The Current State of Canada’s Economy
The economy isn’t so hot these days. Oil is down and so is the Loonie. The issue isn’t that we’re at a low point in the economic cycle. The problem is how quickly this happened and caught most people off guard. The price for a barrel of oil fell from $100 to $30 in just 18 months, which triggered big layoffs in our resource based economy, forcing many desperate folks to search for other means to make a living. Luckily my major oil holdings like Chevron is still doing okay.
But it’s not just this country that’s struggling. The entire global economy is slowing down and there are problems in the jobs market across every continent. The Bank of Japan recently announced the use of negative interest rates. This is a pretty big deal. The 3 most used currencies in the world can be manipulated by the European Central Bank, the Bank of Japan, and the Federal Reserve. Both the ECB and BoJ have played the negative interest rate card to devalue their respective currencies. The only bank remaining is the U.S. Fed. Will the U.S. try to stimulate its economy by lower rates into the negative? I think there’s a good chance it will. But since I can’t predict monetary policy I’m just going to focus on my long-term financial plan and stick with what I know. 😀
Maintaining a Long-term Perspective in a Volatile Market
Since my investment portfolio is based on my risk tolerance, short-term events should have little effect on my long term retirement and savings goals. There are many Investment Personality Questionnaires (IPQs) which can be found for free on the internet. Their purpose is to help people determine their propensity to take on risk, which is a good place to start for any novice investor. 😉
Historically, there have been tons of major events that have had dramatic impacts, at least initially, on the markets. But looking back, these are now mere blips on the financial market radars. Those who stay invested and contribute regularly generally have the biggest gains in the long run. 😉
Net worth results from the first month of the year are usually pretty interesting. This year was no exception. Many equity investors experienced quite a roller coaster ride, lol. At one point in January my net worth was down ~ $20,000! That’s naturally what happens when I have over $200,000 invested in equities and North American stock markets drops 10%. Fortunately, by the end of the month they regained most of the loss. 🙂 Phew.
- Part-Time Work = $900
- Freelance pay = $400
- Dividends = $700
- Fun = $200
- Debt Interest = $1400
*Net Worth: (MoM)
- Assets: = $925,500 total (+3,100)
- Cash = $5,500 (+2000)
- Stocks CDN =$97,200 (-500)
- Stocks US = $70,000 (-2700)
- RRSP = $63,000 (+300)
- MICs = $15,800
- Home = $263,000 (+4000)
- Farms = $411,000
- Debts: = $498,400 total (-3500)
- Mortgage = $190,500 (-400)
- Farm Loans = $197,400 (-500)
- Margin Loan CDN = $29,500 (-1000)
- Margin Loan US = $31,000 (+200)
- TD Line of Credit = $22,000 (-1000)
- CIBC Line of Credit = $10,000
- HELOC = $18,000 (-200)
- RRSP Loans = $0 (-600)
*Total Net Worth = $427,100 (+$6,600 / +1.57%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.71 USD
What hurt my finances in January:
- Stocks – Most of my stocks lost value. The TSX almost broke even for the month, but there was thousands of dollars worth of paper loss for my U.S. stocks.
What helped my finances in January:
- Side incomes – I picked up an extra shift at my part-time teaching gig. I also made some extra money doing graphic design in my spare time. Finally, January is historically a high dividend income month for me. Altogether these side projects boosted my net worth by a couple thousand dollars. 🙂
- Real estate appreciation – I update the value of my apartment each January based on either the previous year’s inflation rate, or the government’s assessed value of my home, whichever is lower. Consumer prices in Canada increased by 1.6% year-on-year in December 2015, so I’ve added $4,000 to the value of my home. This is a conservative estimate. 😀 According to The National Post, “the benchmark price of an apartment property increased 14%…”
- The Canadian loonie continued to lose value against the USD. – This may not be a good thing for my purchasing power, but at least it helps increase my net worth since I consolidate all my wealth into $CAD.
There was no Santa Clause rally this year to give my stock portfolio a boost. But luckily all the other positive financial events were enough to increase my bottom line by a decent amount. 🙂 I hope to grow my net worth to $500,000 by the end of the year.
Random Useless Fact: