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FREEDOM 35 BLOG
How negative real rates distort everything Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. 😛 The graph below shows the difference HOW TO HEDGE AGAINST INFLATION IN 2021 Land and property. Prime real estate will always be in demand. Alternative investments such as fine art, wine, rare collectables, and cryptocurrencies. Human capital. Productivity is a great answer to inflation. Invest in yourself to maintain your earning powerregardless of
FINANCIAL INDEPENDENCE! I HAVE FINALLY ACHIEVED MY DREAM. Dividends = $19,044/year. My stock portfolio is worth about $600,000. It holds mostly dividend growth stocks. The average portfolio yield is 3.2%. This is the bread and butter of my passive income strategy. I have been consistently borrowing money on margin to buy dividendstocks since 2010.
WHAT YOU SHOULD KNOW ABOUT NEGATIVE REAL INTEREST RATES Thanks to negative interest rates holding a mortgage produces wealth, net of inflation. Real estate tends to be a terrific store of value. So you can generate returns from both your property and your debt, which creates a double compound growth effect. 🙂. Ben Bernanke, who used to chair the Federal Reserve, still maintains a mortgage despite WHAT BANK TRANSACTION CODES MEAN WBD – Transfer in of money from another account – usually the description will include TSF FR (account number.) WHTX02 – Withholding tax from a U.S. stock or other security. Keep in mind that these transaction codes may be different than what will ultimately appear on your year-end tax slip. Sometimes banks and brokerages use default designations for convenience and may vary from the tax HOW TO BUILD YOUR NET WORTH LIKE THE MILLIONAIRE NEXT DOOR This is the third and final post in this series where I discuss the most influential events of my personal finance journey. I like to save the best for last so today I’m discussing a book called, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” by Thomas Stanley and William Danko. 🙂 The MillionaireNext Door
EXPLAINING THE US ECONOMY AND PRODUCTIVITY WITH AN ISLAND Hey Ramone. One option you can look into is the Vanguard FTSE Emerging Markets ETF. It’s one of the largest EM funds in the world. *If you buy with Canadian dollars the ETF is listed on the TSX under the symbol VEE.TO. *You can also find it as VWO on the NYSE.; Both are pretty much the same, except the US dollar ETF (VWO) has a lower management fee (MER) of just 0.10%. MEDIAN AND AVERAGE NET WORTH IN THE USA AND CANADA In Canada, there were 1,100,000 people last year in 2014 worth at least US $1 million. That number dropped to 984,000 this year, thanks largely to the huge drop in the loonie. ( source) A person needs only $3,210 to be in the wealthiest 50% of world citizens. About $68,800 secures a place in the top 10%. Finally, the top 1% of the world’sFARMLAND INVESTING
An Introduction to Farmland Investing. Farmland is a fantastic investment! We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives it only makes sense that it should also be a part of our investment strategy. 😀 Inflation hedging is the main reason why some investors are looking atagriculture.
ACCUMULATING $1 MILLION WORTH OF ASSETS A few things: i) Good to see you acknowledge your right place-right time luck. Even billionaire Buffett admits as much. ii) Good to see you acknowledge the difference between assets, net worth, and liquidity. $1 million is worth $0 million if you can’tFREEDOM 35 BLOG
How negative real rates distort everything Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. 😛 The graph below shows the difference HOW TO HEDGE AGAINST INFLATION IN 2021 Land and property. Prime real estate will always be in demand. Alternative investments such as fine art, wine, rare collectables, and cryptocurrencies. Human capital. Productivity is a great answer to inflation. Invest in yourself to maintain your earning powerregardless of
FINANCIAL INDEPENDENCE! I HAVE FINALLY ACHIEVED MY DREAM. Dividends = $19,044/year. My stock portfolio is worth about $600,000. It holds mostly dividend growth stocks. The average portfolio yield is 3.2%. This is the bread and butter of my passive income strategy. I have been consistently borrowing money on margin to buy dividendstocks since 2010.
