September 10, 2007, 7:00 am

Live Smith Manoeuvre Example, September update

by: The Financial Blogger    Category: Smith Manoeuvre
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Well well well… I did I survive my month of August? Did my investments took a drop and followed the market? After all, most banks were on a free-fall during the last month and I only held the NBC dividend fund in my portfolio. Everybody knows that banks are big players in the dividend funds. In the top ten shares of the NBC dividend bank, five of them are related to banks.


Surprisingly, I am not doing too badly. So far… my account shows a small negative yield of 0.79% as of this morning. I was definitely expecting a much lower yield considering the market. I guess that the last 2 weeks help to bring back my investment a little bit higher. It is basically like I am not losing anything on my investment. Hence, I am losing money considering the interest charged on my line of credit.


My line of credit shows a negative balance of -$4,100. I am still surprise to see how much I put so far and it was not even for a year! Even if the money invested is for long term, it constitutes a great source of liquidity if I ever run into financial troubles.


I was thinking about it for the past three month and I realized that I can’t keep up with investing $600 a month (on top of paying my monthly interest). The fact that my wife is on maternity leaves hurts our cash flow big time and I am starting to feel it.


However, the real reason why I will drop my monthly investment is that I just got back from the garage and it costs $1,900! I recently put about $1,300 six month ago. Even if my car is paid off earlier this year, I will still have the equivalent of a car payment this year. I used to pay $330 per month, and now I am averaging $267 per month for maintenance. I will therefore drop my monthly investment into my Smith Manoeuvre from $600 a month to $400. I will still be able to put almost 5K every year in investment which is pretty good. Probably that next year, I’ll be able to increase it back to $600 and keep going the right way.



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Hey FB, cue the comment from the link:

The short-term cost of the car will vary greatly, like the day when you pay it off. Of course, even though you feel $300/month richer you’re actually just on “borrowed time” b/c your 2002 is going to need $2,000 in the next 18 months: tires, belts, brake pads, suspension, etc. So your long-term cost hasn’t changed, it’s just lower for the moment.

I guess that 18 months was more like 2 months. 😯
Have I ever mentioned that I don’t drive a car? 😕

by: The Financial Blogger | September 10th, 2007 (3:41 pm)

I’ll gladly trade my car for a bike:wink:
I thought that putting $1,200 at the beginning of the year was enough. In the end, this year will almost cost the same thing as my previous car payment! Not quite sure if I did the right thing after all…

Congrats on your progress to date….I really think your on the right track! The years will go by whether you invest or not. Having the resource of liquid investments is a great aspect of the SM. Its like an emergency fund.