
  • HELOC = $16,400 (-100)

*Total Net Worth = $618,000 (+$15,300 / +2.5%)
All numbers above are in $CDN. 

I am so glad I have investments outside of Canada in April. The British Pound gained a lot of strength boosting my U.K. stocks by about 6% in $CDN terms. The United States dollar and stock market also went up a lot. My U.S. stock portfolio gained $5,200. Sweet! But on the flip side, my U.S. margin loan increased by about $1,800. This is the reality about buying U.S. stocks on margin; it’s great for my investments when the U.S. currency appreciates, but it also means I owe more money when everything is converted back into $CDN, lol. Oh well. I hope everything will work out in the long run. 🙂

 

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Random Useless Fact:

Mar 062017
 

Dow Jones trading over 21,000 points

It’s only the beginning of March and the stock market indexes are already up 6% to 9% year to date in the United States. The Dow closed over 21,000 points last Friday. Of course hitting new highs is nothing special for the stock markets. But who knows how long this momentum will last.  We have confirmation from the Federal Reserve that interest rates in the United States will increase next week by a small amount. I expect this will cool the financial markets. Afterall, since World War II, 77% of Fed tightening cycles had ended in recession.

It has been a fairly predictable month for myself. I’m slowly collecting passive income while paying down my debts.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $800
  • Freelance = $700
  • Dividends = $800
  • Interest = $200
*Discretionary Spending:
  • Fun = $500
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,088,400 total (+5,200)
  • Cash = $1,500 (+400)
  • Canadian stocks = $138,200 (-1000)
  • U.S. stocks = $90,800 (+4900)
  • U.K. stocks = $19,300 (+700)
  • RRSP = $74,900 (-100)
  • Mortgage Funds = $30,600 (+200)
  • Peer-to-Peer Lending = $20,100 (+100)
  • SolarShare Bonds = $10,000
  • Home = $270,000
  • Farms = $433,000
  • Debts: = $494,400 total (-1,800)
  • Mortgage = $184,800 (-400)
  • Farm Loans = $190,900 (-500)
  • Margin Loans = $59,600 (+300)
  • TD Line of Credit = $15,400  (-600)
  • CIBC Line of Credit = $27,000 (-500)
  • HELOC = $16,700 (-100)

*December Total Net Worth = $594,000 (+$7,000 / +1.2%)
All numbers above are in $CDN. 

Lucky me. It was another positive month in general for the markets. I’m very close to $600,000 now. 🙂

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Random Useless Fact:

 Our brains tend to find creative ways to be entertained when we’re bored.

Feb 022017
 

How High Can the Dow Go?

The Dow rose from 7,000 to 20,000 points over the last 8 years. And that doesn’t even account for the dividend payments. By using financial leverage my portfolio managed to outperform the market every year since I started buying stocks in 2009. 🙂 Borrowing to invest is risky. But if I continue to maintain a diversified portfolio of real estate, stocks, and fixed income investments, then it is very likely that my assets will grow overall in value over time. So as long as I can borrow money cheaply I will continue use leverage. It’s all about expected market return vs the cost to borrow. In my previous post from last year I explained how rich people create wealth. Using other people’s money to enhance investment gains proves to be a very effective method. I currently have about $50,000 of available funds remaining before I risk getting a margin call. This gives me quite a large safety cushion. As long as I keep an eye on this number I should be able to withstand the market cycles.

Breaking the 20,000 barrier was a huge milestone for stock investors. But can the Dow Jones continue to climb even higher? The answer may be found in American football. 🙂 Believe it or not the outcome of the Super Bowl game this weekend could have an impact on the stock market’s performance for the remainder of 2017. This idea is known as the “Super Bowl Predictor.” The predictor states that if an original NFL team wins the Super Bowl, then the Dow index will increase over the next year. Otherwise, the stock market will fall. So far this indicator had been bang on every year since 2008, except for one time. So if we want the Dow to hit 20,000 again and continue to grow this year, we better hope the Atlanta Falcons win this weekend. 😀

Anyway, since equity valuations and price/earnings ratios appear to be worryingly high, I decided it’s time to be more cautious with my money. So as I see the growing risk of a bubble forming, I have turned my attention towards alternative investments that do not correlate with the stock market. That’s why today I present a new addition to my asset column.