WHAT YOU SHOULD KNOW ABOUT NEGATIVE REAL INTEREST RATES Thanks to negative interest rates holding a mortgage produces wealth, net of inflation. Real estate tends to be a terrific store of value. So you can generate returns from both your property and your debt, which creates a double compound growth effect. 🙂. Ben Bernanke, who used to chair the Federal Reserve, still maintains a mortgage despite WHAT BANK TRANSACTION CODES MEAN WBD – Transfer in of money from another account – usually the description will include TSF FR (account number.) WHTX02 – Withholding tax from a U.S. stock or other security. Keep in mind that these transaction codes may be different than what will ultimately appear on your year-end tax slip. Sometimes banks and brokerages use default designations for convenience and may vary from the tax HOW TO BUILD YOUR NET WORTH LIKE THE MILLIONAIRE NEXT DOOR This is the third and final post in this series where I discuss the most influential events of my personal finance journey. I like to save the best for last so today I’m discussing a book called, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” by Thomas Stanley and William Danko. 🙂 The MillionaireNext Door
EXPLAINING THE US ECONOMY AND PRODUCTIVITY WITH AN ISLAND Hey Ramone. One option you can look into is the Vanguard FTSE Emerging Markets ETF. It’s one of the largest EM funds in the world. *If you buy with Canadian dollars the ETF is listed on the TSX under the symbol VEE.TO. *You can also find it as VWO on the NYSE.; Both are pretty much the same, except the US dollar ETF (VWO) has a lower management fee (MER) of just 0.10%. MEDIAN AND AVERAGE NET WORTH IN THE USA AND CANADA In Canada, there were 1,100,000 people last year in 2014 worth at least US $1 million. That number dropped to 984,000 this year, thanks largely to the huge drop in the loonie. ( source) A person needs only $3,210 to be in the wealthiest 50% of world citizens. About $68,800 secures a place in the top 10%. Finally, the top 1% of the world’sFARMLAND INVESTING
An Introduction to Farmland Investing. Farmland is a fantastic investment! We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives it only makes sense that it should also be a part of our investment strategy. 😀 Inflation hedging is the main reason why some investors are looking atagriculture.
ACCUMULATING $1 MILLION WORTH OF ASSETS A few things: i) Good to see you acknowledge your right place-right time luck. Even billionaire Buffett admits as much. ii) Good to see you acknowledge the difference between assets, net worth, and liquidity. $1 million is worth $0 million if you can’t BEST READS | MOST POPULAR BLOG POSTS. This is the best posts section of the site. The following articles have been the most popular or best written ideas on this blog so far. Feel free to skim through them at your own leisure :) Liqui WHAT YOU SHOULD KNOW ABOUT NEGATIVE REAL INTEREST RATES How negative real rates distort everything. Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. 😛MY PORTFOLIO
The 2 links below represent all the stocks I’m holding in my brokerage accounts. I will update the lists of stocks I own as time goes by. TFSA and RRSP – My Tax Free Savings Accounts and Registered Retirement Savings Plans. These are tax advantaged accounts in Canada. Non-Registered Cash and Margin Accounts – My cash and leveragedaccounts.
MEDIAN AND AVERAGE NET WORTH IN THE USA AND CANADA In Canada, there were 1,100,000 people last year in 2014 worth at least US $1 million. That number dropped to 984,000 this year, thanks largely to the huge drop in the loonie. ( source) A person needs only $3,210 to be in the wealthiest 50% of world citizens. About $68,800 secures a place in the top 10%. Finally, the top 1% of the world’s EXPLAINING THE US ECONOMY AND PRODUCTIVITY WITH AN ISLAND Hey Ramone. One option you can look into is the Vanguard FTSE Emerging Markets ETF. It’s one of the largest EM funds in the world. *If you buy with Canadian dollars the ETF is listed on the TSX under the symbol VEE.TO. *You can also find it as VWO on the NYSE.; Both are pretty much the same, except the US dollar ETF (VWO) has a lower management fee (MER) of just 0.10%. MY OPTIONS INCOME STRATEGY. A NEW REVENUE STREAM. I currently have a $270,000 portfolio with my discount broker IB. From what I’ve researched, making a 3% yield using an options income strategy is safe and sustainable. $700 a month, or $8,400 a year roughly gets me to that 3% target. Investment website Seeking Alpha even advocates consistently earning 10% a year from trading options.FARMLAND INVESTING
An Introduction to Farmland Investing. Farmland is a fantastic investment! We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives it only makes sense that it should also be a part of our investment strategy. 😀 Inflation hedging is the main reason why some investors are looking atagriculture.
