If we had to separate people into 2 different clans: The Thrifts and the Spendthrifts, I would probably be closer to the latter. Unfortunately, the thing I like most about money is spending it. However, being a husband and father of two beautiful children has helped me be more responsible financially. While I never really wasted my money, I have always enjoyed earning more to spend more in order to indulge myself from time to time.
Now that we live on a single income, I have to double my efforts to become more frugal and concentrate on priorities. I guess this is what attracted me to read more about “being cheap”, which led me to “In Cheap We Trust” by Lauren Weber.
About Lauren Weber:
The author “grew up in Connecticut with a father who rationed toilet paper, set the thermostat at 50 degrees during the winter, and rarely used his car’s turn signals (to prevent them from burning out).”
Strong from her frugal background, Lauren always had a passion for writing. She has been writing for Reuters, The New York Times, The Los Angeles Times and American Banker just to name a few. Since 2007, she has concentrated on writing “In Cheap We Trust”, a combination of personal anecdotes intertwined with social and historical data wrapped up with a political taste for frugal living.
About the book:
Lauren captivated me during the first few pages about her cheap thrills introduction. And why the word “cheap” has become so negative over time. It’s as if the amount of money spent annually has become the measure of your social class in our modern (capitalist) society.
This book uses history to bring us back to the very definition of thrift and how frugality has been an important part of our value system for a very long time. Through a well documented (sometimes too exhaustive though) research, she depicts the history of frugality since the very first person set foot on American soil.
The last decade (apparently) has brought us wealth and comfort. Yet, recent economic events show us that we, as a spendthrift nation, simply incurred a huge credit bill over these same 10 years and it is now time to pay the interest and reimburse the capital. If we had not forgotten the efforts from our ancestors in building the foundation of a strong and frugal society, we might not have hit such a brick wall in today’s recession.
I particularly liked the Paradox of Thrift revisited by Weber. The paradox of thrift was created based on the principle of the economy declining due to the fact that everybody is saving instead of spending. Technically, if consumers stop buying and save their money, it should create an economic contraction resulting in more job losses (I guess this is why Bush was telling us to take our stimulus check to go to Disneyland!).
While the premise is accurate (spending less will result in a longer and deeper recession), spending more will simply postpone the problem for a few years. It’s akin to not going to the doctor because you have the flu, instead wait until you get pneumonia. I feel that a balance between savings and spending would be most appropriate.
I also found it quite interesting to actually understand the roots of frugality and Weber’s personal stories included in her book got me thinking about how far from being thrifty I actually was. It was nice way to get into the mood to save money!
Now the Giveaway!
– Comment below with a frugal tip or spending philosophy (1 entry per comment).
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You can actually participate on both sites by commenting.
The giveaway winners will be announced on Friday, November 6th.Comments: 13 Read More
I have been in the same position, as a financial planner, since March 2008. Since then, I have established great relationships with several of my clients. At some point, we start talking about real business relationships. What I really like about my job is that since we talk about personal finance, we can easily jump into personal side-discussions after having demonstrated a few retirement graphs. Most of my clients know that I have completed the MBA and now that it is finished as of September 2009: they all ask me the very same question:
“With this new diploma, don’t tell me that you will stay as a financial planner. What are you going to do next?”.
There are 2 things I found funny about this question:
#1 They see my job as a “deluxe” vacuum salesman due to the bad press about financial advisors in general. I must say that it is hard to find a good financial advisor! So once they know me and they know that I have an MBA, all my clients think that I will get a promotion. Being a financial planner is just not good enough for the MBA 😉 hahaha!
#2 Most people obviously attribute more value to a title or the level of responsibility that comes with it as compared to the unseen quality of life underlying a “simple” job. Don’t get me wrong, I love my job and I think I help people with their finances. But in order to help them, I have to “sell” products to them. I guess these same people would see doctors the same way if we had to pay the doctors’ employers for any kind of medicine they want us to take (for our own good 😉 ).
The reality is that being a financial planner is really cool!
