May 2016 Fiscal Update – Still Growing

Markets at a Glance

The Canadian economy shrunk 0.2% in the last month of the 1st quarter. Despite a disappointing Q1 the S&P/TSX Composite index still managed to climb higher this month, as did the major indexes in the U.S.

I don’t know what’s keeping the stock market afloat these days but it can’t all be fundamentals. The Dow Jones index managed to post its 4th straight monthly gain in May despite poorer jobs numbers, worse manufacturing data, a weak U.S. economy, and 3 straight quarters of contracting profit growth for corporate earnings. It doesn’t make much sense to me how the stock market continues to move higher when there are hardly any good indicators out there. But just like living in North Korea, I can’t complain. 😀 As an investor, market returns make me happy regardless of the reason. 🙂 But even though I now have a quarter million dollars rolling around in the stock markets it actually doesn’t feel like very much at all, because my portfolio is merely based on the perceived value of large companies, which can be fickle at times.

In 2014 Elizabeth Holmes was named as “America’s richest self-made woman” with a net worth of $4.5 billion, as estimated by business magazine Forbes. This valuation was based on her 50% stake in a blood testing startup that she founded called Theranos. A blood test can take a lot out of someone. It can be a very draining procedure. But recently Holmes’ business ran into some regulatory trouble which puts into question the $9 billion valuation of her private company. So earlier this week Forbes had revised her net worth all the way down to $0. Wow, from $4.5 billion to being flat-out broke. It’s amazing how quickly the perceived value of someone’s net worth can change. This is why we shouldn’t take our net worths for granted. It could all change. 😕

Liquid’s Net Worth Update

*Side Incomes:

• Part-Time = $900
• Freelance = $400
• Dividends = $600
• Interest = $200

• Fun = $200
• Debt Interest = $1300

*Net Worth: (MoM)

• Assets: = $985,700 total (+12,800)
• Cash = $11,500 (+7300)
• Stocks CDN =$114,100 (+200)
• Stocks US = $69,500 (+3900)
• RRSP = $70,500 (+2400)
• Mortgage Funds = $23,100
• Home = $263,000
• Farms = $433,000

• Debts: = $486,400 total (-1,100)
• Mortgage = $188,700 (-500)
• Farm Loans = $195,400 (-500)
• Margin Loan CDN = $28,300
• Margin Loan US = $25,500 (+1000)
• TD Line of Credit = $20,000  (-600)
• CIBC Line of Credit = $10,500 (-500)
• HELOC = $18,000

*Total Net Worth = $498,300 (+$13,900 / +2.87%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

May turned out to be another great month. It would be nice to think that hard work and personal sacrifice created the $13,900 addition to my net worth this month, but I have to admit that most of this wealth gain simply came from passive income and stock appreciation. 😀 I received $4,500 in cash from my tenant in May. The government also gave me a $2K tax refund because I contributed a lot to my retirement savings account last year (over $10K.) And my portfolio grew by about $4,100 on its own this month without me lifting a finger, thanks mostly to a stronger U.S. dollar.

I hope everyone else had a great month as well. 🙂 Building up to financial independence is a marathon that requires planning and patience. So what we do today to create more wealth at the moment isn’t really important. What matters more is what we did yesterday to build a financial foundation for ourselves to stand on today. And by shifting the timeline to the year 2020 and beyond we can continue to plant the seeds now that will bear fruit for us in the future. It’s a lot easier to increase our net worths by five figures every month if we’ve already built up a sizable investment portfolio. 🙂 But at the same time, it’s important to keep in mind that having more money in the stock market also increases the risk of losing more money in bear market conditions. Which is why many investors slowly change their asset allocations through different life stages from being overweight in equities when they’re younger, to favoring fixed income investments over time as they get older.

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Random Useless Fact:

The universal emergency number 9-1-1 was established in 1968.