Dec 202014
 

What do you call the world’s largest bulletin board which has 174 million users? Reddit! :) Registered members provide content on this social news website, and everyone decides, through voting, what’s important and what’s rubbish. Submitted pictures, links, and articles that receive community approval get pushed towards the top, so the front page is constantly updating with fresh, interesting entries.

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New contents are organized by areas of interest called “subreddits”. Think of these as message boards with specific topics. Today I’d like to share some subreddits that I frequent from time to time to either learn something new, or simply read about interesting news and stories related to personal finance. ;)

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Nov 242014
 

How do you handle change? Some people put it in parking meters. But everybody copes with it differently. Change can appear in many ways but it is always inevitable. You have memories and life experiences today that you didn’t have 20 years ago. Your appearance has probably changed quite a bit too. Even the matter of which you are made up of is different. Millions of new cells in your body are created everyday, and old ones die off. Scientists say about every 5 to 7 years just about every atom and molecule in your body is replaced. 20 years is enough time for your body to go through several of these cycles. It appears that the only constant in life – is change.

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Similarly the person that you will become 20 years into the future will be psychologically different, remember very few of your current experiences, and have a body that only resembles your present one in appearance, but contain none of the same physical matter. So in a way, you have more in common with your next door neighbor today, in terms of memories, experiences, and history, than with your future self 20 years from now.

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Nov 182014
 

In the world of finance, the word “arbitrage” refers to buying something in one market, and simultaneously selling it in another, profiting from a temporary price difference. According to Investopedia, this form of profit is considered practically risk free for the investor/trader. :D Well I have recently found such an arbitrage opportunity in the gold bullion market.

Introducing the 2014 Howling Wolf 99.999% Gold Coin

Several days ago I went out to buy the 1 oz. pure gold 99.999% – 2014 Howling Wolf coin made by the Royal Canadian Mint. The Howling Wolf gold coin cost me $1,389 CAD to purchase. The slight premium over the spot price of gold is due to the spread charged by the broker and the unmatched purity of the coin (most bullion is only 99.99% pure gold.) Details below with proof of purchase.

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If you live around Vancouver you can buy it from the VBCE, which is where I bought my coin. The current quoted price on their website is about $1,400 CAD. In Calgary albern.com currently sells it at $1429 CAD. In Florida, gainesvillcoins.com sells this coin for $40 over spot per oz. If you live around Toronto you can visit the Canadian Bullion Services to buy the coin. You can also order it online and pick it up in their store or have them mail it to you. In fact many of these companies I mentioned ship worldwide. There are hundreds of dealers across North America so this coin is relatively easy to obtain.

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Nov 102014
 

Rich people value financial security while the middle class focuses on job security. There use to be a time when these two terms meant the same. When I was going through school my parents wanted me to have a good education, so I could go on to get a high paying job someday. But that was the old way of thinking because the modern world doesn’t work like that anymore. :| Many university graduates with high grades today can’t find those “high paying” jobs anymore, let alone any job. :?

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In today’s world we have to think outside the box. We have to see the bigger perspective. For most people the point of having a job is to make money. If that’s the case then we should start with the money, not the job. Financial security means having a financial plan. It should begin in life as early as possible, but it’s never too late for anyone to start. Giving our finances priority means learning about our career paths, and life choices. It’s about making financial goals regarding savings, investing, and retirement. Financial security means knowing what we want our money to do for us. It means giving our financial future a purpose.

Finding job security can be a part of our financial security, but it shouldn’t be the priority. Job security is about finding a job. Financial security does that too, but it also teaches us how to survive if we lose a job. With a direct understanding in financial literacy we’ll have the knowledge and confidence to utilize other options like entrepreneurship, investing, network marketing, etc, in case we aren’t lucky enough to land our dream jobs right away.

The governor of the Bank of Canada recently received some heavy backlash from vocal individuals when he suggested that unemployed millennials should volunteer their time to build up relevant work experience. He probably meant volunteer work would help improve someone’s resume. However his words could also be interpreted to mean he supports unpaid internship. And there’s a lot of people angry about corporations taking unfair advantage of young people who are willing to work for free. I’m glad I’m not a public figure. In today’s politically correct world it can be difficult to speak candidly about anything. The best way to not offend anyone is pretend to be old, ignorant, and poor, lol. No offense. :)

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Random Useless Fact:
On August 16, 2013, Google went down for 5 minutes and in that time, the global Internet traffic dropped by 40%.

Sep 162014
 

A series of stress tests can help you sleep at night worry free :) A stress test is designed to determine if you have the ability to deal with a financial crisis if things go pear-shaped. It makes the impact of unlikely, but plausible events measurable and transparent, so you can see exactly if you should be worried or not about your financial situation.

A stress test is like an alternative solution to an emergency fund, but there are some differences.

Emergency funds are great, but they lack tangibility. The popular rule of thumb is for people to have enough cash in their emergency funds to “cover six months’ worth of essential expenses,” writes personal finance guru Gail Vaz-Oxlade on her blog. I’ve heard other professionals say this as well. It’s good advice, and these knowledgeable gurus are not wrong. But six months is quite an arbitrary time period :| Why not four months or nine months? An emergency fund is a good start to financial security, but perhaps it’s not quite enough to give you the complete peace of mind that you deserve. This is where stress testing your finances can come in handy.

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A stress test will categorize all your risks, quantify them, and tell you exactly how much money you should keep on hand, and more importantly, why. It removes all traces of uncertainty and doubt from an objective point of view and offers you a strong sense of financial stability :D It’s also flexible and is accommodating based on your changing financial needs. For example if you renovate your kitchen a stress test can help you determine a budget and solutions in case of complications or unexpected overhead costs. A stress test will also show you warnings in the changing economy, like potentially rising mortgage rates, so you can prepare for it.

Having $15,000 or 6 months worth of expenses in an emergency fund doesn’t tell you why that amount is important, or exactly how that money would be used in a real life situation. You can’t do anything with an emergency fund except wait for an emergency to happen. But a stress test allows you to be proactive instead of reactive. If you have proper auto insurance and know that the most expensive out of pocket cost is $2,000 to fix your car in the unfortunate event that it gets damaged, then a stress test will help you maintain at least $2,000 of cash or available credit at all times, so you don’t have to constantly worry about it ;)

But it’s not about one or the other. A stress test can be used as an emergency fund, or you can incorporate an emergency fund inside a stress test :)

Below are six stress tests that I have made for myself. You can use them as reference/template to create your own. Because stress tests are so granular and custom in nature, everyone’s will be different.

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