WHERE DO PEOPLE GET THE MONEY TO BUY EXPENSIVE HOUSES? Good points. Just some more anec-data to add: My wife and I’s combined income from jobs last year was ~200k (we both work for tech companies). We just purchased a new home in Coquitlam. 1Mil purchaseprice. 250k down.
HOW TO ANALYZE A STOCK I used the Graham Formula to determine the fair value of ATD.B. EPS = Trailing twelve months earnings per share. 8.5 = P/E base for a slow-growth company. g = Expected long term earnings growth rate. Couche-Tard’s EPS was $2.09 in 2020. The analyst consensus for its growth rate is 22. But I will use 10 to be on the conservative side. MYERS-BRIGGS, WHAT PERSONALITY TYPE MAKES THE MOST MONEY? INTJ, ENTJ, and ISTJ, are the 3 most common personality types for personal finance bloggers and make up nearly 60% of them! Meanwhile, these 3 types combined account for only 16% of the general population. All 3 types have “TJ,” which are very common traits in managersand leaders.
FREEDOM 35 BLOG
How I Make Money Trading Options Financial independence is all about having options. 🙂 And that’s the topic of today’s post. I’ll explain what they are, and how I plan to make the most of my new options income strategy. In April I made over $700 trading options. My BEST READS | MOST POPULAR BLOG POSTS. This is the best posts section of the site. The following articles have been the most popular or best written ideas on this blog so far. Feel free to skim through them at your own leisure :) Liqui FINANCIAL INDEPENDENCE! I HAVE FINALLY ACHIEVED MY DREAM. Dividends = $19,044/year. My stock portfolio is worth about $600,000. It holds mostly dividend growth stocks. The average portfolio yield is 3.2%. This is the bread and butter of my passive income strategy. I have been consistently borrowing money on margin to buy dividendstocks since 2010.
HOW TO HEDGE AGAINST INFLATION IN 2021 Land and property. Prime real estate will always be in demand. Alternative investments such as fine art, wine, rare collectables, and cryptocurrencies. Human capital. Productivity is a great answer to inflation. Invest in yourself to maintain your earning powerregardless of
WHAT BANK TRANSACTION CODES MEAN WBD – Transfer in of money from another account – usually the description will include TSF FR (account number.) WHTX02 – Withholding tax from a U.S. stock or other security. Keep in mind that these transaction codes may be different than what will ultimately appear on your year-end tax slip. Sometimes banks and brokerages use default designations for convenience and may vary from the taxFARMLAND INVESTING
An Introduction to Farmland Investing. Farmland is a fantastic investment! We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives it only makes sense that it should also be a part of our investment strategy. 😀 Inflation hedging is the main reason why some investors are looking atagriculture.
MYERS-BRIGGS, WHAT PERSONALITY TYPE MAKES THE MOST MONEY?HOW MANY PERSONALITY TYPES ARE THEREWHICH PERSONALITY TYPES ARE COMPATIBLEMONEY PERSONALITY TYPEMONEY PERSONALITY TYPEMONEY PERSONALITY TYPE QUIZ INTJ, ENTJ, and ISTJ, are the 3 most common personality types for personal finance bloggers and make up nearly 60% of them! Meanwhile, these 3 types combined account for only 16% of the general population. All 3 types have “TJ,” which are very common traits in managersand leaders.
MORTGAGE INVESTMENT CORPORATIONS A mortgage investment corporation lets investors pool their money together to be lent out as mortgages. It essentially allows the average investor like you and I to participate in, and profit from, the mortgage lending business. 😉 This is the best thing sincecanned peaches!
WOMENS' GIFTING CIRCLE SCAM Falling Victim The pharaohs of ancient Egypt created the first pyramid schemes. But since then these schemes have evolved to become moreelaborate. The
CROP SHARE LEASE AGREEMENT A land lease agreement is a legal document that sets out the terms of an agreement between a landlord and tenant. There are many items and conditions that need to be included as terms of anFREEDOM 35 BLOG
How I Make Money Trading Options Financial independence is all about having options. 🙂 And that’s the topic of today’s post. I’ll explain what they are, and how I plan to make the most of my new options income strategy. In April I made over $700 trading options. My BEST READS | MOST POPULAR BLOG POSTS. This is the best posts section of the site. The following articles have been the most popular or best written ideas on this blog so far. Feel free to skim through them at your own leisure :) Liqui FINANCIAL INDEPENDENCE! I HAVE FINALLY ACHIEVED MY DREAM. Dividends = $19,044/year. My stock portfolio is worth about $600,000. It holds mostly dividend growth stocks. The average portfolio yield is 3.2%. This is the bread and butter of my passive income strategy. I have been consistently borrowing money on margin to buy dividendstocks since 2010.
