Jun 142014
 

Canadian comedian and actor Jim Carrey gave a moving commencement address to a class of 2014 last month. In his speech he describes how people often make seemingly practical choices that are actually based on fear, and how this can turn into a costly mistake. It’s true for many aspects of life, including personal finance. What I want is to become financially independent. But what I fear is making the wrong decision and losing all my money. So I have to let my love of freedom overcome my fear of failure.

Jim encourages us to ask the universe for things that seem out of reach. It’s amazing what we can receive if we simply ask for it. Last year I hoped my investments would perform well. The universe granted my wish and the stock markets returned over 20% in 2013. I also wished to receive more dividends and boom! Many companies I own have increased their dividend distributions over the last year, including Apple, Target, Enbridge, Disney, McDonalds, Chevron, and Scotia Bank. The universe rewards those who are proactive and optimistic :D

This is why I buy stocks despite their volatility. Why I buy real estate and land despite pundits saying the property bubble will burst at any moment. Why I invest in gold and silver even though many would argue precious metals are not even real investments. I will gladly face all the risks because I’m not afraid to ask the universe for what I really want ;)

Jim’s dad taught us that even if we make conservative financial choices, we can still fail. So we might as well take a chance on our dreams, even if it means exposing ourselves to more risk. I think this is great advice for many people who are too conservative with their financial decisions. We only live once after all. We can’t let fear paralyze and prevent us from turning our goals into realities. And for dads all around the world, happy Father’s Day :)

A longer version of Jim’s speech can be found here.

 

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Random Useless Fact:

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Jun 082014
 

From shady snake oil salesmen to the proverbial Nigerian prince, there is no shortage of fraudsters in the world trying to swindle people out of their money. You might think scams only happen to other people. You know better than to fall for phishing scams or multi-layered marketing products that don’t work. But despite best efforts even the most careful, conservative investors can still get tricked.

 

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A retired couple in Ontario Canada sold their home and received $268,000 from the proceeds. They wanted to invest in something short term and gave the entire amount to an investment company, MJF Financial Consultants. The couple was very explicit that they will need this money in the near future and did not want to risk losing any of the principle. The company told them to not worry.

Well unfortunately the money-grubbing clod of a salesman forged the couple’s signature, and gambled their $268,000 in risky stocks. When the couple asked for the money back, the investment firm had lost $80,000 of their money.

We had trusted him to make the right choices for us.” - Don, the husband.

A government investigation has found the company committed forgery and acted inappropriately, and it should reimburse the $80,000 back to the couple. However, this recommendation is non-binding, meaning the company doesn’t have to if they don’t want to. Welcome to Canada, where punishment for white collar crime is often just a slap on the wrist :P Unfortunately the couple may never see their $80,000 ever again :(

I never had any health problems prior to this. I am now on two heart meds, five times a day. I am furious.” - Elaine, the wife.

Being the victim of fraud and misrepresentation is often harder to avoid. There’s no way to tell for certain which mutual fund dealer will decide to fake a client’s signature, or commit embezzlement or other financial crimes.

Continue reading »

May 272014
 

Life is short so it’s important to take periodic breaks from our busy lives, sit back, and enjoy the present moment :) Listening to music is a great way to unwind. Here’s some ambient background music composed by David Wise of RARE/Nintendo fame. Enjoy!

Studies have shown that people who are more giving also live happier lives! Money shouldn’t be a means to an end. But it can help us to live in the moment and give our lives more meaning. Perhaps the most meaningful life is one that’s shared with others :)

Warning: Incoming feels. Keep a spare tissue handy.

When 26 year old maintenance inspector, Chris Price, was told he had terminal lung and liver cancer and didn’t have long to live, he decided to dedicate the remaining time he had left to make all his girlfriend’s dreams come true. He proposed to her (Ceri) and they were wed last August, with Ceri’s four children as the guests of honour :)

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Soon after, Chris surprised his new wife and his stepchildren with a trip to Disneyland in Paris.

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He even flew with Ceri to New York for a romantic weekend of sightseeing and shopping. He bought her a pair of boots for $800, and a $1,500 handbag.

He knew I had fancied a pair of Louboutin boots but they were way too expensive for me to ever afford them. But Chris bought them for me and got me an even more expensive Mulberry handbag.” ~Ceri

As a final gesture of endearment Chris booked a Las Vegas getaway for Ceri’s birthday.

