Road to Recovery
The S&P 500 climbed 13% in April, gaining back most of the losses from March. I picked up some new stocks during the low points in the first quarter so the V-shaped recovery is nice to see. πΒ Leading the bounce back are technology stocks. Amazon just announced it made $75 billion in Q1 revenue, beating expectations as more consumers are shopping from home. AMZN shares hit an all time high recently. I’m brushing up against the elusive $1 million net worth once again. π Things are looking up. But is it too soon to celebrate?
The market is getting back to a balanced state as volatility subsides. But it’s hard to say if the bottom of the bear market is already behind us. I’m concerned that this quick rebound in April could be a false signal and we are actually headed for a double dip correction in the months to come. So my current strategy is to buy only defensive stocks with a strong balance sheet. If sentiment continues to improve then I won’t miss out on the rally. If markets drop back down then my portfolio should hold up better than the general index. π
My earlier stock purchases from February and March are starting to pay off. For example, Telus Corp (TSE:T) paid me nearly $300 in April. That payment was used to purchase another 13 shares of Telus thanks to the DRIP program. Maybe next time I’ll receive 14 shares.
This is the best kind of passive income. It makes you money using the money it already made you. π I’m now consistently earning over $1,000 a month in dividend income. This is the first year this has ever happened to me. Interest income from bonds, REITs, and other funds are growing as well. It’s exciting to watch my trading account get bigger by itself over time. π
Liquidβs Financial Update April 2020
*Side Incomes: = $4,600
- Part time job =$500
- Freelance = $100
- Dividends =$1300
- Interest = $900
- Rent = $1,800
*Discretionary Spending: = $1,600
- Food = $300
- Miscellaneous = $400
- Interest expense = $900
*Net Worth: (ΞMoM)
- Total Assets: = $1,510,800 (+$55,100)Β
- Cash = $47,900 (+5400)
- Canadian stocks = $294,000 (+28,000)
- U.S. stocks = $145,600 (+17,300)
- U.K. stocks = $18,700 (+900)
- Retirement = $152,100 (+2000)
- Mortgage Funds = $35,100 (+1200)
- P2P Lending = $36,400 (+300)
- Home = $331,000 (assessed land value)
- Rental Unit = $450,000 (2020 purchase price)
- Total Debts: = $525,800 (-3,600)
- Home Mortgage = $182,200 (-700)
- Rental Property Mortgage = $313,500 (-800)
- Margin Loans = $30,100 (-2100)
*Total Net Worth = $985,000 ($58,700 / +6.3%)
All numbers are in $CDN at 0.72/USD
Stick to the plan
In March I wrote about waiting awhile before I buy any new investments. I wanted to wait for a clearer market direction. Well now there is. π Last week the 10 day simple moving average (SMA) of the S&P 500 crossed back up above the 50 day SMA. This is a technical indicator which signals strength in the stock market. And we haven’t seen a circuit breaker halt trading activity in several weeks now – meaning the market has somewhat stabilized.
Some readers have asked me for stock tips. I don’t give specific financial advice. But recently while shopping I came across this stock on sale below. What a great deal. π
I didn’t buy any new financial assets in April. But going forward I will be looking to purchase new stocks in the energy and financial sectors. π I still think dividend growth stocks are worth considering even though valuations are not as cheap as last month.
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Random Useless Fact:
In April, Toronto police issued fines ($750 each) to more than 470 people over social distancing rules.
How are the renter’s doing paying rent with COVID-19, hope they are essential or remote workers
They are doing well so far. I don’t know if they are essential workers or not. But they have enrolled in a government program where the province of BC covers $300 of their monthly rent, and they make up the rest, which is $1500. So far no issues. They also have $11,000 in savings as of February 2020 – a large safety net. π
Hey Liquid,
Love the posts, keep it going man!
I have a question regarding ETF investment such as VBAL. Obviously a chunk of the fund is invested in bonds, but with the low annual payout along with inflation possibly rising, wouldn’t it make more sense to keep the conservative share of the portfolio as cash?
Within the conservative share of my portfolio I typically like to hold some short term low risk investments, such as ZSB or ZCS, and also hold a little bit of cash. I can use the cash balance to buy riskier investments in the future. And then maybe sell some conservative bonds to replenish my cash. Balanced funds such as VBAL contain other funds that invest in many different asset classes. It’s a good option for someone who doesn’t have a lot of time to figure out a detailed investment plan and asset allocation. VBAL and other funds are a good catch-all investment strategy if someone simply wants a generic diversified portfolio. But the way I like to invest is to be more selective of my investments. For this reason I don’t own VBAL. By selectively choosing risk asset investments and conservative investments separately it’s easier to control a portfolio’s overall risk in the market. Cash is the safest thing short term. But I would still buy bond funds, or other low risk investments that have a 1 or 2 year average maturity date. This is because the returns are slightly higher than cash accounts, and they won’t lose too much… Read more Β»