Jul 292014
 

Last year I blogged about wanting to invest in bonds as one of my goals because I’ve heard smart people invest in stocks, but smarter people invest in bonds ;) Then earlier this month I wrote about taking out a loan and have dedicated some money to buy bonds with.

Well I have finally taken the plunge into bonds. Yesterday morning I purchased $5,000 face value of the Sherritt International Corporation 8% bonds, maturing on Nov 15, 2018, for the price of $104.475. I will explain the jargon in a moment, but essentially what this means is I have made an investment of roughly $5,200. And by the end of 2018 that investment will turn into $6,800. That represents a 6.8% annual return :D It’s not the best investment ever, but it sure beats the low returns on 5-year CDs and GICs.

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Bonds are generally safer investments than stocks because if a business goes bankrupt bond holders have priority over shareholders :P muahaha. I’m not 100% sure on this so maybe Chuck the bond trader can weigh in, but I assume this means my 6.8% bond return is pretty much guaranteed as long as Sherritt stays in business until my bonds mature. Considering how the company’s stock is part of the S&P/TSX Composite index and it hasn’t missed a quarterly dividend payment in almost a decade, I think my 6.8% return is pretty safe :)

I will discuss three topics in today’s post: Why I’ve decided to buy these bonds. How to buy bonds. And what are the risks and expected returns of my new bonds.

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Jul 262014
 

If you ever want to feel rich just head over to globalrichlist.com to find out where you are on the spectrum of wealth. For example when I punched in my income I found out that I am in the top 1% of all earners in the world :) My income is so high I can afford to pay the annual salaries of 10 doctors in Azerbaijan, a small country between Eastern Europe and Western Asia. All you need is to earn more than $32,000 USD to be in the top 1% as well.

In terms of wealth I input $300,000 CAD as my total net worth and it turns out I’m in the top 5% :D

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To be in the top 1% you’ll need a net worth of $830,000 CAD or $770,000 USD. But for now I am already very pleased being at 4.61%. If I take just 1% of my current wealth I could feed a family of 4 in Ethiopia for 3 years :shock:  My personal wealth is equal to the combined wealth of 231 people in Afghanistan. What a financially empowering realization!

I think the moral we can take away from this relative wealth exercise is don’t work in Azerbaijan if you’re a doctor.

It’s possible to feel financially inferior after getting used to living in a first world country. Sometimes it’s nice to be reminded that making even just $30,000 a year and having a $50,000 net worth would already put someone in a very favorable financial position.

Other than using that website to compare our wealth with others for fun, we can also use it as a motivational tool. Find out how rich you are today in terms of both income and wealth. Write down your results, or take a screenshot and email it to yourself. Then go back to the site next year to input your new income and net worth to find out how your position has changed. You should be moving up the ranks every year. If not, find out what’s preventing you from getting ahead. In a global competitive world if we don’t improve, but others do, then we will get left behind. For my own goal, by this time next year I hope to be in the top 4% of the richest people in the world by wealth :)

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Random Useless Fact:

If plastic is made from oil, and oil is made from the hydrocarbons of decomposed, prehistoric plants and animals, then that means plastic toy dinosaurs are partly made from real dinosaurs.

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Jul 232014
 

Last week I invested roughly $5K into two new companies: Timbercreek, and Atrium. Both are mortgage backed securities called MICs and trade publicly on the TSX.

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Timbercreek (TMC) is based out of Ontario, where it conducts most of it’s lending business. TMC recently lowered its interest payout to 7.8% a year, which is still pretty attractive :) Its CEO recently said “Given our primary objective is preserving capital, we believe it is prudent at this time to reduce our payout to maintain credit quality rather than increase risk in the portfolio.”

Atrium (AI) has most of its portfolio in first mortgages. Its average loan to value ratio is only 64% so a small correction in Canada’s real estate market should not affect the company’s principal investments. Atrium currently pays 7.3% a year.

My new investments are generating $364 every year :) That’s like $1 a day of passive income :) #Winning! Some readers might be thinking “Yeah, but you have money to invest, Liquid. What aboot the rest of us who don’t have $5,000 to buy these MICs?” Well hold on to your toques because I didn’t have any money to invest either. In my latest net worth update I revealed that I only had $800 in cash. So here’s my secret – I used a retirement plan loan to buy these new stocks :)

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Jul 202014
 

I often gain financial knowledge by attending local events and seminars. It doesn’t mean every event I go to will directly lead me to make an investment decision, but they all help to improve my understanding of how money works in general. So here are some upcoming free events in major Canadian cities that might interest some people. Note: some of these seminars are meant to sell a service or product, but I encourage people to go for educational purposes only.

Toronto ON
RBC Direct Investing Seminar
Introduction to RBC’s stock trading platform and self-directed investing. Learn how to manage your own portfolio and use research and other resources to make better investment choices.