It is true that I don’t have the “director” sign under my name, that I am not in charge of any employees and that I actually don’t have much latitude when it is time to take a decision exceeding the scope of my office. However, I have gained a remarkable quality of life with flexible hours, the ability to work 4 days a week, by being responsible for my results and to my clients (both of which are under my control unlike a group of 30 employees!).
But the most important part of all is that when I close my laptop on Friday, I know that I don’t have to open it until Monday. I don’t have to think about anything during the weekend, bring work home or make phone calls on Sunday morning to make sure everything is under control. I just have time to spend with my wife and children.
By writing this post, I am not trying to convince to become a financial advisor (trust me, life is not always that easy!) but more to consider what your job implies with regards to quality of life instead of looking at the prestige and the compensation.
I once wanted to become a VP and have worked very hard to get promotions and have established my network ensure I would get THE job one day. But in the meantime, I have realized how much time I have invested in my career in order to get here.
Since time can not be expanded, if you are concentrate on your career, this means less time spent everywhere else (sleep, family, friends, health, etc). I have decided to work on the 20% exclusively and spend the rest of my time with the family.
While I won’t become rich by the age of 30, I am sure that my career as a financial planner combined with my company’s progress will definitely bring me financial independence fast enough. I am done running after dollars, I prefer running after my kids on the soccer field!
Comments: 6 Read More
In our latest annual meetings, we have seen reports demonstrating that many investors have decided to go out on their own and trade by themselves, with self-directed accounts. Burned by questionable financial advisors, they prefer to use a DIY investing strategy. So for those Canadians who have decided to invest on their own, here’s a list of 8 free websites designed for Canadian investors. While they are not all exclusive to the Canadian market, you should bookmark all of them in order to gain a complete view of your investments and all possibilities.
General Canadian Investor Information Websites
This is obviously the main source for any Canadian investor. You will find a handful of lists detailing information about any mutual fund. You can compare them, get the Morningstar rating, historic yields and fund description. This is probably one of the best places to start the selection process for Canadian mutual funds.
Another great read if you like to know what is going on with the stock markets. With its continuous news, financial bloggers and automatically refreshing quotes of the main indexes (not to mention currency and resources), Globeinvestor.com is a great resource for Canadian investors. You can build a model portfolio and start trading like the big guns of Wall street. Most of their features are free for the young (and young at heart) Canadian investor. If you want more, you can get even more resources through Globeinvestor Gold.
Based on the fundamentals issued by Benjamin Graham’s investing strategy, the well known Canadian portfolio manager Michael Irwin shares his investment philosophy on this website. Within a few clicks, you will also find more information about his recent moves and why he purchased these stocks. This could be a great inspiration if you are looking for a new stock to buy.
General Websites for Canadian Investors to Access Diversified Information
The name says it all! You want to see the chart of an index, a stock, commodities? Big Chart can draw whatever you want in a few simple clicks. You can also compare different stocks with indexes or inflation. This is definitely a great (free) investing tool!
Hear the wisdom of the most prolific investor of all time… Mr. Warren Buffett. You can learn more about his thoughts on the market or his previous moves. Unfortunately, we cannot really have access to his kind of investments (like preferred GE shares he bought in 2008 issuing huge dividend payouts!).
The link above takes you to a page where you can get your first symbol analyzed (technical analysis). From there you can easily add more symbols to get a daily update. It is as easy as entering the symbol and you get the free analysis! Trend Analysis covers over 300,000 symbols (stocks, futures, forex, ETFs, mutual funds). The tool doesn’t cost anything and is used by professionals to supplement the tools they are currently using.
Intelligentspeculator.net (all right, I admit, we own this blog 😉 )
We may author this blog, but the main guy behind it is a CFA, a trader AND is making more than 70% with his stock picks in 2009. So if you are looking for a good read about stocks or simply market commentaries, Intelligent Speculator can be a great site to add to your favorites!
Follow Specific Information about Investments
Looking to trade Canadian bonds? This site should be your reference for all Canadian fixed income vehicles. Along with Canadian bond information you have a direct access to question Hank Cunningham, a well advised Canadian bond trader and founder of the site.
