Growing passive income
Thanks to some recent stock purchases I’m now making about $20K a year in total dividend income. π I also earn $9K a year from interest through my fixed income portfolio. And my rental property cash flows $700 a year after mortgage payments and other costs. So altogether my forward annual passive income is expected to be $29,700.
My current personal expenses adds up to roughly $30,000 a year. This means I am really close to being financially free. Hurray! π€ Investment income tends to be fairly stable despite volatility in the underlying assets. So unless there’s some kind of black swan event I will probably achieve financial independence within the next couple of months!
I didn’t expect to hit my goal this soon. My initial plan was to be FI in 2022 – when I turn 35 years old. But now it appears financial freedom could be just around the corner! π
This came as a surprise to me. I didn’t expect the stock market would go on sale earlier this year. But it did. π As a result I was able to buy more shares than initially planned, leading to a higher yield on cost.
Since I’m further ahead on my financial journey than planned I have decided to reduce my financial efforts by quitting all freelance work. This means going forward I will be working only 45 hours a week instead of 50 hours a week. This will give me more free time on the weekends. But I will keep both my full-time and part-time jobs for now. π¬
Liquidβs Financial Update June 2020
*Side Incomes: = $4,600
- Part time job =$800
- Dividends =$1300
- Interest = $600
- Rent = $1,800
*Discretionary Spending: = $1,800
- Food = $400
- Miscellaneous = $500
- Interest expense = $900
*Net Worth: (ΞMoM)
- Total Assets: = $1,540,400 (+$10,200)Β
- Cash = $20,800 (-32,500)
- Canadian stocks = $336,900 (+35,700)
- U.S. stocks = $153,700 (+3800)
- U.K. stocks = $19,600 (+700)
- Retirement = $152,200 (-900)
- Mortgage Funds = $39,300 (+3100)
- P2P Lending = $36,900 (+300)
- Home = $331,000 (assessed land value)
- Rental Unit = $450,000 (2020 purchase price)
- Total Debts: = $518,500 (-3,300)
- Home Mortgage = $181,300 (-500)
- Rental Property Mortgage = $312,000 (-800)
- Margin Loans = $25,200 (-2,000)
*Total Net Worth = $1,021,900 (+$13,500 / +1.3%)
All numbers are in $CDN at 0.73/USD
It was another positive month for the financial markets as stocks continue to recover. I filed my income tax in June. I have to pay about $2.5K in tax adjustment to the Canada Revenue Agency (CRA) this year because I didn’t use all of my RRSP deduction room. The good news is I don’t have to pay this tax bill until September. π
I’m planning to use all of my saved RRSP deduction for next year’s tax season when I have to offset the huge capital gain I triggered this year from selling the farmland – which unlocked about $250,000 of equity that was just sitting there doing nothing.
2020 has been a wild ride so far. But we are officially half way through. How are your finances doing so far this year?
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Random Useless Fact:
waaa, congrats! do you do detailed tracking of your monthly expenses or is it just an estimate? I’ve seen some pretty crazy spreadsheets but always have been too lazy to enter in all my spending lol
Thanks. I do detailed tracking of my spending in a spreadsheet. I charge most expenses onto my credit card so it’s easy to track. π
Well done Liquid! Thats fantastic progress and great to see your progress over the years and hitting that $1M milestone and getting that much more closer to financial freedom. Keep up the great work and wishing you the best
Love that “inner peace & not my problem” image at the bottom lol….so true.
R2R
Thanks R2R. I’m really grateful for everyone who has followed me up until now. That inner peace cat is my inspiration for this week lol. If I learn to tune out noise I can better focus on the things that are important to me and that I have control over. π
Congrats on being close to financial independence. Well written post.
You still hold Cineplex? If so, what are your thoughts on it? I still have my shares, but regretting not selling when it went above $34 after the proposed sale. I was so close to pulling the trigger on it. With an ACB around $36, I am down a lot on Cineplex.
I still have my Cineplex shares, and feel pretty much the same way as you. I regret not selling sooner, but it’s hard to anticipate a worldwide pandemic. Cineplex just started to open theatres again and charging $5 per ticket. The stock price can certainly go lower but things could also get better as the community slowly recovers. At this point I will just hold my shares as there are no undervalued stocks that I know of right now that can replace CGX.
Congratulations, I’ve been following this blog for some time and it’s really inspiring to see your fiscal update posts. Are you still thinking of buying more real estate? I’ve been watching the Vancouver market with hopes of a discount but haven’t seen any yet.
