Liquid Independence

Liquid is the main editor of the Freedom 35 Blog.

May 222013
 

Want kids some day? ;) What if not every toddler is born equal and that there is a secret formula for making elite babies? I apologize in advance because the point of this post is to try and use probability to potentially give our future offspring a competitive advantage in life over their peers, and by the nature of the subject some parts of this article may contain offensive stereotypes or racism.

The Birth Date Effect
13_05_soccergameThe University of BC published a study that shows January and February babies are almost twice as likely to become CEOs than those who are born later in the year. The study investigated the birth-date effect in a sample of 375 CEOs from S&P 500 companies. Older students born earlier in the year are singled out as leaders throughout their school life and tend to do better than the youngest, who might be less developed. This Relative Age effect (RAE) is well documented in the world of sports as well. In an elite hockey team the best 40% of the players will likely be born between January and March. Early success is often rewarded with leadership roles and enriched learning opportunities, leading to future advantages that are magnified throughout life :) Even the BBC believes there is evidence that children born in the Summer months suffer in school.

The Mixed Race Effect
13_05_weddingSome studies suggest mixed-race people are more attractive and disproportionately successful in many professions. According to Darwin’s hypothesis on heterosis, crossbreeding leads to offspring that are genetically fitter than their parents. Although mixed-race people make up a small proportion of the population, they are over-represented at the top level of a number of meritocratic professions. Halle Berry, Keanu Reeves (quarter Chinese,) Lewis Hamilton, Tiger Woods, Steve Jobs (half Arab), Just to name a few.  Not sure why I and many of my friends find mixed-race people attractive but studies suggest that good looking people do in fact earn more money.

The Name Effect
Are some names more successful than others? Apparently yes according to the online job site TheLadders which analyzed the first names of their 6 million members against variables such as industry, salary level, and location. They found that people with shorter names make more money than those with longer ones. The top 10, highest-paid, executive names earn, on average, 10%more than other names. And unusual names such as Apple or Moonbeam and names that sound African American such as Tyronne and Jamal were not viewed as positively compared to more common names like John and Susan. They tested 24 pairs of similar names like Steve and Stephen, Bill and William, Sara and Sarah, etc, and in all but one case those with shorter names earned higher pay. They’ve concluded that every extra letter in a person’s first name may reduce his or her annual salary by $3,600. They’ve even identified the top 5 highest paid female and male names in their study.
Female names: Lynn, Melissa, Cathy, Dana, Christine
Male names: Tom, Rob, Dale, Doug, Wayne
This isn’t the first study of its kind either. In 2011, LinkedIn reported that American CEOs do often have short names, or nicknames like Peter, Jack or Tony.

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So to ensure that our children will have the best possible start in life we just have to find a partner of a different ethnicity than ourselves, get really frisky in April and May (゜o゜), and name our kids something like Cathy or Rob :D Then statistically our kids would have a better chance than most others to be top in their class, better leaders, more athletic, and make 6 figure incomes ;) And now you know the secret to making elite babies :0) As responsible and loving parents-to-be shouldn’t we do our best to give our future children gorgeous looks, and the highest probability for success? (^_^)

I don’t mean to imply that one group of people is superior to another, or that attractive people don’t have to work hard for their success, or that Moonbeam is a dumb name. These studies could simply be statistical realities and NOT factors of causality.  And it goes without saying that attitude, education, temperament, and work ethic will effect one’s life much more than how one is born. But unlike those other factors which are dependent on upbringing, the initial circumstances of how one is brought into this world can never be changed, (except names can be legally changed I suppose) :D

I don’t believe the results of the studies are conclusive, but if there is even a slight truth to their findings then it’s something interesting to think about isn’t it? I’ll have to remember these points when I have the “baby talk” with my future spouse ;)

May 192013
 

There’s a sitcom on CBS called 2 Broke Girls. It’s the story about Max and Caroline who are both poor and work at a diner in Brooklyn, New York. Despite their financial circumstance they want to start their own cupcake business (゜∀゜) Their plan is to save $250,000 and open up their own cupcake store one day.

Spoiler alert if you haven’t watched it already but in last week’s episode they discovered an old, hidden storage room in the back of the diner which nobody knew about before. Caroline said “Uhg. It’s so humid and damp in here. Now I know how balls feel:D  The restaurant manager was about to hire a cleaning company but then Max suggested that she and Caroline could clean the derelict room instead since they could use the extra cash. The manager agreed to pay them $600. In the middle of steam cleaning they discovered the room had some shutters which opened up to the street outside. And Eureka :) the girls realized this would be the perfect place for them to set up a small cupcake walk-up window, literally a window of opportunity (^_^) This would surely bring them one step closer to success.

