Oct 292011

Men generally have more money than women. That may not be a surprise since men tend to have higher incomes as well. However, I didn’t expect the difference to be so big. In 2005 in Canada, the median male had $184,964 of wealth, and the median female had $105,470. That makes guys 75% richer than girls on average. And around the same time the median family net worth in the US was $93,100. This of course doesn’t mean Canadians are richer than Americans, our wealth is just distributed differently than their’s.

The good news for younger adults is that our bar has been set pretty low. The median net worth for my gender and age group for example is only $28,203. Although my net worth is higher than that, the median debt to asset ratio for this same group is 0.41, where mine is over 0.70, which means for every dollar I have, I owe someone else more than 70 cents. I know carrying around almost a quarter million dollars of debt in my 20s is kind of risky but I can’t help myself from borrowing more and more because credit is just so cheap and easy to get.

So men apparently have 1.75 times more money in general than women. So here is some quality advice. Ladies, don’t settle for any man who is struggling with his debt because there are plenty of other guys out there who are more financially sound. And guys, don’t marry a girl just because she likes you for your money.


Oct 252011

Last month I explained why I started a swing trade. It’s like day trading, but you hold onto the securities for longer. Earlier today I sold the related holdings and made a profit. In my previous post on swing trading, I borrowed about $5000 to buy some undervalued stocks. I wrote back then that when the VIX drops back down to 30 I will sell. Yesterday it dipped below 30 but I didn’t realize it until the markets closed, so earlier today I sold the holdings and made an 11.8% gain, in just over a month’s time. Break down below.

Sept 22nd 2011
Borrowed $5027.70 from Bank at 5% interest rate
(SNC.TO) Buy  $42.42 x 60
(HAL.NE) Buy $33.10 x 75
Total Bought = $5027.70

Oct 25th 2011
(SNC.TO) Sell  $49.95x 60
(HAL.NE) Sell $35.76 x 75
Total Sold = $5679.00

Paid back loan -$5027.70
Paid expenses -$56.96
Total capital gain = $594.34
Or $594.34 / $5027.70 = 11.8% Profit

Expenses include interest, and trade commissions. That’s almost $600 in profit, all using other people’s money. The strategy is based on the fact that usually the VIX and the stock market index move in opposite directions. Historically it’s rare for the VIX to climb higher than 40 points and even when it does, it usually doesn’t last very long. So when the VIX inevitably falls, stocks should go up. Will the stock market go even higher in the next couple days or weeks? Did I sell too soon? Maybe, but I have to follow my strategy and quit while I’m ahead.
HAL.NE (Halliburton Co) didn’t gain as much as I expected, but that’s why I bought 2 companies in 2 different sectors, to diversify my exposure. The S&P500; grew by 8.8% during the same time, and the TSX Composite gained only 4.7%.  By choosing cyclicle companies we were able to beat both indexes in the last month with 11.8%.  Swing trading is a speculative activity and because of its risky nature, is not for everyone.  I was definitely lucky this time. Even so, would I do it again if the same opportunity arises? If I’m still fully employed, then yes. Because you only live once. If you want the reward you have to be willing to take the calculated risk.

Oct 202011

Building up an Asset Column

When I started my career in 2008 my salary was in the mid $30,000s, and all I had for assets were a few thousand dollars in mutual funds. When I moved into my own place the following year I was excited to learn as much as I could about the the real world, and how to manage my own money. The words below helped inspire me to become an investor, and is still one of my favorite financial quotes today.
“Rich people buy luxuries last, while the poor and middle class tend to buy luxuries first. The poor and middle class often buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old money people, the long-term rich, built their asset column first. Then, the income generated from the asset column bought their luxuries. The poor and middle class buy luxuries with their own sweat, blood, and children’s inheritance.”

