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Sunday, April 4, 2010

Little gain by little gain: on the road to financial recovery

I finish work at 6pm and went for a walk after. The weather was so nice in Montreal this evening; a nice spring wind was in the air. Just last week, I was freezing to death, and tonight, well, tonight was really enjoying spring night. I couldn’t stop walking, feeling the nice wind in my hair. I went to Park Lafontaine, than continue walking downtown, went down to Radio-Canada tower. I continue my walk to the Old Montreal, went back downtown, all the way from St-Catherine Musique Plus to the Chapter, where I finish the evening and than I took the metro to come back home. Nice evening today I hope for another beautiful day for tomorrow. While walking, I had plenty of time to think. And I decide it could worth it to search for another job. Want to know why?

Well, I want to recover from my bad investments made in Timminco (TIM), Sprott Inc. (SII), and the other like HE, DNI, BNT and Sprott Canadian Equity Fund. I lost around 7 000$ in bad investment. I went through the calculation of those loses previously. I had learned from my investment mistakes. But now that I learn, I would very much to gain an extra 7 000$ in income in order to catch up. I would invest the money in a solid company like Enbridge (ENB) (hold by Derek Foster by the way lol). I always had great regrets when it comes to the bad investment choices I made in the early beginning when I decide to invest. If only I would have stick to Derek Foster portfolio, I wouldn’t be here today, thinking about how to recover. Yes I have more than 50 000$ worth in net value (after 2010 dividend earnings) but I know that I can achieve much more than that.

If I can have 2 000$ per month to invest, I would be able to reach the 100 000$ in assets in 6 months from now. By the end of 2010, I could exceed the 100 000$ in assets.

Another reason for my motivation is that some of my mutual funds investments are now at the same level that they were before the stock crash of 2008. So this mean that we’ll soon get back to the point where our mutual funds investments – mostly concentrated in our RSP portfolio will provide us a positive return. In the last couple of months, we lost some money in our mutual funds. At a point, I asked myself if it wouldn’t be better to just have the money sleeping in a saving account. But that taught never last for long. It’s just the recovery period had been extremely long for me, like I couldn’t see the end of it.

Heres some examples of what I am trying to explain:

The investment: CIBC Dividend Growth Fund
Initial investment value: 500$
When the investment was made? January 2007
My lowest point that I recorded was in August 2009. In August 2009, my investment in the CIBC Dividend Growth Fund only worth 465.98$.
What does it worth now? 505.21$ in date of April 1, 2010. Since January 2007, in 3 years of investment, I earn 5.21$ in profit from the CIBC Dividend Growth Fund. This is showing how tough the road had been. But as you can see, since we mark a gain with this investment, we can say that the stock market is on the road for a recovery. Personally speaking, this also mean for me that the CIBC Dividend Growth Fund is a pretty good fund, because we didn’t lost our initial capital, which was 500$.

We don’t have many examples like this one in our portfolio. But here is another one:

The investment: RBC Canadian Dividend Fund
Initial investment value: 500$
When the investment was made? January 2008
My lowest point that I recorded was in August 2009 also, when the investment in RBC Canadian Dividend Fund only worth 466.22$.
What does it worth it now? 513.48$. That being again on date of April 1, 2010. Since January 2008, I made 13.48$ from the RBC Canadian Dividend Fund… 13.48$ in 2 years of investment. I am being quite sarcastic, but once again, the RBC Canadian Dividend Fund had been strong enough to recover from the loses experiment in August 2009. The RBC Canadian Dividend Fund, just like the CIBC Dividend Growth Fund, is a very powerful, extraordinary investment if you want my point of view. Reason being that the investment save the value of our initial capital invested which was, in both cases, 500$.

This is one of the reasons why it is extremely important to diversify your investment portfolio. A portfolio will never be too much diversified.

And I like my portfolio! Forgive my craziness to have this very messy portfolio. The money is all over the place, in different investment products. You can name them all, I have them all (or almost): GIC, mutual funds, stocks, units, segregated funds, cash… I have all that :) Not now but on the long run, we should be able to generate good gain by this diversification. That’s one of the reasons why we have to get a third job. Is that understandable?


As you can see, the spring wind wasn’t only beneficial to my hair, but it was also beneficial to my little brain.

So I am hoping to see this kind of recovery for all of my mutual funds. I had worked hard at trying to pick the best funds and I am looking forward to recover from my mutual funds loses and also make money from those same investments. If we calculated the gain made by the recovery + our dividend earning + the current value of our assets; that really begin to make some serious awesome cash. This is getting way too hot.

So guess I will be job searching really really soon.

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