It’s P2P lending! 😀 Hurray! This makes a total of 10 different asset types I own. And most of them produce a stream of passive income for me! 🙂

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $900
  • Freelance = $800
  • Dividends = $800
  • Interest = $600
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,083,200 total (+33,200)
  • Cash = $1,100 (-700)
  • Canadian stocks = $139,200 (+4100)
  • U.S. stocks = $85,900 (+2700)
  • U.K. stocks = $18,600
  • RRSP = $75,000 (-100)
  • Mortgage Funds = $30,400 (+200)
  • Peer-to-Peer Lending = $20,000 (new!)
  • SolarShare Bonds = $10,000
  • Home = $270,000 (+7000)
  • Farms = $433,000
  • Debts: = $496,200 total (+16,700)
  • Mortgage = $185,200 (-300)
  • Farm Loans = $191,400 (-400)
  • Margin Loans = $59,300 (+300)
  • TD Line of Credit = $16,000  (-700)
  • CIBC Line of Credit = $27,500 (+18,000)
  • HELOC = $16,800 (-200)

*December Total Net Worth = $587,000 (+$16,500 / +2.9%)
All numbers above are in $CDN. 

January has traditionally been a very positive month for my net worth, and this year is no different. This is thanks to the phenomenon called the new year’s bump. I used the average inflation rate of 1.6% to increase my home’s value and rounded the number to $270,000, which is $7,000 higher than the previous year. Stock markets held up well this January, despite a slight pull back over the last couple of trading days.

I will write more about my new venture into the world of peer-to-peer lending in a future post. But it’s basically a fixed income investment in the form of debt financing. Compared to stock market, P2P investments have a low correlation with stocks and are less volatile. However, this doesn’t mean they’re less risky. I invested $20,000 to start. $2,000 came from personal savings, while the remaining $18,000 was borrowed, which is why both my asset and debt have grown this month. I plan to slowly pay down the new debt while I wait patiently for my new asset to grow. This is the same basic strategy I used for all my leveraged investments in the past. 😉

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Random Useless Fact:

It can be quite difficult to tell if a tiger is pregnant, or just fat.

 

Jan 022017
 

The Second Longest Bull Market

Happy New Year! 🙂 I hope everyone had a great 2016. It’s somewhat surreal to see an economy that’s still struggling while the stock market has never been stronger. We are currently living in the 2nd longest bull market in American history, recently surpassing the 7 year streak that spanned 1949 to 1956.

2017 could be the year that we finally see a major market correction. But who knows? Maybe stocks will remain resilient and continue to climb for several more years! After all, the longest bull market ever lasted 13 years from 1987 to 2000.

Chart from http://money.cnn.com/

My goal of reaching freedom 35 means I need to be financially independent by 2022. That’s only 5 years from now! Can the markets continue to move higher until then? Well the 13 year bull market run from 1987 to 2000 shows that it’s indeed possible. 🙂 Like many other millennials, I began investing in 2009 by sheer luck, because that was the perfect time to get into the stock market. Maybe I can deleverage at the right time too, Haha. 😀

Future apoplectic haters will probably say, “Well of course he retired early. Any ninny with half a brain could have borrowed $500,000 to buy stocks and other financial assets between 2009 to 2022 and easily become a millionaire.”

And they would be correct. 🙂 But my question is why haven’t I heard of anyone else borrow $500,000 to invest right now? This is currently the best time of our generation to use leverage to potentially double or even triple our investment gains! Surely I can’t be the only one to see the advantage of borrowing money at 2% to buy and hold strong, reliable, blue-chip stocks like utilities and Canadian banks that have been paying 4% or higher dividends for decades, and are also expected to appreciate in value over the next 5 years. Call me crazy, but I want to get rich sooner rather than later, even if it means taking on a bit more risk. 😀

Anyway, December has been another amazing month for the markets. All stock indexes gained, including my new British equities purchased recently. It’s still very early to tell so I’ll continue to hold my U.K. index ETF, and see how it does over the next year or so.

