2021 Financial Plan – What I’m Watching For

Elon Musk must be enjoying his year so far. Tesla stock surged to new highs and his net worth is now over $200 billion. This makes Elon Musk the richest person in the world, supplanting the previous top dog, Amazon founder Jeff Bezos.

They're rich because they have good plans

Alas, not everyone can be a billionaire like these two. But that shouldn’t discourage people from pursuing their own financial ambitions. In this post I will discuss my goals for this year, my outlook for the economy, and what I have been buying. πŸ™‚

 

2021 goals

  • Increase household net worth by $250,000
    This target is $50,000 more than last year’s. I think it’s achievable because I’m now in a dual income household for the first time.
  • Create personal finance videos
    This was the most requested content from my readers so I would like to try it out. πŸ™‚ I have a YouTube channel set up, and will upload a video soon. Looking forward to see who will be my first subscribers.
  • Invest in the psychoactive drug market
    Psychedelics are a fringe investment idea. But there is potential for it to become mainstream in the future.
  • Reassess my investments for a potential deflationary environment
    The economy may get worse before it gets better.
  • Diversify away from North America
    The S&P 500 returned 15% last year. Seems like a decent gain, doesn’t it? πŸ˜‰ But nominal returns don’t tell the whole story.

 

Economic outlook

The US dollar index fell 9% in 2020. Once you account for this 9% drop in the buying power of the currency, a 15% stock market return doesn’t sound that great anymore. One reason for this currency devaluation is the massive government stimulus.

US policy makers have announced their willingness to print as much money as needed to support the economy. So I believe the USD will continue to trend lower in value, at least in the first quarter of 2021.

shoveling money that was printed

There’s an ongoing struggle in the economy between deflation and inflation. I’m keeping an eye on both to see which proves to be stronger.

The mass creation of debt and an aging population is deflationary for the economy. A shrinking labour force is deflationary too. The US just lost 140,000 net jobs in December. Ouch. So what can investors do?

Defensive sectors such as health care, utilities, and staple items tend to perform well during deflationary periods. Even in a recession people will still need their medication, use electricity, and brush their teeth. This demand generally prevents stocks in these sectors from declining as much as the broader market. This is why I personally own companies such as Costco and Johnson & Johnson.

On the other hand we’re seeing clear signs of inflation in commodities, food, and other asset prices. This is why I’m very bullish on real estate. But I don’t recommend it across the board because location is everything. Base materials and precious metals are also effective at fighting against inflation.

Finding a proper balance between deflation and inflation can protect investors from the worst effects of both.

I also continue to like technology companies that can disrupt large industries. And I think small cap will outperform large cap this year with more retail investors jumping into the market.

 

New additions to my stock portfolio

In line with my 2021 financial plan and investment thesis I have recently bought the following stocks.

4 Canadian stocks

I purchased 50 shares of Dye & Durham (DND). It offers cloud based services to law firms and governments. Revenue is growing at roughly 50% a year and the business is diversified globally.

I also boughtΒ  Kinaxis Inc, (KXS) and Descartes Systems Group (DSG). Both are high valuation growth stocks that operate on a software as a service model.

Lastly I bought Ivanhoe Mines (IVN) because it produces copper and gold – which should be profitable if inflation rises.

 

4 US Stocks

Last month I purchased AbbVie Inc. (ABBV) a research-based biopharmaceutical company and Merck & Co (MRK) a global healthcare company.Β  These are two high quality, mega cap, blue-chip stocks with predictable profitability. Can’t go wrong buying and holding them. πŸ™‚

For a more speculative pick I started a small position in Peloton Interactive (PTON). Peloton thrives when the economy is locked down, lol. It makes fitness machines that come with workout classes. This is the new way to exercise for the modern age. Hipsters love showing off their Peloton bikes. πŸ˜‰

Finally I bought theΒ Global X Video Games & Esports ETF (HERO). It offers exposure to the video game industry. By geographic allocation roughly 2/3 of the fund’s exposure comes from Asia. This gives me some diversification into emerging markets. The fund has a management fee of 0.50%. Here are its top 10 holdings.

The fund holds shares in Nintendo, Activision Blizzard, Sea LTD, Nexon, EA, and Bilibili

 

As always these are not stock recommendations. I just wanted to share my personal thoughts and keep myself accountable. πŸ™‚ Individual stock picking can be very risky and end badly if you don’t know what you’re doing.

 

 

Β Β  β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”β€”
Random Useless Fact:

The Big Dipper is part of the constellation Ursa Major.

 

 

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D Investor
D Investor
01/11/2021 9:47 am

Great ideas! Thanks for updating the portfolio as well. I’ve subscribed to your channel – looking forward to watching your videos!

AnotherLoonie
01/11/2021 10:35 am

Great stuff. I also suffer from buying wayyyyy too much stuff at Costco. I have a huge supply of oatmeal that I’ll never finish, among other silly purchases I made to “save money.”

Ana
Ana
01/12/2021 7:04 am

Thanks for the insight. Some great goals for 2021 including a YouTube channel. Many good wishes for the new year!

Jay
Jay
01/12/2021 8:43 am

Thanks for your thoughts! Subscribed to your youtube channel. Looking forward to vid #1.

GYM
GYM
01/13/2021 11:46 pm

Costco really gets me too. Was reviewing our bills from 2020, basically all $300+ bills were from Costco.

Interesting you bought Peloton πŸ™‚ As a millennial I don’t get the allure of it.

PP Gal
01/16/2021 1:09 pm

Subscribed! I listened to your interview on a podcast and would love to hear more of your stories and endeavours. Maybe you could also turn your videos into a podcast if you want to. Some PF bloggers/vloggers do this.

Either way good luck to being a vlogger. Also I’ll keep an eye on your psychoactive drug market investment. I want to invest a little to alternative investment. The dividends in HMMJ are fluctuating and have gone to as low as 0.01, which is such a disappointment but I’m in for the long haul.

Vancouver FI
Vancouver FI
01/18/2021 12:37 pm

Hi Liquid,

Great to have you back, I really enjoyed the podcast as well. My biggest takeaway was the interactive brokers margin account example. I would love to read a post comparing different margin account options for Canadians.

DividendScholar
01/22/2021 11:25 pm

Hi there. I enjoy reading your concise posts. $250k growth in 2021 is a great goal, I hope to be at your level some day!

What do you think about Cintas and Union Pacific as Industrials Stocks picks? I also like S&P Global, Nasdaq and Intercontinental Exchange as stock picks. The latter 2 are benefitting from record day trading among Robinhooders and Tesla traders. The larger stock volumes, the more money Nasdaq and Intercontinental Exchange make in revenues.

These stocks are included in the financials sector, but are not in the business of lending money. As an example, Nasdaq (NDAQ) stock is up almost 600% over the last 10 years, S&P Global is up a whopping 950%! However, you will not see these stocks being recommended on CNBC or Bloomberg.

All the best and cheers!

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