I am indeed trying to buy some more real estate in Vancouver. I’m hoping to find a larger place so eventually I can start a family with my current girlfriend. My view on Vancouver real estate is it will probably not get cheaper over the next 1 or 2 years. This is because interest rates have just been cut earlier this year. It takes about 1 year for the effects of lower interest rates, which is higher property prices, to hit the market. Most economists are forecasting rates aren’t going back up until at least middle of next year in 2021. π
I also believe real estate is something you have to hold for at least 5+ years. I have a higher degree of certainty that investing in Vancouver real estate will be more profitable than the Canadian stock market in the medium term. Everyone needs a home, but not everyone needs Tim Hortons or other services in the general economy. Given these conditions, I calculate that buying a property in 2020 is probably one of the best financial moves I can make, which is why I’m doing it.
Congrats, glad you are on your way to financial independence! Last few times I tried to make a comment… it didn’t go through I think!
It’s so close I can feel it. π Another month of steady dividend income and I should have enough to be completely FI.
Congrats on reaching the end of one life stage and starting on the next exciting challenge…Family !π
I’m kind of nervous for that next stage. I don’t know much about being a husband or a father. Afraid I might mess up. But I know from a financial standpoint I am ready. π
Hey Liquid, congrats on an incredible achievement. What are your thoughts on your assets on Lending Loop? I have found that around 10% of my holdings are in some sort of arrears due to covid-19. Hope you’re keeping safe!!!
Thank you. You be safe as well. 10% isn’t bad all things considered. About 15% of my holdings are late or in default. This goes to show that P2P lending is not immune from a pandemic. I haven’t made any new loans for over a month because the market place has basically dried up lol.
Well done on the passive income, super exciting.
Thanks. I’m really pumped to see how my finances change over the next couple of months. Hopefully the economy can have a strong recovery. My biggest concern right now is the BoC increasing rates too soon.
Ever think you’ll get married have a few kids and the expenses will jump?
Yup. I talked about this with the girlfriend. She has some savings of her own. Our combined finances should still make financial independence possible. Kids will increase expenses by $8,000/year per child. I’ve asked my friends who are parents and this seems like a reasonable number to budget for – assuming we don’t use child care services. Government programs like the CCB and provincial tax credits will cover about $7K per child under age 6 and $6,000 per child age 6 through 17. That’s most of the $8K/year cost of raising a child.
The remaining amount can be easily generated through selling my rental property. If I sold it today I would receive $100,000 after expenses. This can produce $4,000/year of passive income by investing it in dividend stocks that yield 4% like a blend of financial and utility companies. In all likelihood at least one of us (my future wife or I) will be working at least part time. But the idea is to set up a financial plan that we can both stay home and retire if we wanted to. π
Congratulations Liquid, this is a huge accomplishment for being so young. You are under 35, right? You made your goal same year as Frugal Trader did his $60K annual goal!
The CCB provides you with income for children under 6 but if your household income is too high it claws back to $0.
I just had my 33rd birthday a few months ago. Frugal Trader was one of my earlier inspirations to start blogging and tracking my net worth. π
8k/kid seems low to me. It’s the hidden costs, the babysitters, the diapers etc that add up. As GYM mentions don’t count on any money from the government as you’ll likely not get any. But it’s all definitely feasible especially if you get creative!
I’ll have to watch out for the clawbacks. It’s a backwards incentive to pay people less the harder they work but I suppose it has its reasons. What makes me nervous is that I don’t know how to be a parent yet. So I’ll have to learn that over time and hopefully do a good job at it. Being financially independent prior to having kids will certainly help I think. π
As a first-time parent, I also was apprehensive about our first new-born. But you know what? You learn as you go.
Sure, I wasn’t the perfect father but they still love you the same. Good luck!
that’s awesome to see Liquid! I’m always super intrigued in your blog posts since a part of me is planning very carefully to go to BC and another part I want to see how someone like yourself, living in arguably the most expensive part of Canada can STILL live comfortably and retire wealthy… I know there are less expensive parts of BC for sure but I’m just assuming the overall expenses of living there is definitely more than where I am right now in Winnipeg
The end goal of financial freedom is often on my mind. But I’m also really enjoying the journey and discussing it with readers like yourself. π I know the general consensus is that it’s expensive to live on the west coast, and it’s hard to save money due to the costly housing market. But as you probably know, I don’t like mainstream thinking. To me, a high cost of living city like Vancouver represents an opportunity to make money faster. Sure, it’s expensive for newcomers. But Vancouver has been the best place in the country to build wealth for long term residents. For example, my current mortgage payment is under $800/month. Meanwhile renters who recently moved into the city have to pay $1,800/month to have the same living condition as me. This means I have an advantage because I can save a lot more of my income, and use it to grow my stock portfolio faster. I think by 2030 BC real estate will be even more expensive, benefiting the owners of today. That’s the reason I bought a second property in January this year. Eventually I will be mortgage free and my principal residence will probably be worth 3… Read more Β»
I’m impressed that you have reached this milestone at a young age. Congrats! I have thought about investing in property, so it’s interesting to read about your perspective.
Thanks for dropping by. π Real estate can be a great investment opportunity, especially with all the money printing and currency debasing by central bankers. π