Liquid Independence

Liquid is the main editor of the Freedom 35 Blog.

Nov 302015

Some people are¬†so poor they can’t even afford to pay attention. ūüėÜ But jokes aside, this is an important issue. About 15% of Americans, and 10% of Canadians live in poverty. Since each country has its own criteria for defining the poor it wouldn’t be fair to compare the two. However, I have a simple solution to reduce both country’s national poverty rate to effectively 0%. ūüėÄ

The Current Problems Around Poverty

North America has an abundance of wealth and there is enough food and other resources today to go around for everyone who lives here. But there are barriers in place that prevent some people from becoming financially literate and a self sustaining part of society.

  • A lack of practical education.¬†


Education is the best chance for a poor person to get out of poverty. The current public education system does a great job of testing our memories, but not so much on teaching us how to critically think for ourselves in the real world, especially when it comes to the application of mathematics and financial knowledge.

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Nov 262015

Discreet Success

What¬†I appreciate the most about investing is the option to be¬†inconspicuous about it. ūüė鬆If someone¬†buys a detached house in an affluent neighborhood like Lawrence Park¬†for $5 million, then people will know he’s rich. There is no way¬†to hide his wealth¬†from his close friends or his employer. If he¬†drives to work in a comfortable¬†Aston Martin One-77 then his¬†coworkers will find out about his affluence. But when it comes to his financial holdings, nobody¬†has to find out what, or¬†how much he has. :) This usage of stealth wealth is how most millionaires are able to blend into society.



Keeping our wealth a secret allows us to enjoy work, travel, play, and financial security without attracting unwanted attention to ourselves. We can’t hide our success if we’re famous, but we can hide our financial position¬†if we’re rich. ūüėČ Continue reading »

Nov 232015

Discounted Reinvest Plan¬†ūüĎĆ

Stocks that pay dividends often offer a Dividend Re-Investment Plan (DRIP) for its shareholders. I’ve written about how that works in previous posts. It basically means instead of receiving cash distributions, investors can choose to reinvest the dividends by automatically buying more shares or units of the same stock.

Normally when we buy an investment we can expect to pay the market price for it. But there’s a guaranteed way to purchase certain stocks at a discount to the market price every time. :)

Today I will demonstrate this example with one of my holdings, Smart REIT, which I blogged about a couple months ago. Currently Smart REIT (SRU.UN) pays a distribution of $0.1375 per unit every month.

The distribution date for this month was on November 16th. The average TSX market price of SRU.UN over the 10 business days prior to this date was used to determine the DRIP price for existing investors who wish to reinvest their distributions.

The average price of SRU.UN over the 10 trading days preceding the monthly distribution date was about $31.32. This is the market price that most investors would have to pay. However, when my Smart REIT distributions re-invested, I was able to purchase a new unit this month via DRIP for only $30.44, as shown in my portfolio activity below.


$30.44¬†is 97% of the average price on¬†the market over the 10 business days. ūüėÄ This¬†3% discount is the bee’s knees and saved me 88 cents!¬†Wow!¬†ūüíį

DRIP Purchase Discounts

DRIP discounts are very effective at retaining investor loyalty. :)

Unitholders who elect to participate (in the DRIP program) will see their monthly cash distributions automatically reinvested in units of SmartREIT at a price equal to 97% of the average TSX market price over the 10 business days preceding the monthly distribution date.” ~Smart REIT’s website.

While¬†everyone else pays¬†the market¬†price¬†to acquire SRU.UN, existing investors who DRIP can¬†pick it up for cheaper. Other companies like Enbridge and Sun Life Financial offer DRIP discounts too. Some REITs such as Allied Properties even offer discounts up to 5% to its investors! Imagine purchasing new shares and units of our favorite companies that we already own, and paying less than market price for it every time with no commissions or fees. :) Great Scott! Over time this should¬†give us a significant leading edge over other investors who don’t DRIP and only purchase stocks at market price.

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Nov 202015

Investing in Energy Infrastructure –¬†TransCanada Corporation

Pipe dreams can come true. We just have to find the right pipeline company to make it happen. :) In today’s post I’ll explain how to earn a tangible profit in the stock market with minimal effort and risk. And the best part is we don’t need any savings¬†to do this. ūüėČ I actually use this strategy a lot for my retirement planning. It’s known as the Stable Leveraging technique.

The purpose of stable leveraging is to use credit in a low-interest rate environment to harness the high yielding potential and long term stability of energy infrastructure companies in order to make some easy money. And it only takes a few minutes to set up if we already have a discount brokerage account.


How does Stable Leveraging work?

We simply use borrowed money to invest in common shares of pipeline companies. Then we use the earned dividends from the investment to pay off the interest incurred from the loan until the economic situation changes.

This investment philosophy is very different than “I have $X. What should I invest it in?” because Stable Leveraging¬†assumes¬†we have no money to begin with and therefore puts the risk of investing on both the borrower, and the lender.