Liquid’s Financial Update

*Side Incomes:

  • Part-Time = $700
  • Freelance = $900
  • Dividends = $700
  • Interest = $400
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1200

*Net Worth: (MoM)16-12-networthiq_chart-nov

  • Assets: = $1,050,000 total (+12,200)
  • Cash = $1,800 (-17,700)
  • Canadian stocks = $135,100 (+5000)
  • U.S. stocks = $83,200 (+3000)
  • U.K. stocks = $18,600 (NEW!)
  • RRSP = $75,100 (-200)
  • Mortgage Funds = $30,200 (+3500)
  • SolarShare Bonds = $10,000
  • Home = $263,000
  • Farms = $433,000
  • Debts: = $479,500 total (-2,600)
  • Mortgage = $185,500 (-500)
  • Farm Loans = $191,800 (-600)
  • Margin Loans = $59,000 (-300)
  • TD Line of Credit = $16,700  (-800)
  • CIBC Line of Credit = $9,500
  • HELOC = $17,000 (-400)

*December Total Net Worth = $570,500 (+$14,800 / +2.7%)
All numbers above are in $CDN. 

Good golly! What a way to end the year. 🙂 Thanks primarily to stock and farmland appreciation, my net worth has increased on average by over $12,000 per month in 2016. That’s totally dope! I can hardly contain my excitement! 😀 It was a gradual and steady process, but I’ve managed to somehow accumulate $350,000 of financial assets over the last 7 years. I wonder what amazing new serendipity awaits for my finances in 2017. 🙂 I guess we shall see. Good luck to everyone in the new year!

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Random Useless Fact:

Stingrays do not use their eyes to hunt for food. Their eyes are above their bodies, but their mouth and nostrils are situated on their underbellies.

Dec 192016
 

2016 is turning out to be a spectacular year for equity investors. 🙂 The Canadian S&P/TSX index is up 17% year to date, while the Dow Jones index in the United States is up 14%. Wow! That’s impressive even by historical standards. The markets have done an excellent job of beating expectations lately. 😀 We could even see the Dow hit 20,000 points before December 31st if we’re lucky.

December is usually a good time to re-examine our investment portfolios and see if there’s any adjustments we need to make to our asset allocation or general financial plan. Personally, this last quarter has been quite eventful for me as I’ve contributed over $30,000 in new investments. As of now here is a breakdown of all my assets and liabilities. 🙂 Everything has been rounded to the nearest $1,000 in $CAD.

Net Worth At a Glance

Assets by Account/Type: 
$19,000 – TFSA at Canadian Western. Private mortgage fund.
$47,000 – TFSA at TD. Mostly income trusts.
$14,000 – Cash trading account at TD. Mostly stocks.
$86,000 –  RRSP at TD. Bonds, U.S. equities, and MICs + REITs.
$170,000 – Margin Account at IB. Mostly dividend stocks.
$10,000 – SolarShare bonds.
$263,000 – Primary residence.
$433,000 – Farmland.
Total Assets = $1,042,000

Liabilities:
$186,000 – Home Mortgage
$192,000 – Farm Mortgage
$58,000 – Margin Loan
$17,000 – TD LOC
$17,000 – HELOC
$10,000 – CIBC LOC
Total Liabilities = $480,000

Total Net Worth = $562,000 🙂

Farmland still makes up a rather large piece of the pie chart. I can’t complain that my farmland went up 10% in value, but I would like to see my stocks and fixed income allocation increase to create a more balanced portfolio.

Last year in December 2015, my farmland represented 44.6% of my asset allocation. This year it has gone down to 40.3% so I am making progress. But it is still not enough. I have to stay focused on my goals and make changes to my situation. As George Bernard Shaw once said, “The people who get on in this world are the people who get up and look for the circumstances they want, and if they can’t find them, make them.”

So in 2017 I plan to buy more fixed income assets and dividend paying stocks to increase my relative position in those liquid asset classes. 🙂

Below are some more details about my various investment accounts.

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