My 2022 Financial Plan

What’s new in the new year

Last year I set out 5 goals and accomplished 4 of them. Not bad overall. 🙂
The act of writing down goals, and tracking them over time has helped me so much.

This year I have 6 new goals.

You can check out my new video explaining each one, or continue reading this post for a summary. 🙂

 

2022 goals

  • Increase household net worth by $300,000
    This is $50,000 more than last year’s target. As usual most of the heavy lifting will be produced by our existing assets.
  • Borrow $130,000+ on margin
    Right now I have roughly $110,000 CAD of margin debt. I want to increase my borrowing to $130,000 total. I’ll elaborate on this below.
  • Read at least 5 books
    I managed to read 4 books in 2021. So this year I want to try reading one more.
  • Meditate for 60 minutes a day for 60 consecutive days
    I heard this is good for you and lots of highly productive people do it so I’m going to try it out.
  • Make 10% return in my margin account
    Higher if possible because inflation is running pretty hot these days.
  • Earn $20,000 in net premiums from trading options
    In 2021 I earned about $10,000 in premiums. This year I plan to double that figure because I feel more comfortable making riskier trades with higher returns since I can manage them now.

 

Why I want more margin debt

Normal people have goals to pay down their debts. But I’m anything but normal, haha.

Here’s how much debt I currently owe in my margin account.

I want my total margin debt balance to exceed $130,000 CAD because that would give me the privilege to borrow at more favourable interest rates.

IBKR has tiers of borrowing. Any additional debt I take on after the $130,000 threshold will be charged an interest rate of only 1 percent. 😀

Yes. That’s insanely low, lol.

As long as inflation stays above 1%, I would be essentially getting paid to borrow new money.

What’s the catch? Borrowing more on margin adds to the risk of receiving a margin call if my stock holdings fall precipitously. This means I need to put the proper insurance in place to make this work. With liquidity being so readily available there are multiple strategies I can use to make sure I don’t lose my shirt. For example, I could tap into my unused HELOC to cover any unexpected margin requirements. I look forward to this new challenge of managing more debt. 🙂

 

______________________________________
Random Useless Fact:

Prevention is often better than cure.

 

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RICARDO
RICARDO
01/10/2022 1:09 pm

I run a HELOC tied to an investment account. Interest on the HELOC is 2.45%
The dividends pay the interest on the loan and reduce the principal every month.
The markets weren’t all that good to me and I am presently approx $20K lower than the HELOC loan. Doesn’t bother me too much as I mentioned above the divs pay the interest and still lower the principal every month.
So, yes, you can make money by leveraging but you can also lose money.

RICARDO

Passivecanadianincome
Passivecanadianincome
01/10/2022 1:47 pm

nice goals Liquid

Im going to add the read x amount of books in 2022 goal. thx

Love the margin approach, Im currently trying to setup a heloc to max our accounts, after that i would focus on 50% investing 50% pay down that heloc while reinvesting all the dividends.

keep it up
cheers

Odif
Odif
01/10/2022 4:07 pm

Leverage makes you look like a genius during a bull market, and shreds you to pieces during a bear market.

Financial Samurai
01/10/2022 5:32 pm

Love it! Margin away and swing for the fences!

I’ve decided to get more conservative in 2022 and focus on capital preservation.

If you can grow your net worth 20% more than you did last year, you will be a hero! Can you share what you will be investing in?

Thx,

Sam

maplethrift
01/10/2022 7:16 pm

dude for reading more I’m SO there with you! look there’s nothing that’s beats having a real book in your hands so I always been super annoyed at eBook readers and such but man… I got one for dirt cheap and it’s been a joy to bring it to work, not only does it hold multiple books but I think what’s super underrated is that ain’t nobody know what I’m reading lol

meditation wise… I tried it, I swear I tried man… but I just fall asleep LOL so I make it a point to work out everyday to tire myself out; also last point if you haven’t already, you gotta get on the podcast trend, listening to them and also creating one 🙂 if you do create a podcast it’d be hilarious to see you in different masks every episode discussing investing haha

maplethrift
01/12/2022 9:20 am

Tim is always a good listen I love his human lab mice approach on himself, I liken him to us DIY investors a lot lol, I would definitely recommend my faves, Planet Money and Every Little Thing. They are all 20mins ish and so well done but that’s expected from an established broadcasting company like NPR and Gimlet.

I think you’re underestimating how much content you can produce and if anything just take Tim’s approach, invite experts and ask them questions lol always be the dumbest one in the room haha

Money Mechanic
01/11/2022 5:03 pm

Love it! Can’t wait to follow along with the Options updates.

Nic
Nic
01/13/2022 7:37 am

Hello Liquid, I’m planning on using the smith manoeuvre on my house so I’ll be using debt that way, but still find the margin option you’re doing appealing. How exactly do you cover up in case of margin call? You just pull the amount they ask from you HELOC? If you already have this amount, wouldn’t you be more ahead if you invested it already?

AlW
AlW
01/16/2022 11:11 am

I’ve looked at the Smith Manoeuvre a few times with stocks, but never taken the jump.

In replying to Nic: the major worry I’d have with using HELOC (equity/borrowed money) and then using leverage on top of that is you’d be doubled up with risk and would have no reserves if you needed to cover a margin call.

I believe liquid owns a bunch of stocks free and clear and uses margin leverage against the stocks, but keeps money available in a HELOC for an emergency margin call.

Mr. Dreamer
01/14/2022 10:38 am

WOW! $300K increase in 1 year is awesome. How much of that comes from Real Estate appreciation?

And you are going to kill it again with Options trading. Great job and thanks for sharing all the tips and tricks.

I am enjoying my $20K from Tangerine for 2.45%. I invest it all in Stablecoins and lock for 90 days earning me 14%. It has been working pretty awesome so far.

Moe (Moementum Finance)
01/20/2022 8:55 pm

This is a great video, man! Thanks for sharing your goals for 2022. Well done on your amazing net assets. Great tip on not selling appreciating assets and growing them over time. Book recommendations? Probably you’ve read it before, but if you haven’t, I like “Quit like a millionaire”. Though there are points made by authors that I don’t quite agree with like their view towards real estate. I’m curious to learn more about your leverage investing through your margin account. Keep it up!

J.T.
J.T.
02/02/2022 5:16 pm

Hi! I’m wondering if you invest in crypto and if so what exchanges do you recommend for Canadians?

Great blog btw!!

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