Fiscal Update July – U.S. Rate Drop

Much like raising horses, financial markets are at their best when they are in a stable environment. 😀 But when the economy starts to show signs of weakness, officials may step in to ease the situation. One way they do this is by making money cheaper to borrow.

July was an okay month for stocks. But the bond market was where all the action took place. 🙂 A couple of weeks ago I blogged about buying the long term bond etf (ZLC.TO) because I thought interest rates were about to fall. Luckily that was a pretty good move. A week later, for the first time in over a decade, the Federal Reserve actually lowered rates in the U.S. This means that rates in Canada may fall later this year as well. Long term bond funds increase in value when interest rate falls because existing bonds in those funds pay more money than newly issued bonds. The price of ZLC is already up 2% since last month. It also pays 4% interest every year. 🙂

My income was pretty good in July, and quite a bit higher than this time last year. Since interest rates are dropping I decided to increase my financial leverage a little bit. I borrowed $6K from my LoC to buy some new commodity stocks which I discussed in a previous post. I plan to pay back the debt before the end of the year but keep my investments for many years. 🙂

Liquid’s Financial Update

*Side Incomes: = $2,900

• Part time job =$800
• Freelance = $300
• Dividends =$1000
• Interest = $700

*Discretionary Spending: = $2,200

• Food = $400
• Miscellaneous = $400
• Interest expense = $1300

*Net Worth: (ΔMoM)

• Total Assets: = $1,372,000 (+19,000)
• Cash = $5,500 (-2000)
• Canadian stocks = $189,200 (+12600)
• U.S. stocks = $136,900 (+6100)
• U.K. stocks = $21,500 (-200)
• Retirement = $134,600 (+1600)
• Mortgage Funds = $36,600 (+600)
• P2P Lending = $35,700 (+300)
• Home = $367,000 (assessed land value)
• Farms = $445,000

• Total Debts: = $393,200 (+4,800)
• Mortgage = $187,300 (-400)
• Farm Loans = $163,800 (-400)
• Margin Loans = $36,100 (-400)
• Line of Credit = $6,000 (new)

*Total Net Worth = $978,800 (+$14,200 / +1.5%)
All numbers are in $CDN at 0.76/USD

 

I’m less than $22K away from a million dollar net worth. Wow. 🙂 One more month of positive stock market returns and I may just hit it by the end of August. Even though many experts warn of a U.S. recession by 2020, it wouldn’t be a good idea to try and get out of stocks before a bear market hits. Simply holding on to good businesses can be very profitable over time.

Technically, falling interest rates don’t just benefit bond funds – it’s also good for the stock market. But things are looking less certain with global trade disputes, and the elections coming up. I think we may see a small stock market correction before more stabilization in 2020. But who knows. In the meantime I still like the precious metal sector. I think gold and silver will finish 2019 really strong. 🙂

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