This is my third net-worth updates for the year 2018. For those new to my finance journey, net worth update is a simple report I post every month, which tracks the progress of my journey to reach my financial goals.
My ultimate financial goal is to become a self-made millionaire by December 2024 (10 years plan). I have a strong belief that I can achieve this goal by saving and investing in high-quality dividend-paying blue-chip companies. And, I am a strong believer of ‘compounding’ power, and if I work hard and build a decent net-worth now, then the ‘compounding effect’ will give a heavy lifting in later part of my journey.
I am posting all my financial information on this website because I love to inspire and motivate people to start their own journey and reach their financial freedom. You could learn from my successes and failures (experience) and make your own financial decisions to build your wealth.
Along the way, I make financial mistakes and I will share them here with you. So, you could learn from the mistakes, avoid them in your journey and save money.
Also, I like to publicly track my progress and get feedback from like-minded people.
In March 2018, my net-worth was down by $1000 or 0.55% from the last month updates, declining for the second straight month for the first time since August 2017.
Like I said last month, it is an expected result for me as the majority of our asset values are tied with the stock market, so my net-worth is depending on the market’s performance.
Another reason for the net-worth declines is that my semi-annual property tax due date was in mid-March. It cost me around $1500 last month. I am not sure how city calculates our property fees, but there is a big increased from last year. Next due date will be in mid-June.
I make lump sum payments for my property tax and avoid monthly recurring expenses. So, once I paid-off my property in June, then I don’t need to worry about it until March 2019. So, I could use the cash-flow to buy assets or pay-down my debts.
Last month, I was busy in adding some hard-hitting dividend growth stocks to my portfolio. As a result, my debts level has increased by $2200. Unfortunately, my debt level is moving opposite direction. One of my goal for this year is to reduce my debt to $315K. I hope I could control my spending (mostly in asset purchases) and bring down my debts by end of the year.
Also, I was busy in refinancing my debts. Some of my low-rate promotions were about expired. So, I did some financial changes, paid down debts and refinance some others for another 8-12 months. It cost some transaction fees, but it worth the money.
In rising rate environment, I had been experiencing some difficulties to get a low rate (less 1.99%). Luckily, I was able to secure $12000 for 2.99% for 12 months, which is 1% more than usual rate. It is a warning sign for me, so I better pay-down those short-term loans as early as possible.
Next due is coming in June and another one is in July, but I received a new offer from one of the cards for 1.99%. So, I am good until September.
I have a back plan with HELOC account. I have over $22 000 credits available for 3.95% rate. If I couldn’t secure for a low rate, then I can use my HELOC. For now, it is not necessary.
I am a risk taker. I built over $200K portfolio relatively short period of time mostly with borrowed money. Now interest rate is about to move high. Therefore, it is time to slow-down and start focus on debt reduction.
I know many people don’t agree with my leverage approach, but it’s been working well for me. Remember I buy income producing & appreciating assets using borrowed money. I don’t by depreciating assets. Please understand it is not a recommended approach for all investors. It is very risky and it is not suitable for all.
Let’s get back to numbers..
Please note that my financial situations and risk tolerance will be much different than yours. We all are unique in nature. AS I always say, do your own research or discuss with a qualified professional advisor before making any financial decisions.
Net worth update as of March 31, 2018 ()
Assets:$520 800 ()
- Cash: $900 ()
- Home: $280 500 (no changed) – Yearly adjustment with average inflation rate of 2%
- Canadian Stocks: : $182 800 ( )
- U.S. Stocks: $39100 ()
- Employer’s Pension Plan: $17 500()
Liabilities: $331 000 ()
- Mortgage : $176 300 ()
- Student loan: $21 300 ()
- Margin loan: $64 800 ()
- Credit card 1:$6100 (no changed) (low interest credit card – 1.99% special rate for 8 months – will be expired in July 2018)
- Credit card 2: $21 900 () (low interest credit card – 2.99% special rate for 12 months – will be expired in January 2019)
- Credit card 3: $6100 ( – re-financed) (low interest credit card – 0.99% special rate for 12 months – will be expired in December 2018)
- Line of Credit 4: $4500 () (low interest credit card – 0% special rate for 12 months – will be expired in June 2018)
- Credit card 5: $5900 () – (low interest credit card – 1.99% special rate for 10 months – will be expired in October 2018)
- Credit card 6: $6800 () – (low interest credit card – 2.99% special rate for 8 months – will be expired in August 2018)
- Credit card 7:$500 (no change) – (regular expenses)- high interest rate of 19.99%.
