Last morning, I jumped off a plane…. HAPPY BIRTHAYYYYY! (this was my wife’s birthday and we went doing free fall Aaaahhh!).

Here are some great reads for the weekend:

Friend or Foe: Credit Card @ Green Panda Treehouse

A Day for Zombies and Vampires @ Intelligent Speculator

How to network @ Money Smarts Blog

Saving on currency conversion @ Canadian Capitalist

Ipad Giveway @ Where Does All My Money Go

The Basics of Credit Report @ Million Dollar Journey

Getting older and closer to financial independence @ Canadian Dream

A dividend rule that can help your investing performance @ The Dividend Guy

Modern Portfolio Theory @ Balance Junkie

Why do some stocks get more attention than others? @ Thicken my Wallet

25 basics steps to get out of debts @ Financial Highway

You might be crazy to not buy Euro now @ Money Energy

Stop 401(k) contribution to pay off debts @ Debt Free Adventure

Carnival of Personal Finance

Carnival of Money Hack

Carnival of Money Stories

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GO HABS GO!

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To go variable or not to go variable? This will be one of the great questions regarding Canadian mortgage rates in 2010. Since the beginning of 2008, Canadian home owners have been fortunate to benefit as the Bank of Canada dropped its interest rates lower and lower until its hovers near the floor with a 0.25% overnight interest rate.

Mortgages rates have obviously followed this trend and it is now possible to have a variable mortgage at prime (2.25%) or even lower if you negotiate with your banker (anyone had heard of prime – 0.25% yet?). However, some people may also be tempted to lock in their mortgage rates for a five year term for a little less than 4.00%.

While I don’t plan on playing the economic oracle, I’ll share with you my thoughts on fixed versus variable mortgage loans according to the current economic situation.

2 Reasons why you should go for a Fixed Rate Mortgage

I am not a big fan of fixed rate mortgage loans and even though the variable mortgage rates will increase in the upcoming years, I still think it would be a bad move to switch for a fixed rate mortgage loan.

Our economy grows faster than the US economy and our dollar is still pretty strong (thanks to the resources boost!). Increasing drastically the short-term interest rates in this situation will likely strengthen our dollar and push it over parity. This is something we surely don’t want as our manufacturing industry will suffer, cuts jobs and we will go back to the same slow motion economy. As previously mentioned the government will probably reduce the maximum amortization for a mortgage back to 30 years or increase the minimum cash down requirement in order to slow down the housing boom.

With that said, there are still 2 reasons why you should go for a fixed mortgage rate:

#1 If you are a young owner with a tight budget

If you just purchased your home and you are running on a tight budget already, you certainly can’t afford a rising interest rate environment. Therefore, it’s not worth taking chances with being wrong in your interest rate predictions. Lock down your mortgage loan rate around 4.00% or less for 5 years and concentrate on paying down your debts while increasing your income so you can enjoy the interest rate fluctuations of a variable rate in 5 years.

#2 If you buy a rental property

Then again, if you can afford interest rate fluctuations over time, you may want to consider the variable rate. However, if you prefer to keep your investment return projections steady, you can go with a fixed mortgage rate (that is tax deductible on top of that!). With a fixed payment, you will know in advance how much you will receive per month for the next 5 years (unless your renters do a fly by night ).

And for those of you who choose the variable rate mortgage in 2010…

I think it is still the best choice even if you know for sure that interest rates will go up sooner than later. Why? Simply because you must look at a picture larger than the span of 5 years. (not to mention than the financial institutions always cover the fixed rates with a safety premium that borrowers gladly cough up!)

When buying a property, you probably took at a 25 – 30 year mortgage loan. Therefore, you should be worried about which interest rate strategies you must take in order to pay the less interest possible over the span of 30 years… not 5 years.

Mathematically, the variable interest rate has always been cheaper over a 20 years amortization period or greater. I can guarantee you that you will pay more interest compared to a 5 years locked-in mortgage rate once in a while. However, over the long run, you will benefit from the interest rate dips and pay less in interest (or pay down your mortgage faster).

image source: woodleywonderworks

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We hear so many things from the stock market and how to trade that many investors are getting confused. I’ve completed some research and picked a few good lines to keep in mind when you trade stocks. Some must be followed religiously; others may be taken lightly:

The trend is your friend

This quote comes from momentum traders. According to them, one must not try to go against the market trend. In doing so, one will probably buy too high or sell too low. The problem is that you can only surf the trend for so long. One day or another, the trend will change and you will hit the wall…

Sell in May and Go Away

According to statistics, there is less profit to be made during the summer months on the stock market. Theory being that many investors sell their stocks at the end of spring and reinvest in the stock market in the fall. I’ve already given my opinion on this one by telling you not to sell in May and to avoid the market timing methodology.

The more certain the crowd is, the surer it is to be wrong

This explains how the stock market can be psychotic. When everybody is convinced of something, chances are that they are completely wrong. There is a psychological concept that describes when a group of people agree on one point, it is almost impossible to change their minds as they convince each other the “group” is right. This is the perfect indicator that when everybody sells, this is probably the right time to buy

Occasionally, successful investing requires inactivity. (Warren Buffett)

Patience is king when you want to make serious money on the stock market. When Canadian Bank stocks were dropping faster than rain, was there any rationale to it? Nope. So being patient with these stocks was the right approach. If you did sell them back in December, I suggest you don’t look at them today… it might ruin your day!

Don’t marry your stocks

One must not fall in love with his holdings. The market doesn’t care if you love a company. Therefore, you might see your “favourite” stocks plunging because advantages in their fundamental characteristics are not there anymore.

Price is king, but volume is the power behind the price.

The price of a stock is really important as it will determine your profit or loss. However, if there is no volume, the price is subject to wild fluctuations. While I don’t think it affects general trends (i.e. when the market went up from March to June, it wasn’t just a high volume of transactions), I do think this is applicable for small caps and penny stocks. It is pretty hard to determine the fair value of a stock that jumps and plummets by 10% weekly. This is what happens when there is minimal volume to support a price and few makers in its market.

I actually have more quotes, so I’ll keep a few for tomorrow

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Here we go, now you are reading my title and you think “this guy, this little Quebequer who hates his country…. Such a shame!”. Not quite right. In fact, I am very proud to be Canadian and if ever Quebec separates, I’ll be moving in Western Canada for sure!

However, Canada Day is pretty special in Quebec; this is also called “Moving Day”. For some unknown reason, most rent expires on July 1^st and then, most people move on that date. The thing is that I always have a friend that moves on that date as well!

Therefore, again, today I am stuck driving to Montreal, get stuck in traffic and move furniture and boxes the whole day. The great part is that I have to work tomorrow morning…

However, I really love the new Olympic Vancouver 2010 Maple Leaf Poster:

So I leave you enjoy your Canada while I’ll be sweating and swearing all day!

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