You want to make sure that Jim doesn’t drop all his RIM shares before he announces poor results, you can follow trades done by the big guys of major Canadian companies. You can also find Canadian stock analyses.
If you are looking to buy precious metal, this is probably the best place around. Kitco is a well established company providing services to buy and sell precious metals such as gold and silver. If you want to buy yourself gold coins, this is the place to go. You can also find graphs and financial analysts’ reports on gold.
And if you want to invest money in a website…
If you want to pursue your investing adventure even farther and you have $538 (USD please) per year to invest in your research, you can find valuable information at Valueline. They provide information on stock that is hard to find and independent firm reports on the market and specific companies. It could be interesting to count on an independent source of information in this world full of Bernie’s 😉
I don’t know if I have missed other Canadian investing websites, there are a lot to cover! Do you have other resources that can be useful for a new or advised investor?Comments: 4 Read More
Now that I have more time since I am done with my MBA, I can make more researches and find some interesting stuff for my blog ;-). There was a recent survey done by TD Waterhouse (their 9th annual survey) revealing interesting facts about how men and women handle their personal finance. Apparently, we, men, are as dumb as our ancestors (read monkeys!), while women seemed to learn from history and become smarter (I hope my wife won’t read this post!).
Women want more and they are willing to take the risk to get it
Remember I told how women want more? Well they are also willing to take more risk to get it! According to TD Waterhouse survey, 73% of women surveyed didn’t change their investor profile nor their asset allocation. Regardless of the current economic situation, they are willing to take the bet the market will come back up. So here’s my first question; Women didn’t change their investor profile because:
a) They are smart and know that the market will come back up before their retirement.
b) They receive their investment statements and use them for the kids so they can make some drawing without looking at their returns.
c) Their spouse took their investment statements away from them because they have been trading with their RRSP account and they don’t want her to see what they have done.
More seriously, I think women are more responsible and are able to make the difference between a moment of panic and bad investments. Actually, 52% are worried about their investments and only 21% of them have sold a part of their equities to find piece in bonds and other fixed income.
The recession has changed their spending habits.
However, while most of women didn’t touch their investment portfolio, the economic situation has made them change their way of living:
– 48% have postponed a major purchase
– 46% have spent less on their credit cards
– 40% have stopped buying non-essential goods
Then again, they seem more responsible than men (I actually bought a brand new truck and keep spending money on non-essential goods such as a laptop bag and a Black Berry 😉 ).
They aim for their goal:
97% of them say that a comfortable retirement is one of their major goal but only 20% say that they feel confident of achieving this financial goal. I guess that most of them are looking for a good financial advisor these days 😉
It is impressive to see how women can be savvy when they put their shopaholic super hero suit in their wardrobe ;-). The following stats surprised me:
– 97% easily manage their budget.
– 96% save money in case of an emergency.
– 90% are reimbursing their credit card balance.
3 sound financial advices:
Those savvy and smart investor women have 3 great financial advices for us, stupid and emotional men 😉 :
– Spend according to your means.
– Start investing sooner than later.
– Do not get indebted.
Fortunately, I already follow the first 2 advices while I seem to not be able to quit leveraging. You are making money with other’s people money, isn’t that right?
Note: This survey was done with 1432 women of 45-65 years old that have exclusive or joint financial management habits.
Comment: 1 Read More
A few weeks ago, both the Intelligent Speculator and I wrote 2 articles comparing ETFs to Index Mutual Funds (you can read why ETFs are superior to mutual funds by IS or why index mutual funds may be the right solution sometimes, written by me. However, there is something that bugs me about ETFs: They follow the index but they don’t pay dividends! Dividend stocks have always been popular and we see a growing interest for them with the comeback of major Canadian Banks as money makers (they always made money but for some weird reason, some crackpots from Bay Street thought the other way a year ago 😉 ).
So, I pursued my quest to find Canadian ETFs that pay dividends… and finally found them! After writing about the top 10 Canadian Dividend Stocks and the Best Canadian Dividend Stocks, I am glad to now present the top dividend paying ETFs in Canada!
Why invest in ETFs that pays dividends?