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There are a couple of financial lessons we can learn from this episode. Even undesirable work can lead to great opportunity, and if we start from the bottom then there’s no way to go but up :D  Sometimes I feel sympathy for these two girls. Caroline uses free napkins as coffee filters, and in an earlier episode Max experienced sushi for the first time in her life. They work so hard for low wages, and sacrifice so much for their dream of eventually opening up a business together. I think we can all learn something from these two characters :) I watch the show because it inspires me to work hard, use my financial resources wisely, and keep me focused on my own goals :0)

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Random Useless Fact: More than 8,000 French households’ tax bills topped 100 percent of their income in 2012.

May 162013
 

The Canadian Real Estate Association recently announced that national home sales pretty much stayed the same in April. Compared to last year’s April activities, sales were 3.1% lower this year. However, the average sale price rose by 1.3% over the same time led by gains in Calgary, and parts of Ontario. The national average price for homes is now $380,588. Overall CREA maintains that the Canadian housing market remains firmly in balanced territory.

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I believe real estate can be a great investment. It’s not often we hear about someone losing money consistently, long term by investing in (not flipping) homes in North America. Even in the US, despite the housing collapse in 2007/2008 average prices are now back to their mid 2003 levels. Not to mention the potential to generate rental income from them. One way to invest in real estate without a lot of money is through REITs. For people who want to buy property directly but perhaps think their city is too expensive then another option is to shop cross country or even cross border. Many investors in BC and ON for example are buying homes in AB and SK because the rental rate relative to purchase price makes more for sense for cash flow reasons.

According to a BMO study, more than 500,000 Canadians now own property in Florida. Wow, half a million. That’s like 1 in every 70 Canadians, almost hard to believe. Go Canada! We saw an investment opportunity in 2010 and 2011 and bought when prices were low. So far it seems to be paying off for us. Over the last couple of years (since April 2011) single family homes in Florida has climbed 12%. While Canadians accounted for almost 40% of all real estate purchases in Florida in 2010, we are now facing stiff competition from Asian buyers and domestic investment companies that have been scooping up hundreds of Florida’s remaining distressed properties in the last year or two.

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Random Useless Fact: Butterflies taste with their feet. Taste receptors on a butterfly’s feet help it locate dissolved sugars like fermenting fruit and other food sources.

 

May 142013
 

To become rich we should try to maximize our earnings and minimize our expenses. Here are two simple ways to do it by adapting.

13_05_comtower adaptFirst, on the earnings side, we can take advantage of unfair market forces to increase our investment potential. For example Canada’s telecommunication sector is an oligopoly with over 90% of the wireless market owned by just 3 companies, and they have quite a lot of political influence. According to J.D. Power and Associates, Canadians are spending 13% more on their cell phone bills now than last year. But that’s okay. Less competition and higher prices for consumers also mean higher profits for those wireless companies :D Over the years I have learned about the anti-competitive wireless landscape in Canada and have slowly bought stocks in all 3 major tel-cos, Bell (BCE), Telus (T), and Rogers (RCI.B) All 3 stocks have outperformed the S&P/TSX Composite for the last 1 year, 5 year, and 10 year periods :) Even if I don’t like to invest in tele-com businesses in general like Vodaphone or Verizon from other countries, I would still make it a priority as a Canadian to have some exposure in Canadian tele-com stocks because they are given a competitive advantage in this country. Non Canadian investors however may not receive the same preferential tax treatment on dividends and capital gains from these companies so you should adapt your investment strategy based on where YOU live.

And second, on the spending side we can save money by adapting our shopping habits to where we live. For example I enjoy both dairy products and seafood. Relatively speaking Canada has expensive cheese, and other dairy goods, but we have pretty affordable seafood (especially near the coasts.) So whenever I want to treat myself to something fancy I usually favor seafood over dairy. In Canada, eggs, chicken and dairy aren’t sold like most goods. Competition is kept out. Tariffs on imports can be more than 200%. A $10 French cheese will be hit with a $24.50 duty for example. Exports are restricted because they’re subsidized. Again this means higher prices for consumers. I still eat cheese occasionally but it’s not a big part of my diet because I can find better value from other products. On the other hand, I do eat a lot of summer produce from the Okanagan Valley, spot prawns, sushi, and other locally sourced foods that are cheap and delicious :D  13_05_superstoreflyer

If I lived in the US I would probably eat more cheese, but would consume less maple syrup. If I lived in France, a larger part of my diet would probably be wine because of how cheap and plentiful it is there. By adapting our shopping tendencies to our surroundings we can choose what we want and still maintain our standard of living without spending more than we have to :D

Financial acumen requires the ability to adapt to change :D Every country will be different. By using the investment opportunities that are specific to a jurisdiction, and by being mindful of what we buy relative to our surroundings, we could greatly enhance the returns on our investments while being cleverly frugal at the same time, creating more savings for our pockets, hurray! (^_^)