HOW TO HEDGE AGAINST INFLATION IN 2021 Land and property. Prime real estate will always be in demand. Alternative investments such as fine art, wine, rare collectables, and cryptocurrencies. Human capital. Productivity is a great answer to inflation. Invest in yourself to maintain your earning powerregardless of
WHAT BANK TRANSACTION CODES MEAN WBD – Transfer in of money from another account – usually the description will include TSF FR (account number.) WHTX02 – Withholding tax from a U.S. stock or other security. Keep in mind that these transaction codes may be different than what will ultimately appear on your year-end tax slip. Sometimes banks and brokerages use default designations for convenience and may vary from the taxFARMLAND INVESTING
An Introduction to Farmland Investing. Farmland is a fantastic investment! We eat food everyday and it is an important part of our culture. Since food is so in-grained in our lives it only makes sense that it should also be a part of our investment strategy. 😀 Inflation hedging is the main reason why some investors are looking atagriculture.
MYERS-BRIGGS, WHAT PERSONALITY TYPE MAKES THE MOST MONEY?HOW MANY PERSONALITY TYPES ARE THEREWHICH PERSONALITY TYPES ARE COMPATIBLEMONEY PERSONALITY TYPEMONEY PERSONALITY TYPEMONEY PERSONALITY TYPE QUIZ INTJ, ENTJ, and ISTJ, are the 3 most common personality types for personal finance bloggers and make up nearly 60% of them! Meanwhile, these 3 types combined account for only 16% of the general population. All 3 types have “TJ,” which are very common traits in managersand leaders.
MORTGAGE INVESTMENT CORPORATIONS A mortgage investment corporation lets investors pool their money together to be lent out as mortgages. It essentially allows the average investor like you and I to participate in, and profit from, the mortgage lending business. 😉 This is the best thing sincecanned peaches!
WOMENS' GIFTING CIRCLE SCAM Falling Victim The pharaohs of ancient Egypt created the first pyramid schemes. But since then these schemes have evolved to become moreelaborate. The
CROP SHARE LEASE AGREEMENT A land lease agreement is a legal document that sets out the terms of an agreement between a landlord and tenant. There are many items and conditions that need to be included as terms of an BEST READS | MOST POPULAR BLOG POSTS. This is the best posts section of the site. The following articles have been the most popular or best written ideas on this blog so far. Feel free to skim through them at your own leisure :) Liqui JUNE 2021 | FREEDOM 35 BLOG How negative real rates distort everything Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. 😛 The graph below shows the difference OPTIONS TRADING UPDATE In May I received $820 in premiums from trading options. That’s $100 more than what I made in April. Yay. 🙂. Here are some key points from my options trading this month. I sold 10 options – 8 Puts and 2 Calls. I bought 1 option to close my previously sold TD Call at $90 strike. My total trading commission was $14.48. WHAT YOU SHOULD KNOW ABOUT NEGATIVE REAL INTEREST RATES How negative real rates distort everything. Normally a mortgage is a liability. And bonds are a low risk, low return asset. However when real interest rates are negative you can throw these conventional concepts out the window. 😛MY PORTFOLIO
Liquid Independence Post author 10/11/2014. Hi Jessica. I would start with what you’re most comfortable with. But generally I suggest you put your investments in a TFSA, which is a tax efficient vehicle available to anyone over 18 years old. MEDIAN AND AVERAGE NET WORTH IN THE USA AND CANADA In Canada, there were 1,100,000 people last year in 2014 worth at least US $1 million. That number dropped to 984,000 this year, thanks largely to the huge drop in the loonie. ( source) A person needs only $3,210 to be in the wealthiest 50% of world citizens. About $68,800 secures a place in the top 10%. Finally, the top 1% of the world’s HOW TO BUILD YOUR NET WORTH LIKE THE MILLIONAIRE NEXT DOOR This is the third and final post in this series where I discuss the most influential events of my personal finance journey. I like to save the best for last so today I’m discussing a book called, “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,” by Thomas Stanley and William Danko. 🙂 The MillionaireNext Door
EXPLAINING THE US ECONOMY AND PRODUCTIVITY WITH AN ISLAND Hey Ramone. One option you can look into is the Vanguard FTSE Emerging Markets ETF. It’s one of the largest EM funds in the world. *If you buy with Canadian dollars the ETF is listed on the TSX under the symbol VEE.TO. *You can also find it as VWO on the NYSE.; Both are pretty much the same, except the US dollar ETF (VWO) has a lower management fee (MER) of just 0.10%. WHERE DO PEOPLE GET THE MONEY TO BUY EXPENSIVE HOUSES? Good points. Just some more anec-data to add: My wife and I’s combined income from jobs last year was ~200k (we both work for tech companies). We just purchased a new home in Coquitlam. 1Mil purchaseprice. 250k down.
