Fiscal Update – Aug 2015 – Recession

The R Word

Stock markets fell about 5% in August and my assets have dropped in value. Canada is technically in a recession now. 🙁 Oy vey.

But we investors are deep thinkers. For example, if pencils came with erasers at both ends, what would be the point? ? So we understand that recessions are necessary for economic growth to be meaningful. The boom and bust cycle is what makes the economy interesting because it creates long-term opportunities to those who are prepared. Besides, why is a recession so bad anyway? It makes the cost of living less expensive, which is good if you’re a consumer. 😀

*Side Income:

• Part-Time Work = $800
• Dividends = $500

• Fun = $400
• Debt Interest = $1400

*Net Worth: (MoM)

• Assets: = $898,700 total (-4900)
• Cash = $3,000 (-500)
• Stocks CDN =$88,800 (-3700)
• Stocks US = $65,500 (-5300)
• RRSP = $56,400 (+4600)
• MICs = $15,000
• Home = $259,000
• Farms = $411,000

• Debts: = $504,700 total (-2400)
• Mortgage = $192,600 (-400)
• Farm Loans = $199,800 (-400)
• Margin Loan CDN = $28,900 (-1000)
• Margin Loan US = $27,200 (+500)
• TD Line of Credit = $25,000  (-500)
• CIBC Line of Credit = $10,000
• HELOC = $18,200
• RRSP Loans = $3,000 (-600)

*Total Net Worth = $394,000 (-$2,500 / -0.6%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

It will be interesting to see how markets perform over the fall. September and October are historically the worst months to be a stock investor, lol. I’m just glad I still have a job, unlike so many people in Alberta right now. 😐

Embracing the Recession

Recession tends to have a negative connotation because people associate it with job losses, falling profits, and high unemployment. But for a large part of the population recessions can be quite beneficial. Retirees and the financially independent should embrace recessions. 😉 They don’t have to worry about losing their jobs since they don’t have any to begin with. High unemployment means fewer of their friends and relatives are working, so they have more opportunities to socialize. With a slowing economy and deteriorating household incomes, there will be less competing buyers. 🙂 Falling profits mean cheaper prices! If you’re in the market to buy a house, low demand means more affordable options.

When the price of food, fuel, housing, and other goods falls it directly benefits everyone because we all have to eat and live somewhere. For the majority of us who are still employed a recession means we can spend less money, and save more for retirement. Personally I’m enjoying the cheap $1.20/L gasoline around here ⛽. I can’t even remember the last time gas was this cheap in Vancouver. 😀

Vulnerable retirees, investors, and the poor who receive government subsidies have to compete with everyone else. In a robust economy that’s difficult for them to do because they live on a fixed income, while everyone else who has a job experiences increasing wage growth. But in a recession, they have the advantage. 😀 Recessions also foster innovation and human ingenuity. Necessity is the mother of invention. Maybe a designer that was let go from Lululemon will invent a new brand of fitness gear that will make him or her a millionaire one day. So recessions aren’t bad. At least not for everyone. 😉

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Random Useless Fact:

In Germany you can get McDonald’s delivered to your home.