Fiscal Update – Oct 2011 (Portfolio up 21%)

By | 11/02/2011

Looks like all my hard work has finally paid off. Or – maybe this is just a one time fluke ( ツ) . In my last Fiscal Update entry, I wrote about how the recent market swings can be a good thing
…stocks should definitely go higher. Buy low, sell high, and it’s pretty low right now which is why I’m a buyer!… ….I borrowed $6000 from the bank earlier this month to invest…. ….hopefully this leveraged investment will pay off in the near future. – Sept 30th 2011

*Side Income = $700
  • Part-Time Work = $300 

     

  • Dividends = $400
*Discretionary Spending = $300
  • Food = $200
  • Others = $100
Net Worth: +16.10%
*Assets: $327,400 (+$11,500)
  • Cash = $3,400 (-$100)
  • Stocks = $60,300 (+$10,600)
  • RRSP = $20,700 (+$1,000
  • Home  = $243,000  
*Liabilities: $232,200 (-$1,700)

  • Mortgage = $209,100 (-$300
  • RRSP Loan = $5,400 (-$600)
  • Line of Credit = $6,700 (-$300
  • Investment Loan = $11,000 (-$500

*Total Net Worth = $95,200 (+$13,200)

Btw, I’m trying a new update format. North American markets saw the biggest 1 month gain since 1974! I’ve sold some holdings at the end of October to lock in those profits.  There are 2 main reasons to explain the 21% increase to my stock portfolio this month, leverage and cyclicals.

Leverage: I actually have around $85K worth of stocks in my portfolio now, most of that is from savings over the last 3 years. However some of those securities are bought with borrowed money (margin) so the equity, or – difference between what I have and what I owe, is the $60,300 you see in purple above, and is used for my net worth calculation. When the market goes up, it affects all my stocks, not just the equity portion. So the $10,600 increase may seem like a huge gain on the net value of my stocks, but in truth it is actually from the appreciation on my entire stock portfolio which is a more realistic increase. I’ll explain leverage in detail in a future post.

Cyclicals: are companies with shares that are more volatile (high Betas) than the general stock market. But it doesn’t necessarily mean they are more risky in the long run. These companies move up and down depending on the economy. They out perform when things are good, but fall faster when things are bad. Energy and mining companies like Chevron Corp or Inmet Mining Corp for example (both of which I own,) are considered cyclicals. Leverage + cyclicals + good timing = win. This is how to become rich without making a big paycheck.

* Numbers are rounded to the nearest $100.

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Michelle P
11/02/2011 6:50 am

Great job on the net worth!