WOMENS' GIFTING CIRCLE SCAM Falling Victim The pharaohs of ancient Egypt created the first pyramid schemes. But since then these schemes have evolved to become moreelaborate. The
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FISCAL UPDATE FEB 2020 – MILLIONAIRE NO MOREFiscal Updates
3
Responses »
Mar 022020
PANIC IN THE STREETS The global stock market fell more than 10% recently. Over five trillion dollars ($5,000,000,000,000) of value was wiped out. And just like that – I have lost my seven figure net worth. I’m now a commoner once again, lol. It was fun while it lasted. 😛 But I am not disheartened – because my mind these days is focused on more exciting things! 🙂 NEW REAL ESTATE INVESTMENT The truth is, I’ve actually had a great start to the year so far. After selling my farmland in January I purchased a new residential property. I have been talking about wanting to do this since late last year. But now I have finally closed on a one bedroom rental condo in the Greater Vancouver area. I paid a 30% down payment (about $135,000) and financed the rest with a mortgage at 2.44%. 🙂 Buying real estate isn’t easy. I kept myself motivated by listening to _house_music. 🤣
Anyway, my balance sheet will look a little different going forward. On the asset side I have welcomed a new line item worth $450,000 – the property purchase price. Meanwhile the liabilities side will now include a brand new $315,000 mortgage. Yay, more good debt. 🙂 I’ll post more details about this over the next couple of week. I also made new plans to buy some stocks soon to take advantage of this recent market correction so there will be lots to write about over the next little while. LIQUID’S FINANCIAL UPDATE FEBRUARY 2020 *SIDE INCOMES: = $2,500 * Part time job =$900* Freelance = $200
* Dividends =$1000
* Interest = $400
*DISCRETIONARY SPENDING: = $1,800* Food = $400
* Miscellaneous = $400 * Interest expense = $1000*NET WORTH: (ΔMOM)
* TOTAL ASSETS: = $1,511,100 (-$290,100) * Cash = $153,500 (-130,000) * Canadian stocks = $209,300 (-8,400) * U.S. stocks = $133,500 (-11,700) * U.K. stocks = $20,700 (-2300) * Retirement = $139,600 (-7000) * Mortgage Funds = $37,700 (-800) * P2P Lending = $35,800 (+300) * Home = $331,000 (assessed land value) * Rental Unit = $450,000 (purchase price) NEW * TOTAL DEBTS: = $533,200 (+314,400) * Home Mortgage = $184,400 (-400) * Rental Property Mortgage = $315,000 NEW * Margin Loans = $33,800 (-200) *Total Net Worth = $977,900 (-$24,300 / -2.4%) _All numbers are in $CDN at 0.75/USD_ I haven’t been in this much debt since 2013 after I bought those farms. Finally I’m back to having more than $500,000 of debt. It’s a familiar and comforting feeling to borrow so much money again – using new money that I don’t have to leverage my financial gains. Yay. 😀 Using other people’s money to get rich saves me so muchtime.
Here’s why I’m excited about this. Thanks to my new mortgage, I was able to buy a new property that pushed the total value of my assets to $1.5 million for the first time. 🙂 If my assets can earn a mere 5% average return per year then my investments will gain an expected $75,000/year. Wow. How great is that? 😀 Of course borrowing money is not free. I’m currently paying about $14,000 a year of interest on my total debt. But that’s just a fraction of what I expect my investments to earn over the long run. 🙂 This is essentially passive wealth creation – build up a large, diversified portfolio, even if you have to use some debt, and thensimply be patient.