- Line of Credit 1 :$16 800 () – (low interest credit card – 2.99% special rate for 12 months – will be expired in December 2018)
- HELOC: $0
Net worth :$189 800 () as of March 31, 2018
My net worth was down by since my last update.
Note
- all amounts are rounded to the nearest $100;
- all numbers are in CAD; and
- Conversion rate 1.00 USD = 1.2902 CAD
I have a huge credit card debts because I take advantage of low balance transfer promotion rate and invest in high quality dividend stocks. Learn, earn, save, invest and leverage your skills are the keys to become wealthy.
Thank you so much for following my finance journey and for your great support.
Please share how are you managing the recent market sell-offs?
Hi
Can you please explain me how your Canadian portfolio is just about 1% down for the year and almost all of your stocks have been down significantly and specially the most significant components of your portfolio (percentages are approximate):
Brookfield Infrastructure Partners (TSE:BIP.UN) down 7%
Canadian Utilities Ltd (TSE:CU) down 10%
Enbridge (TSE:ENB) down 20 % ( It started recovering after your last report)
Algonquin Power & Utilities Corp (TSE:AQN) down 7%
BCE Inc (TSE:BCE) down 10%
TransCanada Corp (TSE:TRP) down 10%
Even banks have been down significantly (about 7%) for the year. They started recovering after your last report.
As a matter of fact your portfolio should probably be down for every single month since mid 2017 as interest rates started climbing up and your portfolio is very sensitive to dividend hikes.
I just do not see how you can be in green unless you have very big contribution from paycheck every month. Dividends cannot repair such big loss.
I wish you all the best
Bezim
Hello Bezim,
Thank you for stopping by and posting your concerns regarding my portfolio / net-worth updates.
First, I just wanted to make it clear that the numbers are real, and I have no intention to post fake numbers here and impress readers. I am just documenting my journey publicly and posting all my success and also failures. Nobody is going to give me a best performer award for my portfolio performance 🙂 … So, I don’t need to fake my numbers and fool myself 🙂
Second, I just wanted to clear your doubts. May be many readers have similar questions so this will help them as well.
Let’s take the Canadian portfolio, the most significant components of my investment assets. Actually it is down by 7.94% for the year – without new contributions. Your numbers are correct.
It was recorded $187 700 on Jan 1st and $182 800 on April 30th. I made around $10 000 (exact number is $9964) purchases during the period using my saving from paycheck, dividends and debts (yes, I borrow money to invest). I have recorded all the transactions in the portfolio updates section here.
Therefore, without those new contribution my Canadian portfolio would be $172 800 as of April 30 -down by $14 900 or 7.94%.
I increase my assets purchases when market is down and mostly intact when market is up/high. And, I added portion of AQN, BCE and TRP after they came down to the current level (portfolio updates section)
I hope this makes you clear…
Thank you for bringing this..
Hi FJ,
Regarding your balance, when you borrow in order to invest that does not affect your balance (your assets are increased by the same amount as your debts), the same is true when you reinvest your dividends (cash from your assets turns into investments), that only changes the composition of your assets and debts, only when you invest from your active income (in your case paychecks) it changes your balance. not everything that changes your portfolio changes your balance.
Assuming you invest about $1000 per month out of your dividends (as you already reached $1000 per month in dividends) the other $1500 must be from your paychecks and borrowings, do you make sure to keep your debt to assets ratio stable at such times (as the interest rate is set to continue rising) or increasing your risks as this is a time of opportunities?
How do you decide when is a good time to increase risks?
In good times, is your priority set more onto decreasing debts or increasing assets?
How much out of your active income do you use for purchasing assets in an average quarter?
Thanks,
Alan.
Hi Alan,
Thank you for stopping by,
I hope you are talking about my net-worth, not my portfolio value. It is true that when I borrow to invest, my net-worth won’t change, but when I receive dividend my net-worth will increase.
Majority of the companies pay their dividend from the operational cash-flow, not by selling their assets and paying dividend. It is true that stock price go bit down on ex-dividend date, but usually they recover in few days. Therefore, when I reinvest my dividend, my portfolio value will increase and so on with my net-worth.
“How do you decide when is a good time to increase risks? “ – when I see a quality company with good track of dividend growth trading at multi-years low for some temporary issue. I buy those stocks as long as their fundamentals are strong.
“In good times, is your priority set more onto decreasing debts or increasing assets?” – I buy stocks at discounted price. In good times, it is little hard to find stocks at lower price. So, my priority will be for debts reduction and increase my purchase power. And, in bad times, many high quality companies will be trading at low for no reasons. I love to buy them and collect dividends.
