2018: Year In Review


I went back one year to see what I wrote about in 2017 and the headlines were all about Bitcoin. Well guess what? Last year I wrote about how I couldn’t give a damn about Bitcoin because it was just a one hit wonder with no longevity and not a proper way to reach financial independence. Well,look at it now. A year ago Bitcoin was all the range and reached its pinnacle of $16,000 USD, now it’s less than $4k. So much for the retirement plan.

2018 was a very polarizing year. There were ups and there were downs. Nonetheless the preaching of all good financial blogs remains the same. Stick to your plan. It couldn’t have been a more trying year in 2018 for people to remain calm through a very turbulent year. I think for anyone who was trying to learn how to invest or understand their emotions towards money and budgeting, 2018 was the year where everyone would learn about their true colours.

Stocks Get Crushed

For as long as I’ve wrote this blog, stocks have always had a positive ending to the year end. In 2018, I can’t say the the same. It almost became a norm for stocks to be up double digits year over year, but this year stocks got hammered in the markets. The most amazing part of it was that most of the drop came in the last month of the year.

I’m not going to sugar coat the statistics of the stock market for 2018 because in two words describe it: It sucked. Those that had an all stock portfolio probably took a massive beating. Those that tried to pick and hold the “best” stocks like FANG probably took a massive beating akin to a bully in the high school parking lot.

  • S&P 500 down 7%
  • S&P TSX down 12%
  • MSCI EAFE down 14.2% (iShares)

Those aren’t pretty numbers. In fact, these kind of drops in the stock market haven’t happened since 2008. In a short term view, this was a really bad year. Those that invested at the beginning of the year have probably seen a large chunk of their net worth wiped out in a matter of months.

If we look back though and see what the markets have done in the last 5 years. It doesn’t look so gloomy anymore.

  • S&P 500 up 34.9%
  • S&P TSX up 4.9%
  • MSCI EAFE up 9.1% (iShares)

If we look back beyond to the the last 10 years it paints a different picture

  • S&P 500 up 279.5%
  • S&P TSX up 162%
  • MSCI EAFE up 103.3% (iShares)

This is why investing to achieve financial independence is a long term game. Investing is not about making money now or worrying about what you gain tomorrow or next month. It’s all about how well your wealth can grow over a long period of time. Practice patience and resiliency and you shall be rewarded.

Rising Interest Rates


2018 represented the first time in a decade that interest rates started to rise in North America. This was a milestone of sorts because it had taken almost a decade for the central banks in North America to finally signal that the economy could withstand the fallout of the financial crisis in 2008.

Rising interest rates meant that cheap money was no longer going to be around for much longer. Those that had borrowed large sums of money were now going to feel the effects of increased interest payments on their large loans.

For many Canadians, this had a large impact on household spending and home buying. What many thought could never happen did happen and it showed. House buying slowed to decade low numbers across the country. When money was available on mortgages for less than 2% on 5 year fixed rate mortgages, you had to wonder who wouldn’t borrow $1M to buy a house? It’s a different tune now.

Mortgages rates have risen by more than 1.5% off their record lows. The tap has finally been turned off. Canadians are now learning that controlling their debt is more important than jumping into new digs.

Reflect and Learn

Now that 2018 has finished, it’s time to reflect and learn from the events that happened throughout the year. Were you successful in keeping to your financial goals for 2018? How did the stock market crash make you feel about investing? Did unexpected home expenses surprise you during the year?

Budgeting and setting a financial plan for the future requires flexibility. Our lives change on a daily basis and the things that we predict to happen sometimes don’t come true. That’s why it’s important to take time and reflect so that we can better plan for the future.

I’ve always said, you don’t know what kind of investor you are until you’ve gone through a bad market. Now that markets have finally taken a beating perhaps you might change your mind. If you’ve been panicking the last few weeks about your money and an all stock investment portfolio isn’t for you. A more conservative approach would be better.

People that have bought homes and renewed at higher mortgage rates are finally realizing that their expensive homes were actually too much for them to own. Now’s the time to cut expenses and perhaps find a better paying job to support your existing lifestyle.

Those that have been successful in saving and controlling their budget might want to see if they want to dial it back or perhaps even push the envelope further to see how much more you can put away. It’s never bad to perpetually challenge yourself.

In a forever changing world, we need to continue to adapt in order to be successful. Managing your finances is no different. Always take some time to reflect on your own personal financial goals. Did you meet them? Can you do it better? Have my goals changed? It’s amazing how some small changes can lead to greater success. Don’t be afraid to try.

2018 can be summed as a trying year, but it provided us with many lessons that we can learn from. Here’s to hoping to continued success in 2019!




Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s