2014 Year End Review

Financially speaking this has been the best year for me so far. Here’s a 2014 year end review and some updates about what’s been going on in my personal life.

Braces Removed

Earlier this year I decided to get braces for financial reasons. According to my research people with very straight teeth make more money than the average person. The total cost was $2,000 but I think this will turn out to be a great investment in the long run. So here’s an update. A couple of weeks ago I got them removed!

My teeth look great and I’m more confident about my smile 😀 which, according to science, should help me earn more money. 😉 The only issue now is I have to wear a retainer pretty much all the time which makes me sound kind of funny when I talk lol.

Stock Markets Climb

Last year in 2013 the U.S. stock markets gained 30% so many investors decided to sit out in 2014 because they thought stock prices were overvalued. But the Dow in the U.S. gained 9% this year, and up here in Canada the TSX gained about 7%. These 2014 gains are on par with average historical stock market returns. This just goes to show that we should not try to predict future market performance using information from the previous year.

Buy stocks for the profitable companies they represent. For example, I posted my analysis for Dollarama, and explained with logical reasoning why this recession-proof business should outperform going forward. I also blogged about investing in Time Warner, and 21st Century Fox and discussed why these are excellent long term investments.

Today, Dollarama shares are up 34% from when I bought them. Both Time Warner and Fox shares have also returned double digits from my purchase price. No wonder my net worth has been growing like a weed. 🙂 It’s no big deal really. I’m not a stock picking wiz or anything. 🙄 Investing simply works for anyone who follows the basic principles of buying great companies at decent valuations! 😀

Oil Price Slump

Unfortunately, not everything is up this year. The one area of my portfolio that suffered lower prices was oil companies. Luckily I’m well diversified so the impact wasn’t that bad. The important thing is to hold onto large cap energy producers like Suncor and Canadian Natural Resources. Despite the oversupply of oil in the world Suncor shares are still worth more today, $37/share, than when I purchased it last year at $28/share. Large companies don’t get hurt as much when the sector in general underperforms.

Tim Hortons Resolution

Many of you have asked me what I plan to do with my 20 shares of Tim Hortons now that Burger King is buying them. There are usually a few options for shareholders when their company is being taken over. My 3 options, specifically in this case, are:

1. Cash Tender – To receive $88.50 CAD for each common share of Tim Horton Incorporated tendered.
2. Stock Tender – To receive approximately 3.0879 common shares of Holdings (to be renamed later) for each common share of Tim Horton Incorporated tendered.
3. Cash & Stock Tender (Default Option) – To receive $65.50 CAD plus approximately 0.8025 of a common share of Holdings (to be renamed later) for each common share of Tim Hortons Incorporated tendered.

I am going with the default option number 3. I purchased Tim Hortons share for about $50 each back in 2013. Option 3 basically gives me an immediate 30% return on my investment, plus I’ll receive shares in the new holding company, which is a nice bonus. 🙂 I also don’t have to worry about taxes because the transition will take place in my Tax Free Savings Account.

Fixed Income Investments

I went on a fixed income splurge this year, buying $20,000 of interest producing assets. My $10K investment in the private company Antrim has been a little disappointing as the annual rate of return is only 6%, when I was expecting 7%. However I’ve only held this investment for 6 months so far. My $5K investment in publicly traded MICs is doing so-so. AI is up, but TMC is down. Lastly, my high-yield Sherritt International bonds are performing exactly as expected. Sherritt is a mining company.

I purchased $5,000 worth their bonds with an 8% coupon. So every 6 months I receive $200 of cash in my RRSP account. Overall I’m getting $1,300 every year from my newly acquired fixed income investments. 🙂 These purchases help diversify my portfolio away from equities. The 6.5% steady return on the overall $20K invested is pretty nice too. I can’t reasonably expect that kind of yield from a portfolio of dividend paying stocks.

Debt Struggle

Ever since going cold turkey on debt in August I’ve been itching to borrow again. Abstaining from new loans is probably the most frustrating thing for me in 2014. 🙁 I feel so helpless and constrained. I really miss the sense of freedom of being able to buy anything I want, regardless of whether or not I have the savings to do so. But on the bright side I’ve paid down about $10K of debt since my abstinence began. 🙂

Debt should be a human right. Not having access to credit is a scary place to be in. Instead of borrowing money to fund my purchases I have to rely on savings, which is not fun at all. It’s like my finances are being suffocated. Imagine how constrained a start up business would feel if it can’t get a bank loan. Without using debt I feel like my options are severely limited. I can’t wait for the new year when I can go on shopping sprees again.

Rent Renewal

I renewed the lease agreement with the tenant on my farms for the 2015 crop year. He’ll pay me $8,500 total. This is about 2.6% of the purchase price and $1,000 less than what he paid me this year. It’s not a very good cap rate to be honest. Grain prices have fallen since last year so unfortunately the rent is down as well. But I’m just glad I’m still getting paid at all. 🙂

Popular Posts in 2014

• 30 Financial Milestones by 30 – Popular because many people can relate to it. (35 comments.)
• Rent vs Buy – Popular because real estate is a hot topic for Canadians. (54 comments.)
• Debt to Income Ratio Exposed – Popular because it’s controversial. (33 comments.)

Focus for 2015

Next year I want to look at possibly investing in some renewable energy. This could include solar power, wind power, or geo-thermal. My debt barrier will be removed next year so I can finally finance my investment again with bank loans, yay. 😉 As for the blog I plan to write more on the topic of debt. Don’t worry I’m not going to track my debt, set goals, and become a generic debt blogger. I can’t compete with the competition in that genre.

Instead, I want to approach debt from a different angle. My intent is to have commentaries and discussions about the state of owing money from a macro perspective – the bigger philosophical topic of what debt actually is, why it’s used, when was it invented, and how just about every single wealthy person in the world today is literally using debt to stay ahead, and how I plan to do the same.