____________________ Random Useless Fact: The French sweet roll pain au chocolat can be served hot or cold. Posted by Liquid Independenceat 7:30 am
Tagged with: fiscal update, net worth
, real estate
RETIRING RICH TAKES TIMEWealth 4
Responses »
Feb 242020
OVERCOMING CHALLENGES Millennials have been dealt a rough hand. We face an unstable job security, a sluggish economy, crippling student debt, high housing prices, and record low bond yields. This all makes it tough to retire rich without taking on at least some form of risk. The good news is that we don’t need to make a ton of money to retire with a big nest egg. We just have to make saving money a priority. 🙂 American author Tony Robbins says you can either look at things negatively or positively. It’s up to you. He uses the example of a former UPS employee named Theodore Johnson who never made more than $14,000 a year. But a friend suggested early on that he should save and invest 20% of his income. At first Theodore complained that he couldn’t save that much. But he gave it a shot anyway and soon got used to a more frugal lifestyle. And after five decades, he finally retired and wound up with over $70 million in hisinvestment account.
But Theodore was a bit of a special case. He made other smart investments besides the stock market. And although his final salary was $14,000 before he retired, that was in 1951. So it would have been worth about $130,000 in today’s dollars. But the point still stands. Consistently putting away money early on can pay huge dividends down the line. THE COMPONENTS OF WEALTH Creating wealth can be broken down into three components: Savings + Investment Returns + Time. It’s difficult to predict investment returns. We obviously want the best performance. And there are things we can do to mitigate risk and improve the odds of achieving higher investment returns. But market performance is largely out of our control. Fortunately we still have efficacy over the other two variables – Savings, and Time. Improving our savings rate is a matter of increasing the difference between what we make and what we spend. We can either act rich or become rich. But very few of us can do both in one lifetime. Understanding this idea can help motivate us to spend less on frivolous items, and value long term savings. Lastly, time is probably the most important factor of all. It’s comparatively more powerful than investment returns when it comes to building wealth. For example, a 10% annual return over 20 years will generate more money than a 20% return over 10 years. Over the next few months I will write detailed posts on how to save more money, earn higher investment returns, and maximize one’s investment time horizon. 🙂 ____________________ Random Useless Fact: In 2020 there are over 6 million articles written on the EnglishWikipedia site.
Posted by Liquid Independenceat 7:25 am
Tagged with: motivational, wealth
HOW RICH SHOULD YOU BE? – A SIMPLE WEALTH FORMULAEconomics
11
Responses »
Feb 172020
WHAT SHOULD YOUR NET WORTH BE? Author Thomas J. Stanley, first published his Wealth Equation in the book, Marketing to the Affluent. He states that your household’s net worth should equal 10% of the age of the primary breadwinner times your household’s annual realized income. So your expected net worth = (Age)x(0.1)x(Income) If you are in the Balance Sheet Affluent category, also known as “prodigious accumulators of wealth”, then your net worth should be twice the expected value. In short, you will be considered affluent if your net worth is 2x the expected result based on this equation. 🙂 This is not a perfect indicator of affluence as it usually becomes easier to accumulate wealth as people progress further in their careers. But it’s a good place to start looking at how you measure up to others in similar situations. Give the Stanley Wealth Equation a try for yourself and see where you land. 🙂 When it comes to reaching a net worth of a million dollars by age 60, a good rule of thumb is to save and invest 5% of your income in your 20s, 10% in your 30s, 15% in your 40s, and 20% or more during your50s.
A PASSIVE WAY TO INCREASE YOUR WEALTH Wouldn’t it be awesome to grow your net worth without having to think about it? Well there’s a practical way to do this. 😀 According to Stanley, to build up a large amount of wealth you can simply live in a neighbourhood where your income is among the highest. For example, if your household income is $120,000 then you should live in an area where the median value of a home is less than $400,000. By doing so there’s a good chance that your income will be in the top 20% in that neighbourhood. Then you can live and consume as though your income was 20% or 30% lower than it actually is. Save the difference. Accumulate your wealth. And you will not feel like you’re missing out on anything in the meantime. 🙂 Living on less than you earn is pretty easy in this situation because people who live in the same area tend to have comparable fixed costs anyway. For example, many families who on the same block will pay similar rent. Property tax rates are also similar. Many residents will drive similarly priced cars, and shop at the same local grocery stores. Do you want to be the only household on the street with a $240,000 McLaren GT parked in the driveway while everyone else drives $30,000 sedans or $50,000 SUVs? Probably not. You’ll stand out like a sore thumb. Your neighbors will be jealous and think you’re a total snob. And you’ll be the designated target for any neighbourhood crimes such as vandalism, theft, property damage, orburglary.