Wednesday, August 13, 2014. 12:15 – 1:15 pm.

RBC Direct Investing Centre
200 Bay St. — Royal Bank Plaza
Upper Concourse level
Toronto, ON M5J 2J5

Call 416-974-7493 to reserve your spot

Ottawa ON
Introduction to Fixed Income
Fixed income are investments like pensions and bonds. Its return is set at a particular figure and does not vary. Learn how it’s different from stocks and real estate equity.

Thursday Aug 7th, 2014. 12:00 – 1:00 pm

TD Direct Investing
45 O’Connor Street. 2nd Floor
Ottawa-Downtown, ON K1P 1A4

RSVP 613-783-6379 or use link above to register.

Montreal QC
Plan your Financial Future
Geared more towards young adults. Learn to set financial goals to build, protect, and enjoy your upcoming future.

Saturday, Aug 9, 2014. 1:00 – 4:00 pm

Wintax
4888 Boul. St-Charles
Pierrefonds, QC

Follow link above and RSVP to attend. You will need a meetup.com account.

Calgary AB
Credit Rating IQ
Learn the essential knowledge on your credit reports and credit score. Understand how it works, what’s reported, who uses it and how it impacts you. Discover how you can maintain or improve your rating.

Wednesday, September 10, 2014. 6:30 – 7:30 pm

616 Macleod Trail SE
Calgary, AB. T2G 2M2

It’s a drop-in so you can just show up.

Edmonton AB
Building Your Retirement Pay Cheque
The presenter will answer the following: What is retirement planning? Where do I begin? Where will my money come from?

Wednesday, July 30th, 2014. 12:00 – 1:00 pm

TD Direct Investing
10205 101st Street. Suite 148
Edmonton-Downtown, AB T5J 2Y8

RSVP 780-448-8082 to reserve your spot or register online using link above.

Vancouver BC
Meet-up with Blonde on a Budget
Get-together with Cait Flanders, a personal finance celebrity here in Vancouver. Discussions will be about debt, budgeting, and money in general. Free treats will be provided. I’ve met Cait before in real life and I think she knows more about personal finance than me.

Thursday, July 24, 2014. 6:00 – 8:00 pm

Tangerine Café
466 Howe St
Vancouver, BC V6C 3L5

Register using link above. Limited seats remaining.

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Random Useless Fact:
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Jul 172014
 

I was kicked out of university after my first year :? I had it coming though since I was probably the worst student on campus. But overall I’m glad I still enrolled, even if the experience was short lived. Going to university made me realize what really matters in my life.

It all started back in 2005 in my final year of high school. My application for the 4-year Bachelor of Commerce program at the University of British Columbia (UBC) was rejected because my “B” average grades weren’t high enough for their fancy business school :mad: But I managed to get into the Applied Science undergrad program instead, which is basically engineering :D

I wanted to do cool things in my first year at UBC like blow things up, or learn to build rockets or design robots. But nope. All they had me do was write reports, read text books, and solve equations. It all just felt dry and boring :|

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I quickly lost interest in all my courses. Instead of attending my own classes I started to sit in on lectures about astronomy and business technology, which were not part of my curriculum but they were more interesting :D I also spent a lot of time playing video games, reading fiction, and watching the serial drama LOST :) I had pretty much stopped going to all of my classes entirely.

Time flies when I procrastinate and before long it was mid terms season. Unlike high school, tests and exams in university make up the bulk of a student’s final grade. So I thought as long as I still show up for my exams and do well, then I can still pass the year :D I also figured I can just cram the night before an exam.

But I might have slightly overestimated my academic abilities. The science exams were brutally difficult. I only knew the answers for two blanks on the physics test – my name, and the date. And I wasn’t even sure about the date :? I spent more time making doodles on the pages than solving actual problems (-_-;) I was completely out of my element for the chemistry test as well. I was so frustrated I wanted to just take all the questions on the test and Barium :D  *badum tss*

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The English exam was even more challenging. My brain went completely blank.

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For one part of the test I had to write a paragraph to either argue for, or argue against an idea in this book that we were suppose to have read. But I hate arguing. Why can’t we all just get along? Plus, I didn’t read the book, which was a bit of an inconvenience since that was the main focus of the exam :| So for my answer I diplomatically wrote “Let’s all just agree to disagree.”

The math exam was the worst. I’m not very skilled at math to begin with. The equation 2n+2n is just 4n to me :D And most of the questions on the test weren’t even practical. I suppose decimals have a point. But how often is differential calculus used by average people in real life? Needless to say I only completed about half the questions :(

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I thought I could ace my mid terms with minimal studying. I had never been so wrong in my life. When the marks came back it turned out I answered none of the questions right on the math test. But I did receive 2 marks for showing my work, which is nice :) So overall I got 2 out of 80 possible marks on my math mid term, or 2.5%. I was a bit disappointed. But hey, things could have been worse ;)

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