Fiscal Update – Mar 2015 – Currencies Beyond Borders

The overall stock market in March dropped a little bit. It appears growth has stalled in Canada due to continuing low oil prices. But thanks to my side incomes I ended the month with a slightly more positive net worth. 🙂 Side hustles are important during tough economic times because if I lose my full time job at least I’ll have a financial cushion to fall back on. One of the more popular forms of making extra income is through online surveys. They don’t take too much time and you even get free products to review sometimes.

Emerging countries have been growing their economies faster than Canada or the U.S. in recent times. One way to profit from this trend is to invest directly in the currencies of those countries. The value of the Chinese currency, for example, should make people in North America pay attention. But instead, too many of us just yuan. 😀

Back in late 2013 I wrote an article about how I had invested in China’s currency, the RMB. I mentioned I would keep everyone posted. So today I’ll give you guys an update. 🙂 Back then I purchased ¥5,000 for $900 CAD. Today, my ¥5,000 is worth $1015 CAD if I convert it back into Canadian currency. It appears my instincts were correct. Wahoo! 😀 I made 12.7% return in 15 months. It’s not a lot of money. But every little bit helps to reach early retirement.

*March Side Income:

• Part-Time Work = $600
• Dividends = $500
• Selling Options = $200

• Fun = $300
• Debt Interest = $1500

*Net Worth: (MoM)

• Assets: = $855,400 total (+800)
• Cash = $3,500 (-500)
• Stocks CDN =$93,500 (+2600)
• Stocks US = $58,700 (-400)
• RRSP = $52,700 (-900)
• MICs = $15,000
• Home = $259,000
• Farms = $373,000

• Debts: = $515,100 total (+500)
• Mortgage = $194,600 (-400)
• Farm Loans = $202,100 (-500)
• Margin Loan CDN = $29,200 (+2400)
• Margin Loan US = $25,900 (+100)
• TD Line of Credit = $29,000  (-500)
• CIBC Line of Credit = $10,000
• HELOC = $18,200
• RRSP Loans = $6,100 (-600)

*Total Net Worth = $340,300 (+$300 / +0.1%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

Currencies make up the backbone of every country. A nation’s currency affects its stock market, bond market, housing market, and everything else it produces. Over the last couple of years Russia’s Ruble has lost about 45% of its value when compared to a basket of international currencies. Yikes! Just imagine losing nearly half your purchasing power. 🙁 There’s a misconception that your money is safe if you buy a GIC, CD (certificate of deposit,) T-Bill, or simply leave it in a high interest savings account. The reality is that it’s only “safe” to the extent that your currency doesn’t become the next Icelandic Krona.

If a basket of Canadian stocks and bonds returned 20% but the Canadian dollar also lost 20% of its value over the same period then the real value of that portfolio would not have changed. Its net worth relative to the rest of the world would still be the same. That’s why it’s important to diversify our currency holdings, much in the same way we deal with asset allocation and risk management. And it doesn’t have to be a dramatic change from our current financial plans. By having only 25% of my investments outside of the Canadian currency I was able to capitalize on the strengthening of the U.S. dollar, RMB, and ZWD, over time. 😉

A couple of weeks ago the first trading hub for China’s currency in the Americas launched in Toronto. This is huge news that can potentially change the way households manage their savings. This establishment will essentially adopt Yuan denominated payments in Canada and economists say it will increase our trade with Asia, and bring billions of dollars to North America. That means more jobs, more business opportunities, and more money for investors! 🙂

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Random Useless Fact:
Americans spend $1.9 billion a year on Easter candy. That’s the second biggest candy holiday after Halloween.

P.S. The post published a few days ago was meant to be an April Fool’s joke. I did not buy a Tesla. 😛