Robert T. Kiyosaki

This made a lot of sense to me so I incorporated these words into my own life. Instead of buying luxuries, I started to build my “asset column.” Just like building any kind of foundation the process began very slowly. My $3000 of mutual funds was only generating about $150 a year in dividends and interest, but I kept investing every dollar I could save. I only made a few hundred dollars in my first year. But I became a better investor as time went on and as my income from work grew, I was able to save and invest more, and made almost $800 in the second year from my asset column. The third year I saved even more money to invest, and continued to re-invest what I already had, and received more than $2000 in dividends by year’s end. And today, those assets are generating more than $4000 every year. So instead of buying a vacation with my own sweat and blood, I can let “the income generated from my asset column buy” all my luxury needs, (lol, sounds like an oxymoron.) The combination of investing regularly, compound growth, re-investing dividends, and growing my income faster than my spending has given me a positive start to financial freedom. If you haven’t started building your own asset column yet, don’t wait any longer. It doesn’t take much to get started. But it will require a great deal of patience in order to see any significant returns on your investments (especially in the first couple of years.)

Sacrificing a small bit of instant gratification now for stable (and most likely growing) income in the future is worth it to me.  Even after a job promotion last year I still make below average salary. But it’s not about how much money we make, because what’s more important is how we make our money work for us. (^_^) To do this we must learn to live within our means, keep our money safe, don’t take on too much risk, keep an eye out for opportunities, invest wisely, and perhaps even start a part-time job or side hustle. For most people, it is possible to slowly but surely reach the point where their investments make as much money as their work income, at which point, they don’t have to rely on a career to put food on the table anymore! I understand that this will take decades, and a bit of sacrifice, but for those who want it, it will be well worth it.


* This post was updated on Feb 11th 2012

Oct 152011

Occupy Vancouver started today. Thousands showed up downtown. I contemplated whether I should join the event or not. I agree with some of their arguments put forward, but disagree with others. In the end I stayed home today because I got hooked on this new HBO series and just had to finish all of season one. But I support people coming together to share ideas and experiences, and create new aspirations to pave a better road for society. Protests are also great places to meet new friends with similar viewpoints. Everyone has the right to peacefully protest, and everyone deserves to be heardヽ(´▽`)/

That’s a lot of people, for a Canadian city.

Unfortunately, not everyone can be an elite 1%, so for the rest of us 99%, how do we fare against each other? I’m more interested to know how my income compares to those in the local economy than to billionaires, because all I really want is to have enough money to hang out, fit in, socialize, and enjoy the same standard of living as my friends, neighbors, and co-workers. It’s not about showing off or keeping up with the Jones, it’s about being invited to go clubbing after work and asking myself ‘can I afford it?’

Well In America, if you made more than $33,048 in 2008 then you are already better off than 50% of the people in the country. In Canada, if you made more than $28,840 in 2009 then you are also in the top 50% of all Canadians. So unless I get a pay cut or something I have no complaints because I can already afford a more comfortable life than the average citizen. The point is, if you “only” make $35,000 a year and feel poor, cheer up! You are still richer than most people in North America! And if you really want to feel wealthy, just focus on the things in your life that money can’t buy.

Oct 112011

In Vancouver the drivers have to pay more for gasoline than in any other parts of the country. According to gasbuddy, at the time of this post the average price for a liter of gas here is 137.8 cents. or ($5.22 per gallon) This is why so many of my friends are driving across the Canadian/US border to buy their petroleum from Blaine, WA, which currently sells gas for only $3.77 per gallon. You save $20 per tank!

Why is gasoline almost 40% more expensive in Vancouver than an adjacent US city less than 30 minutes away? For a country that exports oil, we sure have some weird economics that needs explaining. Below is a rough breakdown of what goes into the cost for 1 liter of gasoline in Vancouver BC.

74 cents – Actual Gasoline
15.87 cents – Marketing/Service
10 cents – Federal Tax
5.56 cents – Carbon Tax (Managed by the Provincial government)
17 cents – Translink Tax (For Vancouver’s public transportation system)
6.75 cents – BC Transportation Authority Tax
1.75 cents – Provincial Tax
6.87 cents – Goods and Services Tax (GST)

Total 137.8 cents/Liter

In other words, 52.93 cents or almost 40% of our money goes towards taxes, and 3 of those taxes are collected by the provincial government. Nice going Ms. Clark. And the carbon tax is planned to increase by another 1.39 cents/liter next year. If you drive but don’t live in the lower mainland, consider yourself lucky! If you do live here, consider taking advantage of our public transit. It’s good for the environment, and drivers are helping you pay for the skytrain service (^_^)