Year End Balance Sheet Update 2016

2016 is turning out to be a spectacular year for equity investors. 🙂 The Canadian S&P/TSX index is up 17% year to date, while the Dow Jones index in the United States is up 14%. Wow! That’s impressive even by historical standards. The markets have done an excellent job of beating expectations lately. 😀 We could even see the Dow hit 20,000 points before December 31st if we’re lucky.

December is usually a good time to re-examine our investment portfolios and see if there’s any adjustments we need to make to our asset allocation or general financial plan. Personally, this last quarter has been quite eventful for me as I’ve contributed over $30,000 in new investments. As of now here is a breakdown of all my assets and liabilities. 🙂 Everything has been rounded to the nearest $1,000 in $CAD.

Net Worth At a Glance

Assets by Account/Type: 
$19,000 – TFSA at Canadian Western. Private mortgage fund.
$47,000 – TFSA at TD. Mostly income trusts.
$14,000 – Cash trading account at TD. Mostly stocks.
$86,000 –  RRSP at TD. Bonds, U.S. equities, and MICs + REITs.
$170,000 – Margin Account at IB. Mostly dividend stocks.
$10,000 – SolarShare bonds.
$263,000 – Primary residence.
$433,000 – Farmland.
Total Assets = $1,042,000

Liabilities:
$186,000 – Home Mortgage
$192,000 – Farm Mortgage
$58,000 – Margin Loan
$17,000 – TD LOC
$17,000 – HELOC
$10,000 – CIBC LOC
Total Liabilities = $480,000

Total Net Worth = $562,000 🙂

Farmland still makes up a rather large piece of the pie chart. I can’t complain that my farmland went up 10% in value, but I would like to see my stocks and fixed income allocation increase to create a more balanced portfolio.

Last year in December 2015, my farmland represented 44.6% of my asset allocation. This year it has gone down to 40.3% so I am making progress. But it is still not enough. I have to stay focused on my goals and make changes to my situation. As George Bernard Shaw once said, “The people who get on in this world are the people who get up and look for the circumstances they want, and if they can’t find them, make them.”

So in 2017 I plan to buy more fixed income assets and dividend paying stocks to increase my relative position in those liquid asset classes. 🙂

Below are some more details about my various investment accounts.

Detailed Breakdown of Liquid Assets

Canadian Western Bank. Total Value = $19,000

• I have a Canadian Western TFSA. All the money here is invested in Antrim MIC, and has returned about 6% per year.

TD Direct Investing. Total Value = $147,000

• I have 3 accounts with TD. Altogether they have cumulatively returned 7.56% per year since inception, beating the TSX index.

Interactive Brokers. Total Value = $170,000

• I opened this new margin account this year and transferred some of my positions over from TD. The (-$56,411) cash value is negative to show that it’s how much I owe. Luckily interest rate on this loan is only 2%, so this debt is very affordable. As we can see from the account info below, my leverage ratio is only 1.49. I’m not worried about margin calls as long as it stays below 2.0. For my leverage to cross 2.0 the market value of my portfolio would need to drop 34% from today’s price point.

SolarShare Bonds. Total Value = $10,000

• This renewable energy bond works almost like a timed annuity. I will slowly get the $10,000 back over a period of 15 years.

Net Worth Over Time

2016 has been the best year for my finances so far. I’ve managed to grow my assets while paying down debt.

The average cost across all my debt is currently 2.9%. I usually adjust the amount of debt I have based on this number. Last week the Federal Reserve raised the interest rates in the U.S. by 0.25%. But I feel like that was a mistake because the U.S. economy is still struggling. Most analysts expect 3 more rate hikes in 2017, but I think the next move by the Fed will actually be a rate cut. 😉 Or maybe this is just my wishful thinking because I’m currently hooked on cheap credit, haha. It shall be interesting to see when and how interest rates will increase again in Canada as well.

__________________________________
Random Useless Fact:

Coffee is the world’s second most traded commodity, only behind oil.