So living in an area where your income is in the top quintile almost forces you to live within your means and save more. The average savings rate in Canada is only 3%. It’s higher in the U.S. at roughly 8%, but still on the low side. Where you live matters a lot to your wealth building potential. If you live in a modest neighbourhood compared to your income you can easily keep up with your neighbours, while still maintain a large savings rate. 🙂 ____________________ Random Useless Fact: Pesticides can threaten biodiversity and are harmful to theenvironment.
Posted by Liquid Independenceat 7:30 am
FISCAL UPDATE JAN 2020 – FALLING REAL ESTATE PRICESFiscal Updates
6
Responses »
Feb 032020
A ROUGH START TO THE NEW YEAR January was such a bizarre month for world news. Bushfires scorched Australia. The U.S. assassinated a general in Iran nearly starting a war. Then out of nowhere Iran shot down a passenger plane full of civilians. Firefighters in France set themselves on fire and fought the police. Britain officially left the European Union. A deadly virus from China caused partial or full lockdowns of entire cities directly affecting over 50 million people. Landslides hit Indonesia causing deaths, mayhem, and displacing thousands of people. But despite all this, the financial markets don’t seem to be fazed much. Global stocks are down, but the Canadian market is up. 🙂 As long term investors we have to simply ignore the current events and continue to execute our long term plans. In terms of building wealth we can control how much we save, what to invest in, and when we retire. But we can’t control the market’s rate of return. So let’s top up our tax advantaged accounts, find ways to cut back spending, and look for new ways to make money. 🙂REAL ESTATE DROP
Unfortunately my home fell in price according to the official BC Assessment. Every year in January the assessed value is updated, and mine fell about 10% in 2020. 🙁 That’s in line with other properties around Metro Vancouver. Lending Loop also wrote off $2,000 worth of my portfolio due to bad loans. Overall my net worth took a beating this past month. But we can’t expect things to go up all thetime.
The good news is after selling the farmland I’m now holding a big chunk of cash which I can invest in something new. I actually made a real estate purchase recently but I will cover that transaction next month as it’s not completely finalized yet. LIQUID’S FINANCIAL UPDATE JANUARY 2020 *SIDE INCOMES: = $2,600 * Part time job =$700* Freelance = $200
* Dividends =$1200
* Interest = $500
*DISCRETIONARY SPENDING: = $2,200* Food = $400
* Miscellaneous = $800 * Interest expense = $1000*NET WORTH: (ΔMOM)
* TOTAL ASSETS: = $1,221,000 (-$213,300) * Cash = $283,500 (+234,000 sold farmland) * Canadian stocks = $217,700 (+33,700) * U.S. stocks = $145,200 (-1100) * U.K. stocks = $23,000 (-400) * Retirement = $146,600 (+2700) * Mortgage Funds = $38,500 (+600) * P2P Lending = $35,500 (-1,800) * Home = $331,000 (-36,000 assessed land value 2020) * Farmland = $0 (-$445,000 sold it) * TOTAL DEBTS: = $218,800 (-186,000) * Mortgage = $184,800 (-400) * Farm Loans = $0 (-161,300) * Margin Loans = $34,000 (-300) * Farmland sales cost = $0 (-$24,000) *Total Net Worth = $1,002,200 (-$27,300 / -2.7%) _All numbers are in $CDN at 0.76/USD_ Ouch. A $27K cut to net worth is not a good way to start the year. One month does not make a trend. But there’s an old adage that says, “as goes January, so goes the year.” A gain or loss in January has correctly predicted stock market’s overall movement for the entire year with great historical accuracy. We’ll have to wait and see how the rest of 2020 plays out. But in the meantime I’ve replenished my Canadian stocks. I also contributed to my TFSA for 2020, but haven’t decided what to buy with the money yet. 🙂 ____________________ Random Useless Fact: The average time spent by recruiters looking at someone’s resume is5 to 7 seconds.
