Fiscal Update – Feb 2013 – US Stocks

Real estate continues to soften in Canada but is picking up steam in the US. Stocks were relatively flat but overall nudged up slightly. I’ve decided to finally add my US trading account to my net worth. There’s not much in there. It’s only worth maybe $30K, made up of different US companies like Starbucks, Caterpillar, and other stocks I’ve blogged about buying in the past, but it is practically all leveraged. For every dollar worth of stock I have in there I’ve pretty much taken on the same amount of debt lol. I used my CIBC line of credit for the initial funding of $10K last year and then borrowed the remaining $20K on margin. So it’s basically a completely leveraged portfolio of US stocks :0) I have to pay about 3.5% a year after tax from my own pocket to maintain this portfolio at the moment. But I think there’s a pretty good chance I’ll get a 3.5% after tax return or higher on my stocks this year, so that’s why I’m doing it! Yay for low interest rates.

I’ve never added this US account to my net worth before because I thought my RRSP contribution room would be plenty to house all the US stocks I would ever want to buy. And it probably still is. But one thing I can’t do in an RRSP (401K equivalent) is use margin :D, and the reason my Canadian stocks are worth over $70,000 today is not because the TSX has done so well, but because I used lots of leverage. But the biggest reason I didn’t want to include it in my net worth is because I’m not sure how to consolidate 2 different currencies. The banks have done a great job of splitting my net worth so I have a balance for all my Canadian accounts, and then a separate balance for just my US accounts.

However I don’t want to have 2 separate net worths. Do I convert all USD to CAD when listing my assets and liabilities, or should I do the conversion at the very end when I calculate the final net worth? It’s not a huge issue right now because the Canadian loonie is worth almost the same as the US dollar. But in the future when the gap widens it could make for some very inaccurate calculations 🙁  Nevertheless this USD account is becoming too large to simply ignore anymore, so starting from this fiscal update and onwards I will include it’s balance and the debt that goes along with it. Of course since it’s all leveraged, it doesn’t really affect my net worth 😀


*Side Income:
  • Part-Time Work = $1200
  • Dividends = $300

*Discretionary Spending:

  • Eating Out = $100
  • Others = $100 (renewed Costco membership)

*Net Worth: (MoM)

  • Assets: = $538,000 total
  • Cash = $1,700 (-$100)
  • Stocks CDN = $72,400 (+$300)
  • Stocks US = $30,500 (new)
  • RRSP = $31,400 (+$600)
  • Home = $252,000 (Same)
  • Farm = $150,000 (Same)
  • Liabilities: = $382,400 total
  • Mortgage = $203,800 (-$400)
  • Farm Loan = $111,400 (-$300)
  • Margin Loan CDN = $18,800 ($100)
  • Margin Loan US = $18,500 (new)
  • Line of Credit = $19,900  (+$500)
  • Line of Credit CIBC = $10,000 (new)

*Total Net Worth = $155,600 (+2.0%

About $3K gain from last month, which is about the same as February of last year. My side hustle and dividend income pretty much covered half of that total increase. So lucky I have 2 jobs in this economy (~_~)  I calculated the net worth this time by simply adding up all the numbers both USD and CAD so the result is a mix of two currencies lol. I need to find a better solution going forward though. I wonder how other people calculate their wealth if they have financial assets in different countries.

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03/02/2013 6:13 pm

Does ur broker give you a cdn dollar equivalent for all balances or USD equivalent besides listing the two currencies as separate accounts

My Financial Independence Journey

You’re making nice progress on your net worth.

I agree with anonymous above, you need to add the accounts up using the same currency type. Unless of course the US and Canadian dollars are trading at an exact 1:1 ratio.

Yakezie (@Yakezie)
03/02/2013 11:14 pm

Gutsy move on borrowing money to make money in the stock market! What do you think the US market will do this year as I’m getting cautious, especially post sequestration.

Also, may I ask you about your cash level comfortability? Is the $1,700 your entire liquidity?



Yakezie (@Yakezie)
03/03/2013 7:30 am

That will be fantastic if the S&P500 does go to 1,600. I’m a little less bullish as I wrote in my 2013 predictions and have a target of around 1,555 hence have turned cautious since we are 2% away.

Are you not afraid of the market going down on borrowed money which compounds the problem? Or is this practice relatively common among your peers and friends? I’ve gone on margin many times before as well, but no longer as i’m focused on other things and feel like I have enough.


03/04/2013 4:43 pm

Oh be carefful on that 99%… Look at where Japan’s at… are we really doing things much differently?

03/03/2013 7:39 am

Nice numbers! I would convert the USD to CAD for each relevant line item. As long as you are conservative on the exchange rate, it should be fairly accurate.

Alex Yang (@yyangalex)
Alex Yang (@yyangalex)
03/03/2013 7:51 am

if you use something like Quicken or Excel to track your data you can easily have the FX taken care of. Quicken will automatically d/l the latest FX rates and apply them. if you are in Excel you’ll have to make some formulas and update it yourself. for simplicity you can just update it when you re-calc your NW each month. i use Quicken for overall stuff and it helps me handle CNY and USD stuff. for stock & stock account analysis i use Excel

Financial Independence
03/03/2013 2:12 pm

I think as they do not make land any more and all the land is discovered you will have some pretty returns on your land investments eventually.

I think US market is particularly good exposure. If you look and CAD vs. USD it is very high at the moment (over last 12 years period). There is good chance that only diversification in currencies will give you good return.

I think you do not need to be particularly sensitive over exchange rates. I keep my money in 4 different currencies and not really chasing strict exchange rates.

The Frugal Path (@Thefrugalpath)
The Frugal Path (@Thefrugalpath)
03/03/2013 3:49 pm

I’m not sure I could leverage money like that, but different strokes. I’ve been thinking of pulling of equities with my wife’s 401(k) until the end of the year, but I don’t really like to try and time the market.

03/03/2013 5:04 pm

Need to convert US holdings to Cdn, as you would need to to calculate your Cdn taxes on it eventually anyways… I never used leverage as you have, but now that i am not working I have been looking into it. Now having had time to follow the markets and trends and understand how to make money in the markets, a margin account interests me – Especially when i get to thinking of what returns I’d have made so far given last year I managed a ~15% portfolio return. as to where the markets are going, I’m going to say sideways from here for the remainder of the year i think, as I am currently looking at a YTD of about 12%, so that tells me not much more upside, except for dividends – Cheers.

Ravi Gupta
Ravi Gupta
03/03/2013 5:59 pm

I think it’s best to ask yourself how much is it worth for the extra reporting? I use to list every etf I owned, and broke out my allocation, after a while though it doesn’t really matter. It’s all just a balance sheet, a snapshot in time. In my most humble of opinions save yourself a couple of minutes and throw it all down, if you’re in the black great, if not you’ll make it up with those two jobs. 😛

John S @ Frugal Rules
03/04/2013 8:41 am

Good work on the numbers again! I’ve been wanting to open a margin account for a while and just not have pulled the trigger on it. I am comfortable doing it, I’ve just seen way too many retail investors make crazy mistakes that have made me a bit on the skittish side.

03/05/2013 5:08 pm

Is there a minimum portfolio value required to open a margin account?