Investments for the New Year
It has not been a great start for Canadian investors. The TSX Composite was down about 2% in January. Cryptos saw their worst month yet. And bond prices have fallen due to soaring yields. But on the bright side, the economy is improving as the labour market grows stronger and inflation is picking up. The U.S. stock market (S&P 500 index) was higher by 5.6%, making it the best performing January since 1997. Yay! 🙂
The TFSA contribution room is another $5,500 this year. So in January I sold a few thousand dollars worth of cryptocurrencies to fund my TFSA and added the following investments.
- Parkland Fuel Corp (PKI.TO)
- Automotive Properties REIT (APR.UN)
- BMO Long Corp Bond ETF (ZLC.TO)
Parkland Fuel delivers lubricants and other petroleum products to motorists, businesses, consumers and wholesale customers. It supports a network of over 1,070 retail gas stations in Canada. It’s not a cheap company, but it should have good growth over the next few years.
Automotive Properties is a real estate investment trusts that focuses on buying and managing automotive dealerships, which is a good business to be in. It recently bought a Mazda facility. The REIT pays a fantastic yield equal to roughly 7.5%/year at a payout ratio lower than 60%. So even with no capital appreciation investors can still earn some decent income. 🙂 As long as auto sales remain stable, this investment will deliver.
BMO’s corp bond ETF is good for long term bond exposure. I explained why I like this particular ETF in my post last month on bond funds.
I also deposited some money into my Lending Loop account. Overall January has been a surprisingly fruitful month.
Liquid’s Financial Update
- Part-Time = $800
- Freelance = $900
- Dividends = $700
- Interest = $1,000
- Trading income = $3,000
- Fun = $600
- Debt Interest = $1300
*Net Worth: (ΔMoM)
- Assets: = $1,171,900 total (+13,000)
- Cash = $2,900 (-7,600)
- Canadian stocks = $170,500 (+2300)
- U.S. stocks = $112,700 (+5700)
- U.K. stocks = $22,200 (+800)
- Retirement = $89,900 (-1400)
- Mortgage Funds = $32,200
- P2P Lending = $30,400 (+8200)
- Home = $275,000 (+5000) Updating this value once a year to keep up with inflation.
- Farms = $436,000
- Debts: = $457,800 total (-4,500)
- Mortgage = $180,200 (-400)
- Farm Loans = $185,300 (-500)
- Margin Loans = $56,500 (-1000)
- TD Line of Credit = $4,500 (-1000)
- CIBC Line of Credit = $16,500 (-1500)
- HELOC = $14,800 (-100)
*Total Net Worth = $714,100 (+$17,500 / +2.5%)
All numbers above are in $CDN.
$17,500 net worth increase is not a bad start to the year. 😀
Higher interest rates cost borrowers more, but they’re also very beneficial for investors who do the lending. 😉 As rates have increased over the last year I’ve noticed my passive income from debt investments rise. In January I earned about $1,000 from interest income alone; a new record for me. $230 came from my Lending Loop portfolio, $370 from mortgage investment corporations, and $400 from two individual high yield bonds in the energy sector. As long as we have a balanced portfolio there’s nothing to worry about.
Random Useless Fact
Wow, we really are neck and neck! 😉 Interesting to read about the Automotive REIT, I’ll have to look into that company. I am curious about Lending Loop- how is the income taxed? Is it at the marginal rate similar to interest income?
Although APR.UN isn’t immune from market corrections, it’s doing relatively better than the general TSX index so far this year, and last year, and in the past 5 years, so that’s pretty good. 🙂 Lending Loop income is taxed as interest income unfortunately, and there’s currently no way to shelter it inside a TFSA or RRSP.
Nice job liquid. Good increase even though the TSX was down for January. Tom
I got pretty luck last month. February will be the real test though. 😉
Nice jump in net worth. Solid start for 2018. Seems like market is going down this month. Great buying opportunities. Nice downward slope on your liabilities.
Yes. I’m putting more resources into paying down my liabilities as interest rates rise.
I too like the Automotive REIT. Its an interesting pick from REIT space with a different niche. I’m assuming the REIT is just a landlord leasing out property to auto dealerships. Or do they also have their own dealerships or exposure directly to auto dealing/selling ? My question may sound silly but Im just clarifying about the role of Automotive REIT.
Ill try to research more on the company and business model.
I’m not 100% certain but I’m pretty sure they don’t have direct exposure to selling cars. All my other REITs such as REI.UN deal exclusively with property management and don’t run the businesses or stores that operate on their properties.
ZLC is something I could consider for a bond ETF. It’s nice to know the other type of REITs like Automotive Properties, making money out of cars and real estate at the same time.
I searched your blog, Liquid, for any topic relevant to Line of Credit since I noticed that you have two bank LOCs. Is it possible if you could explore on a future blog post how the interest is calculated. I have one and been thinking of using a portion. Would it be best to borrow less than 20% just as you would in a credit card to keep a good credit score? Thanks for all the update.
Yes. I can write a post about LOCs and how they work – probably in the next few weeks. Borrowing less than 20% of the maximum allowed balance is ideal because it would improve your credit score. This is why it can be useful to increase the limit over time if you qualify.
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