Posted by Liquid Independenceat 7:26 am
Tagged with: fiscal update, net worth
MAKING THE MOST OUT OF MY UNIQUE ADVANTAGESConfessions
3
Responses »
Jan 272020
WHY IT’S HARD TO REPLICATE SUCCESS After celebrating my millionaire status last year I reflected on my past and examined what factors contributed to my financial growth. I’ve realized that a big part of my wealth comes from simply being in the _right _place at the _right_ time. 🙂 Sometimes good things just happen to me for no apparent reason. In order to make better decisions going forward I believe I need to understand what my undeserved privileges are, and not take them for granted. Here are 5 advantages that I had no control over, yet have helped me grow my net worth. 😀 And due to the serendipitous nature of these advantages, it’s not likely for others to make use of them all. * I’M A MILLENNIAL. Fund manager Peter Lynch says regular retail investors have an advantage over professional stock pickers. We can identify opportunities in our areas of expertise. What has been the best performing stock sector over the last 10 years? Technology. 🙂 Which investor age group is the most familiar with technology? Millennials. 🙂 This inherent advantage has made me so much money as I followed Peter Lynch’s advice: _Know what you’re buying. And know why you’re buying it._ Millennials are better educated about stocks than any prior generations. We have so much information at our disposal. And we know how to use it. We grew up with Google, Apple, Amazon, Netflix, Tesla, and other tech companies. We know these brands intimately because we use their products and services religiously, and have a better sense of which brand will become the next big thing. This gives us a unique advantage over older generations. If something attracts you as a consumer, it should also interest you as a potentialinvestment. 🙂
* I STARTED MY CAREER IN 2008. Lots of companies were restructuring in 2008 and didn’t have the budget to hire expensive senior workers. They could however afford to bring in juniors at that time. As someone who just finished school I was cheap, available, and eager to prove myself. Since most unemployed people were looking for jobs that required experience, I didn’t have much competition at my salary level. It didn’t take long before I landed my first job in the graphic design industry. * I was given a large severance. My employment abruptly ended a couple of years ago. But I already had a contingency plan prepared. So I got back on my feet pretty fast. I actually started to make more money than before. 🙂 Plus I received a five figure severance package from my old employer since it was a no-fault termination. Things couldn’t have turned out better for me. 😀 * I’M NOT AMERICAN. Several years ago I tried get into a venture capital deal in the U.S. I asked the company if they accept Canadian investors and they said yes. So I wired them $55,000 to put into a startup business which delivers online music streaming,
and some other companies. I imagined my seed money was going to turn into $500,000 when the company eventually goes public. 😀 But a few months later they refunded my $55,000. It turns out they can’t accept my money after all because I’m not American. Thankfully my investment didn’t go through – I just found out that the music streaming company ceased operations last month. Its user base has been shrinking and it ran out of operating money. So I definitely dodged a bullet there. Phew. 🙂 I clearly didn’t know what I was doing. But something beyond my power saved me from making a huge mistake. * I GREW UP IN VANCOUVER. Vancouverites talk about real estate more than we talk about the weather. Most already own their homes, and the rest are just waiting for the right entry point. So growing up in this environment has made me naturally biased towards favouring home ownership. I purchased a condo in 2009. Property prices here have doubled since then. But the same can’t be said about other Canadian cities like Calgary or Ottawa where price growth is slower. A big part of my net worth today comes directly from the tremendous growth in the local real estate market. So where you live can have a big impact on your finances. And I just happened to be lucky enough to live in a city with a strongreal estate market.
Making smart financial choices obviously helps. But not everyone can save and invest their way to wealth. Some are just born with certain privileges. Even Warren Buffett admits that luck is important tosuccess.
Buffett said he is lucky to be born in America. If he had started his life in Africa he would have become some animal’s lunch because he can’t climb trees very well, lol. We all have different stories, different beginnings. There are many things that we cannot change. But it’s important to develop a positive, growing mindset to face the world. The more we concern ourselves with the things we can’t control, the less we can affect the things we can control. 🙂 I believe everyone has innate advantages that aren’t shared by most people. 🙂 Let’s all keep our eyes open for opportunities that are unique to ourselves – or else they will pass us by and we will have squandered our privilege. _____________________________________________ Random Useless Fact: Actor Leonardo DiCaprio has never been married before. Posted by Liquid Independenceat 7:15 am
Tagged with: advice
, buffett
, millennial
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