What do we need to make the stable leveraging strategy work?

  1. A publicly traded, large-cap, blue-chip, dividend growth stock in the pipeline¬†sector that’s been operating for at least 50 yrs.
  2. This stock must also be trading at a discount relative to its peers, and its own historic P/E ratio.
  3. A reliable source to borrow cheap money from, that costs at least 1¬†percentage point less than the pipeline¬†stock’s yield.
  4. A 10 year investment horizon minimum, and the stomach to deal with market fluctuations.
  5. An exit strategy.

These 5¬†criteria are the essential ingredients to pulling off this maneuver successfully with minimal risk. ūüėČ One company that foots the bill is TransCanada Corporation.


Earlier this week I purchased 100 shares of¬†TransCanada Corp (TRP) using 100% borrowed money. I will use¬†my example to demonstrate the advantages of implementing stable leveraging. TransCanada is publicly traded¬†on both Canadian and U.S. stock exchanges. ūüėČ


I paid commission of $9.99 to make this trade, so the total cost is $4,209.99. For the purpose of this post I’ll use $4,200 to make the calculations look cleaner and to make the strategy simpler to explain and understand.

I used my margin account at TD to borrow about $4,200 to buy 100 shares of TRP at $42 per share.¬†The rate of interest I incur on this borrowed money is 4.25%, which would be the same as anyone else using TD’s services. But¬†since I borrowed the money to invest, my 4.25% annual interest rate is tax deductible which makes my effective after-tax cost 3.0% per year on the $4,200 loan.

I used the loan to purchase 100 shares (for $4,200) of TransCanada Corp, which at the time, had a dividend yield of 5.0%. Since these dividends are eligible for the Federal Dividend Tax Credit, my after-tax dividend yield is 4.8% per year.

Since my effective cost of borrowing is currently 3.0%, and I’m¬†earning 4.8% on my TRP investment, the difference between the two (1.8%) is how much I take home each year. 1.8% of $4,200 is about $75. It’s not much, but it’s $75 of passive income¬†nonetheless. The balance of my loan will remain at $4,200. The principal does not get repaid. Dividends are deposited into my account, and interest payments are withdrawn automatically. :)

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Nov 162015

Exploring the Myers-Briggs Type Indicator in Personal Finance


Table of Contents: 

The importance of knowing your type
How personality affects your financial habits
How rare is your personality?
Most common types for Personal Finance Bloggers
How personality affects your income and career
In Closing and Sources


Intro to the Myers-Briggs personality test

In order to master our¬†finances, we have to develop a¬†solid understanding¬†of our personalities. The way we think¬†dictates how we save, how we spend, and how we manage our money in general. Our temperaments can also affect¬†our income earning potential. With a¬†little self-discovery we can discover our financial strengths and weaknesses so we can focus on the skills and actions that we naturally excel at. ūüėČ

One popular personality test is the Myers-Briggs Type Indicator (MBTI.) Through a series of short questions, the MBTI measures our affinity towards four pairs of personality traits. The result is a 4 trait combination, one trait from each pair, that gives us some insight on how we think and perceive the world. Here is an explanation of each pair of traits.

Myers-Briggs Personality Traits

Extraversion (E)
-People's person
-Feel comfortable and enjoy working in groups
-Sometimes jump too quickly into an activity without thinking
Introversion (I)
-Reflective and somewhat reserved
-Feel comfortable and like doing things alone
-Prefer to know just a few people well
-Sometimes spend too much time thinking, and not take action quickly enough
Sensing (S)
-Remembers details based on facts and physical reality
-Works through facts to understand problems
-Pragmatic and looks at the bottom line
-Start with facts to form a larger picture
-Trusts experience over words and symbols
Intuition (N)
-Remembers events by reading between the lines to find their meaning.
-Leaps between different ideas and possibilities to solve problems
-Focuses on the big picture first before finding out the detailed facts
-Trusts impressions and metaphors more than actual experiences
Thinking (T)
-Logical, calculated, not emotional
-Notices inconsistencies
-Looks for logical explanations or solutions to problems
-Sometimes seen by others as too task-oriented, uncaring, or indifferent
Feeling (F)
-People or communications oriented
-Concerned with harmony and care about what other people think is important
-compassionate, make decisions with the heart
-Sometimes seen by others as too idealistic, indirect, or mushy
Judging (J)
-Prefers to have things planned out in advance
-Likes to be task oriented
-Likes to make lists of things to do
-Likes to get work done before playing

(note: Judging has nothing to do with being judgemental in this context.)
Perceiving (P)
-Prefers to go with the flow
-Likes to keep opportunities open to respond to new circumstances
-Appears to be loose and casual
-Keeps planning to a minimum
-Works in bursts of energy
-Tends to rush projects at the last minute

Each pair of traits is a spectrum because personality is not binary. For example, nobody is purely introverted or extroverted. The resulting trait is whichever one the person has a stronger tendency¬†towards. So if¬†someone’s temperament reflects Introversion, Sensing, Thinking, and Judging, then his MBTI personality type would be ISTJ for short. There are 16 possible outcomes for¬†the Myer’s-Briggs personality test.