There are a lot of people that love dividends. There are 2 major reasons why so many investors love them.
#1 they are usually issued by very stable companies which mean less volatility in a stock portfolio.
#2 they pay quarterly income, which is great for revenue seekers.
However, investing in dividend stock is nothing different than regular stock picking. When buying a dividend stock, you concentrate your risk in one company. Therefore, you would need enough money to buy at least 5 to 10 stocks to be more diversified. Unfortunately, the stock price of most dividend paying companies is between $30 and $60. Therefore, you need a lot of money to build a strong dividend portfolio.
With an ETF that pays dividends, you don’t have quite the problem of risk anymore. Since ETFs group several dividend stocks, you can benefit from high paying dividend stocks without being limited by the size of your portfolio.
Another great advantage you get with ETFs is their low MERs. Most dividend paying ETFs show MERs of about 0.50% to 0.60%, which is much lower than the regular 1.50%-1.60% MERs fee with mutual funds (unfortunately, I was unable to find a dividend index mutual fund, so the choice of picking dividend paying ETFs is obvious).
You can find a list of Canadian ETFs that pay dividends here:
|TICKER||NAME||PRICE (10-15-09)||RETURN YTD||DIVIDEND YIELD|
|XTR||ISHARES CDN S&P/TSX INCOME||10.87||33.58%||9.12%|
|FIE/A||CLAYMORE CN FINCL MNTH I ETF||6.79||26.92%||7.75%|
|XRE||ISHARES CDN S&P/TSX CAP REIT||10.59||36.4%||7.33%|
|CPD||CLAYMORE S&P/TSX CDN PFD-COM||16.47||20.07%||5.12%|
|CYH||CLAYMORE GLBL MONTHLY AD-COM||15.1||41.1%||4.93%|
|CDZ||CLAYMORE S&P/TSX CDN DVD ETF||17.89||30.47%||4.93%|
|XLB||ISHARES CDN DEX LONG TERM BO||19.53||5.78%||4.80%|
|XCB||ISHARES CDN DEX ALL CORPORAT||20.14||12.37%||4.63%|
|XBB||ISHARES CDN DEX UNIVERSE BON||29.52||4.73%||4.38%|
|CBD||CLAYMORE BALANCED INCOME-COM||17.95||22.48%||4.26%|
|CLF||CLAYMORE 1-5 YR LADDERED GOV||20.48||0.62%||4.12%|
|XDV||ISHARES CDN DJ CAN SEL DVD I||18.44||32.14%||4.09%|
|XGB||ISHARES CDN DEX ALL GOVERNME||20.47||0.78%||4.05%|
|CGR||CLAYMORE GLB REAL EST ETF-CM||15.43||10.57%||4.02%|
|XCV||ISHARES CDN VALUE INDEX||18.16||39.18%||4.01%|
|XSB||ISHARES CDN DEX SHORT TERM||29.18||4.00%||3.97%|
|XFN||ISHARES CDN S&P/TSX CAP FINL||21.90||42.16%||3.89%|
|CEW||CLAYMORE EQ WEIGHT BANC-COM||7.05||43.66%||3.88%|
|XMD||ISHARES CDN S&P/TSX COMPL IN||17.45||38.00%||3.73%|
|XCS||ISHARES CDN S&P/TSX SMALLCAP||13.36||48.01%||3.23%|
|XIC||ISHARES CDN S&P/TSX CAP COMP||18.20||31.99%||2.77%|
|CLO||CLAYMORE OIL SANDS SECTR-COM||17.35||61.09%||2.75%|
I really like iShares since they hold 70% of their fund in Canadian Banks and show a 3.9% dividend yield. Since banks are solid, they are nothing to be fear. Another interesting point is that they have been amputating their profits with provisions for losses that will perhaps never happen. Therefore, when accounting rules prevail, they will have to remove them in a few years and “realize” surging profits crossed with a much better economy. What do you think will happen? Canadian bank stocks should soar again 😀
My bonus is coming pretty soon (January) and I am seriously thinking of investing in Canadian ETFs that pay dividends in my TFSA 😉
Comments: 13 Read More
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