Welcome to my Weekly recap November 10th Edition where I discuss some of the key events of the past week and provide an update on what I’m doing with my finances.
Stock Market and Investing
Stocks are all over the place lately. We had a few good days this week and some bad days too. Lots of talk about interest rates rising and a recession on the horizon. Against this backdrop, I bought some more Bank of Nova Scotia shares. I just can’t ignore the nearly 5% yield and the fact that the stock is down about 20% this year.
Last year at this time BNS was one of the best performers, now it’s the laggard. BMO was the dog last year, now it’s one of the best performers. There is a pattern where the worst performing bank tends to be the best performer the following year. So you simply sell the winner and buy the loser or sell high and buy low. Does it always work out? Probably not, but I’m okay owning any of the Big 5 banks.
US Midterms
The Midterms came and went and unfolded pretty much as expected. The Dems took the House and the Reps kept the Senate. Next comes Mueller’s findings…
Is FIRE (Financial Independence/Retire Early) Realistic?
There’s been a lot of articles recently about whether the FIRE movement is realistic. Sure we’ve all read stories about the young thirty-something who retired to travel the world. The problem, these people are for the most part single, no kids and have found creative ways to keep their cost of living very, very low. This is what I would call the most extreme form of FIRE and I don’t think I could ever be happy living that life. But that’s just my personal opinion.
At the other end of the FIRE spectrum are people like the thousands of financial bloggers out there who want to live a comfortable life and want to have a bit a choice when it comes to their careers. These people, myself included, save and invest a fairly high percentage of their income, but don’t miss out on life. I just couldn’t put myself through a decade of toil to live like a student for the rest of my days. Quality of life matters a lot, so I don’t think that it’s possible to retire in your early 30s with anything less than about 2 or 3 million and about $80k-$100k in passive income!
So it raises the question about whether or not FIRE – in its truest, purest form – is really just a millennial fantasy. What do you guys think?
Income, Net Worth and Wealth
I read an article in Forbes about how high earners can build wealth. Yes, they may make a lot of money but they also face high barriers to building wealth due to a variety of factors: ie. Student loans, starting later in life, lifestyle inflation, and lack of financial education.
The point of the article was that income alone doesn’t necessarily make a person wealthy. Net worth matters more. This is the old “it’s not what you make, but what you keep” argument. I have a bit of a different take on all this. I would argue that yes, net worth matters, but so does passive income from things like dividend stocks and rental properties. My advice to high earning professionals is to build up sources of passive income ASAP.
I believe that cash flow is the number one problem most people have so it makes sense to invest for cash flow. I just published my October passive income report and I’ll soon be above the $2k in passive dividend income for the Jan, Apr, Jul and Oct months! Building streams of passive income takes time, but it’s worth it.
Basement Reno Update
Not much new on the basement reno front. I taped up the rest of the sub floor and removed the carpet from the basement stairs and did a little bit of trim painting. Now the waiting game of choosing the carpet and getting it installed. I really hope that I can get this basement finished by December 1st. It has dragged on way too long.
One positive thing that we did was sort out all our bills and start paying down our line of credit balance. We had way too many things coming at us the past few months so we just kept charging everything to our HELOC. Now that the bills are all settled we could no longer ignore the huge debt pile so we made a plan to tackle it.
Thanks for reading my Weekly recap November 10th Edition.