If you don’t know your personality type you can take a free test here.


Why It’s Important to Know your MBTI

Increasing our financial self-awareness strengthens our¬†relationship with money, so we can prioritize what’s important to us. For example, there are two primary ways to save more money for retirement. ENTJs are better at increasing their incomes, while ISTJs tend to have an easier time cutting back on spending and being¬†frugal. Understanding our natural tendencies lets us choose financial management strategies that suit our needs. ūüėČ Once we know our 4-letter personality type¬†we can do a lot of practical¬†and useful things with it, including¬†the following.

  • Discover new career opportunities or¬†side hustles to make more money.
  • Narrow down which¬†financial experts¬†or famous investors to¬†follow based on how similar their personalities are to our own.
  • Better¬†understand where gender stereotypes in society comes from.
  • Find personal finance bloggers that think like us¬†and learn vicariously through¬†their stories and experiences.



What your Personality says about your Financial Habits

The 16 MBTI types can be grouped into 4 general personality categories. This gives a broad overview of how the personality types can affect someone’s financial behavior.

  • Protectors (SJ)

    These people all have the Sensing and Judging (SJ) traits. They are known as protectors because those who fall into this category are more financially conservative and want to protect their principal investment regardless of opportunity costs. They see wealth preservation as the main priority. Most protectors make average income or higher. As natural planners, they are good at saving for emergencies and for retirement, but sometimes have trouble accepting some calculated risk with their investments. Protectors generally have high savings rates to make up for their conservative risk tolerance on their portfolios.

  • Creators (SP)

    Sometimes also called players, creators like to live in the moment because they are Sensing and Perceiving (SP.) They like to work hard and play hard. Many creators are entrepreneurs and they tend to take bigger risks with their money than other groups.

  • Intellectuals¬†(NT)¬†

    Intellectuals embody the traits Intuition and Thinking (NT.) Also known as planners, intellectuals like to look at the big picture and plan for the future. They are willing to accept thought-out risks in order to achieve their long term financial goals. Similar to protectors, intellectuals are avid savers. But sometimes they focus so much on the future that they miss out on short-term opportunities to splurge or have fun in the present.

  • Visionaries (NF)

    This group of people tend to be emotional around money. They possess the Intuition and Feeling (NF) traits. Visionaries view lending money to or borrowing money from friends and family members as a very personal matter. They often see money as an extension of who they are. Most visionaries earn average income or lower. Their spending habit revolves more around emotions, relationships, compassion, and ideas, rather than strict pragmatism.



How Rare is your MBTI Personality Type

Most people are Sensing so they prefer to deal with detailed facts and physical reality rather than big-picture ideas and abstractions. Men tend to be slightly more aligned towards introversion while women lean slightly towards extroversion.


Almost 1 out of 5 females in the world are ISFJs. This supports the studies that claim women tend to be more risk-averse than men when they invest. Meanwhile INTJs and ENTJs are the rarest personality types among females. More than half of all females identify with the traits Sensing and Feeling (SF.) This combination lends itself very favorably to working in careers that require a sympathetic approach to people. They are commonly found in the clergy, teaching, health care, child care, sales and office administration work, and personal services.

2 out of 5 males are Introverted Sensors (IS.) They are good at remembering stored memories of previous sensory experiences. This allows them to carry out tasks such as quality assurance because they can compare new products with memories of existing products. Introverted Sensors tend to be good at remembering details. They can easily recall specific things they are interested in, such as names of actors or football players, numbers, percentages, specifications, stock prices, and sports scores.



What Personality Types are Personal Finance Bloggers?

With so many PF blogs out there it’s not always easy to find compatible bloggers who we can relate with. I cover stocks¬†and the financial markets. But what¬†about readers who want to learn about¬†lower risk investment options, or how to get out of debt?

Well earlier this year I surveyed over 100 bloggers to find out about their Myers-Briggs personality types. :) The data has been compiled in the following graph.


Discover which PF bloggers have the same personality traits as you, so you can narrow down which blogs might be more¬†relatable to you.ūüĆü

For a detailed explanation of each personality type, please see the “MBTI Personality Types for PF Bloggerstable below. The types are numbered to make them easier to find. They are roughly placed in order¬†from most common to least common in the blogging community.

1 INTJ the strategist15-11-myer-briggs-personalty-types
2 ENTJ the chief
3 ISTJ the examiner
4 ESTJ the overseer

5 INFJ the confidant
6 ISFJ the defender
7 ENFJ the mentor
8 ENFP the advocate

9 ESFJ the supporter
10 INTP the engineer
11 ENTP the originator
12 INFP the dreamer
13 ISFP the artist
14 ISTP the craftsman
15 ESFP the entertainer
16 ESTP the persuader

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