Sunday, August 13, 2017

My Investment Portfolio

As promised, here is my investment portfolio as of today.

As you can see I have made a few bad investment in my early days of investing. The last two stock in my portfolio were definitely not the smartest decision in my life. However they were all prior to my journey and I have personally learned a lot from making such bad investment decision. Most of the stock in my portfolio was only added this year. The majority of my portfolio is currently with a Canadian tech company call Shopify which has been super bullish since the beginning of the year. I am also invested into two Marijuana stock because I think once the legalization happens in Canada these company will get a huge boost in profits. My personal investment strategy right now is to buy and hold because I found that when I try to invest for short term gain I rarely turn a profit. I am also going to avoid energy stock and try to focus on sector that are less susceptible to global and political factor. I think stocks like Mastercard are excellent because for the foreseeable future the world will still be relying heavily on credits even if retail stores start moving online.

Anyway, I am not here to give advice or tips on which stock to invest into. This post is to give you a better idea of my investment so that when I do my monthly update you can see why the numbers are what they are. One last thing, my portfolio currently generates around $300 in passive income annually.

Tuesday, August 1, 2017

Neighbour Joe - August 2017 Net Worth

Hi everyone, it's time for another monthly update of my net worth. A lot happened this month, I moved to a new province for work which meant I brought a new house and sold my old house. The transaction haven't fully settle yet so I am going to give an approximate amount.  


Asset 
Chequing: $4,149.85
TFSA Investment: $31,165.04
TFSA Mutual Fund: $3,525.77
Real Estate: $224,000 (Purchase Price of my new house)

Work Pension: ~$153,000 (I checked in Jul 2017 but I can't remember the exact amount)
Approximate cash from house sales(Sales price - old mortgage) : ~$91,000

*Automobile is not included as I feel it depreciate too fast and will give a misrepresentation of my true net worth

Liabilities 

Old Mortgage: $0
New Mortgage: $179,200
LOC: $12,066.71

Bridge Loan: $30,000

*Credit Card is not included as it is paid in full every month
Current Net Worth: $285,574.66 (+5%)

A reason for the increase in net worth is my investment which is doing better than last month because Bombardier stock price went up recently. I still haven't contributed any additional money to my investment since this blog started. I am planning to make a post later to show everyone my investment portfolio.

The main reason my net worth went up is because my wife took $10,000 from her saving for the down payment of the new house. Since her net worth is not part of my calculation, this transfer reflected in an increase in my net worth.

One last thing, as you can see i'll have a lot of cash on hand soon. My plan is to paid off all the loan and as much of the mortgage as I can without incurring any penalty. I'll then set aside the max amount for mortgage pre-payment for the new calendar year. Then whatever is left will be invested in my TFSA. 

Tuesday, July 11, 2017

TFSA - Trading vs Investing? Taxable?

I recently came across an article on the Financial Post. Article. The article was talking about how frequently buying or selling stock in your TFSA can make your prone to an audit by CRA. Apparently, if you use your TFSA for any "business" use, all your income in your TFSA can become taxable. I am not going to go into too much details as it is well explained in the articles. I just wanted to point out the article to everyone so that you don't find yourself in such situation. However, if you follow our philosophy of slowly but wealthy where you buy and hold then you'll be just fine. Keep saving, investing and wealth growing. Cheers.

Monday, July 3, 2017

Bank of Canada Interest Rate Hike? What does it mean for you?


I am not sure if you have been following the news lately by there has been a lot of speculation that the Bank of Canada will raise its overnight interest rate. Here is a CBC article if you want to read into the background: Article. Ever since the US increased their interest rate, there has been a lot of speculation on when Canada will follow. 

What this all mean for the average Canadian like yourself? Well interest rate it is used to determine the prime rate which is how much it cost to borrow money. If you were the one lending money then it's how much you should charge for your money. It's kind of like the MSRP when you go buy a car from a dealer, but for borrowing money. Google definition of prime rate: "the lowest rate of interest at which money may be borrowed commercially." 

The biggest impact is the one area where people burrow the most money, their mortgage. 

Mortgage
Lets examine the impact of this on mortgage and your monthly payment. So from doing some simple google search, I was able to find this chart on ratehub.ca. It compares Bank of Canada's overnight interest rate with the prime mortgage rate. One thing that I want to point out is that not all banks has the same mortgage prime rate, TD is currently at 2.85% while RBC is at 2.72%. Regardless, the speculation is that BoC will increase its overnight rate from the current 0.5% to 0.75%. We can assume that mortgage rate will go up by about 0.25% as well, it might not be exact but it'll be a good estimation. Let's compare what a 0.25% difference will do to a $200,000 mortgage.
It's about $25 more in monthly payment which equates to $1000 more of interest in two years and less money going towards principal. Even thought $25 might not seem like a lot, the expectation is that the rate will continue to go up. My advice is bring your debt down as much as you can while the rate is still relatively low. Pretend that the rate is 0.25% higher and put that extra money towards your monthly payment. I mean eventually you'll have to pay it, might as well do it now.

Consumer Debt
The secondary impact are other debts, such as line of credits and credit cards. Basically, if you are in debt then an increase in interest rate is bad news for you. In David Chilton's book "The Wealthy Barber Returns", he suggested that when the interest rate is low, it's best to pay down your debt. This way when the interest rate goes back up, you wont have to pay as much since your debt is much lower. Even thought his book was one of the best seller, Canadian still owes $1.74 for every dollar in income, guess not a lot of peoples are taking his advice. The fact is, as interest rate goes up, your debt will grow as well if you are not able to take control of it. Interest are usually compounded monthly for credits and it can really get out of control fast.