“How much out of your active income do you use for purchasing assets in an average quarter?” – To be honest, I don’t have a right answer for this. As I said earlier, I try to buy stocks as much as I can when market is down using my active incomes and savings, and focus on increasing my buying power in good times.
Please understand that my financial situations, goals and risk tolerance are unique. Everyone is unique by nature and my strategies may not work for all. And, some people disagree with methods. Please do you own research before make any investment decisions..
Thank you once again..
Best Regards,
I like he leverage a lot but only with real estate on multi family homes for cash flow. But I like what you have done with lower interest rates borrowing leverage other peoples money.
Cheers
Dividend pursuit
Hello Dividend Pursuit,
Thank you for stopping by,
If you use DEBTs in a correct way, then you should be fine and accelerate your wealth building journey. Otherwise, it makes your life worse.
Best Regards,
I’m just curious why the margin loan instead of a HELOC. Can you not get a cheaper rate that way?
Thanks for your transparency and continued success building wealth:)
Hello Stock Market Speculator,
Thank you for stopping by,
I have three reasons to keep margin loan:
I hope this make senses 🙂
Best Regards,
You should also include your pending tax liabilities on any of your financial investments that have a capital gain should you sell it at the time you make your monthly statements. You are misleading yourself to say my stocks are up 100K from when I bought them but not include the 22K tax that you would have to pay.
Hey James,
Thank you for stopping by and suggestions 🙂 You are absolutely correct about my pending tax liabilities.
Actually, I didn’t mislead myself. I know that I have to pay taxes for capital gains, but only when I sell my stocks in my non-registered accounts. I am a long-term investor, and I rarely sell stocks in short-run. If I am planning to sell stocks and take profit, then I will definitely take consideration about taxes, but I don’t need to worry about them now.
Also, I need to pay taxes when I start withdraw money from my RRSP accounts. I won’t touch my RRSP until I retire and have low income. Therefore, tax liabilities will be much lower than now.
For dividends, I file tax every single year, so I don’t need to worry about it.
Thank you once again for your suggestions, I really appreciated it
Best Regards
I have a 0.41% interest rate for my mortgage.
Wow, that is the lowest mortgage rate I’ve never heard before (if it is true 🙂 )
Cheers,
I’m about to buy a condo and get a mortgage, how did you manage to get such a low interest rate? where did you get that mortgage?
Hello Alan,
Thank you for stopping by,
Currently, I have mortgage with Royalbank of Canada with 5 year fixed rate. I got my mortgage in late 2014, I secured the my rate through a RBC mortgage agent a month or two before the closing of my house purchases.
In 2014, you could get for much lower rate than now. Even some of my friends got variable rate for less an 2.4% with 5 year term.
You better start shop around early and get pre-approve. You could check some deals at https://www.ratehub.ca/.
Hope this helps,
Considering the rising interest rates are here to stay and I think it is safe to say that they should continue to increase in the coming years, it might be worth considering for you to start tracking your yearly interest costs in a similar way to how you currently track your passive income.
This might provide you with some extra insights in how much of your profits are eaten up by intrest each year and how that number changes as interest rates continue to go up and you continue to work on reducing your overall debt.
For example, a quick calculation of the combined yearly interest for your debt, excluding your mortgage and student loan, tells me that your leveraged investing approach is currently costing you about 5550 per year.
Since your current passive income from your investments is about 9000, that means that your debts use up over 60% of your total passive income in interest charges.
Seeing how that number develops going forward and your ability to reduce that as you keep working on reducing your debt might be a very useful way for you to make sure your debt is still sustainable and might help you decide when you might have to sell some assets to reduce your debt more quickly.
Also, I might add, my 60% does not include any transaction fees or transfer costs you have, in addition to the straight up interest you pay on your debt so I would assume the real number is quite a bit higher than that. Do you know what percentage of your passive income is used up by your interest charges, balance transfer fees, etc.? I suspect you might be close to 70+%.
I hope you keep an eye on that number so that you dont end up in a situation where your debt starts eating up all your profits.
Hello Andre,
Thank you for stopping by and your suggestions 🙂
I do track how much I pay for my debts. I costs over 80% of my passive-income (including my mortgage and students loan). You are absolutely correct about the net-profit calculations. But, I had decided to pay-down my all loans before start investing, I would have still paying my loans (student loans was $ 56K and mortgage was $200K) and wouldn’t have started my investing. So, I decided to do opposite of what mainstreams people do by investing first and paying loans later because of the ultra-low interest rate we had in the past few years. I think I have to start focus on my debts now as the rate may start to rise any-time 🙂
Best Regards,