Here I sit in a bar off Jasper Ave. in downtown Edmonton having a drink and little meal. I am spending this sunny Sunday afternoon re-evaluating my overall financial and career position. June is officially the 49th month I’ve left BC for a new future in Alberta- the first month of the 5th year. With the rapidly shifting economy and the new recession, now viable financial and career decisions seem even more critical. Even the trades- once seen as an often overlooked path to glorious opportunity, now are saturated with fierce fresh graduate, apprentice, and starving journeyperson competition. Now in my case, to stabilize a consistent cashflow and growth of earning power, a combination of investment, business, and employment income across multiple industries is of paramount importance to overcome this new war.
When one source of cash has been dried, I jump ship to the next where it is busy: oilfield and pipeline in the winter, road construction or oilsands plant work in the spring, summer, and fall. I invest in undervalued stocks and real estate that the average investor is afraid to touch in order to get in at lower prices and produce higher yields. The problem with jumping ship as a contractor or working for one is instability- basically you leave as work slows, and then hope, according to your analysis on both industry activity and word of mouth in the area, that the next place is busy enough to produce worthwhile cashflow. Even in the world of employment, the principle of no risk, no return holds its significance- less stable work pays higher to attract risk-taking workers, while more stable work pays less for those looking for security. You see this is set rotational plant jobs where you are given a set schedule and work for half the month, but none the next. It’s also seen in supervisory roles or other salary jobs where the employer keeps more money in its pocket for enduring the risk of paying you when you aren’t producing the company profit. Flat day rates for trucks also provide the operator a pseudo-fixed income but he/she then loses out on potential extra hourly or piece-rate work and hence pay. Construction and other city work pays less, but in return holds much more consistency outside the winter and spring as you work usually every week and on most days out of the week.
Condo #1 of mine has appreciated by around $30,000 based on dollar/sq. ft. of very similar properties. Coupled with $7,824 principal appreciation, this is about $37,824 made from decision to purchase in April 2016. My second condo purchase in April 2017 was done at about $25,000-30,000 below market value, as it was a pre-construction unit and hence received a discount compared to buying new resale. In a perfect world I would like to keep my one new property per year objective, but based on current budget, cashflow, and economic conditions, collecting another $40,000 I am short likely will take two more years, outside an unexpected rapid appreciation in stocks or surge in income. My current financial picture anticipates a $600-2,000/month gain in cash. Each new property acquired in the mid 300 thousands (the most realistic additional properties I’ll likely get) is expected to make me another $30,000 – 40,000/year in today’s dollars. About 3 would be enough to double my current income- coincidently also getting me into the Ferrari I desire by age 30 if held for 5 years, as roughy illustrated in my past blog analyses:
$35,000(3)(5 years) = $525,000 (taking the middle point between 30000, 40000).
Stock appreciation and dividends are not taken into account for reaching certain dollars by a certain time as they are much less predictable, especially when aiming for aggressive growth in undervalued stocks- often those with lower market capitalization, as larger caps only make chump change without hundreds of thousands of dollars to play. Business and employment income is difficult also to predict as economic conditions and labour markets will be unpredictable for quite some time. So in reality, I may have even more Net Worth by then.
In a perfect world, I would like to have my electrician apprenticeship completed so I can increase my employment/business earning power through higher wages, as most do not want to pay truckers or operators anything worth a shit nowadays- especially in a labour market where more are willing to produce for less. Its completion would certainly expand my work and income flexibility and provide a nice boost to earning power. However, as illustrated by the daily new “Hi, my name is ____, please someone indenture me- I want to be an electrician” classifieds online, the trades is gradually morphing into the new university graduate market. More and more people are looking for a (perceived) easy dollar with minimal investment. If the barriers of entry to trades are already much lower than that of many white collar jobs, then the future does not look so bright, and the labour market is only to shift more into the employer’s favour- especially if the economy does not pick up soon to absorb the new bodies.
For now, to increase my earning power, I’ll just have to continue to make employment, business, and investment decisions most people would not dare. Hardships are the beautiful pain that maintains a barrier of entry to keep out the competition and maintain opportunity for the ambitious and risk-taking.