Continue reading »

May 012014
 

Thought I’d share another helpful tip from the recent seminar I went to ;)

If we think like the rich, and act like the rich, then wouldn’t it make sense that eventually we will become the rich? Yup, I think this makes a lot of sense :D For example rich people don’t say “I can’t afford that.” Instead, they ask “HOW can I afford that?” This turns a problem into an opportunity which forces them to be solution seekers :) Why is this important? Because that’s how we make money in this world (^o^) Financial gain comes from finding solutions to other people’s problems.

Every dollar I’ve ever made so far has been a result of me helping someone else to solve a problem they had. This is an interesting realization for me :-o Is this true for you too? The rich are solution seekers, and the poor are complainers :P Technology companies like Google for example make billions of dollars each year because they offer solutions to so many everyday problems.
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So how to act on this knowledge and make it a reality? Well some investors may not feel comfortable if their stocks suddenly lost a lot of value :( For example if John has a lot of McDonald’s shares but is retiring soon, he may want to buy some insurance against a market crash. Sounds like he needs a solution :D Let’s help him find one!
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Today $MCD is trading at roughly $100 per share. John wants to find someone who would be willing to buy his MCD stocks from him for at least $90/share when he retires next year. This way, he limits his downside risk :) Of course he doesn’t have to sell if the share price doesn’t fall below $90. It’s optional for him. So in summary, he benefits from unlimited upside if MCD climbs higher :) And if the stock falls the most he can ever lose is just 10%. Pretty good plan for John.
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But who will agree to potentially buy the shares from him at $90? Well that could be us ;) And for our services as his insurance policy, he will have to pay us a juicy juicy premium, haha :D This is an example of a put option.
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So I called my broker yesterday to upgrade my account to level 4. The change will take 3 business days. But once the upgrade is complete I will be able to sell put options and make some extra side income via option premiums (^_-) If I keep thinking like the wealthy and discover new ways to solve problems for other people, then I’ll eventually become rich myself :0)
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Random Useless Fact: Burgers and fries are often cheaper than salads. This is part of the reason why the U.S. spends $190 billion on obesity-related health care expenses each year.
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Apr 142014
 

What is a credit score? It’s a number typically ranging from 300 (low) to 850 (high) that represents the likelihood of someone paying back a loan on time, based on that person’s past credit history.

Why is it important? Banks use credit scores to determine a lender’s credit worthiness. If someone has a low score because he’s been late on his payments before, then lenders will either refuse to give him a new loan, or agree to lend him money at a higher interest rate, to compensate for the extra risk.

How is the credit score calculated? Broadly speaking, it’s based on 5 factors with different weighting. See breakdown below.

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How do you increase your credit score? Improve the 5 variables that make up the credit score.

  • Credit Searches: Everyone is entitled to one free credit report per year. Hard pulling your credit history too often could raise red flags and decrease your score.
  • Types of Credit: Have a wide range of different types of debt. Types include mortgage, car loan, credit card, line of credit, student loan, etc.
  • Length of Credit Accounts: The older your credit accounts are, the higher your score will be.
  • Credit/Debt Ratio: Try to keep this ratio below 50%. But ideally it should be under 25% for the best possible score. For example, don’t keep a balance higher than $2,500 on a credit card with a $10,000 maximum credit limit.
  • Payment History: Always pay the bills on time and always pay at least the minimum amount.

Where to find your score. You can request it from any of the three large credit bureaus:  Experian, Equifax, and TransUnion. Credit reports are generally free and can be obtained either through the credit bureau’s website or by letter request, but you may have to pay a fee for the score itself. Alternatively if your bank recently pulled your credit history you can ask your financial advisor or another banking representative. They will have your full credit report on file, including the score ;)

What’s the typical credit score? In the United States, the median score was 711 in 2011. The proverbial “subprime mortgage crisis” in 2007 got its name because banks were lending to borrowers with credit scores below 640, which is seen as the dividing number between prime and subprime. Typically individuals with subprime status, or credit scores below 640, have trouble meeting their debt obligations.

This means you should keep your own credit score above 640 at the minimum. A score between 700 and 750 would put you in the same boat as most other people. And a score over 750 would give you the lowest interest rates on the market for your next mortgage or auto loan :)

Do companies have credit scores too? Yes, but they’re referred to as credit ratings. And instead of a number, companies receive letter grades such as AA, or AA+ for prime and credit worthy businesses, to C or D for more risky borrowers. Credit rating agencies who grade businesses include Moody’s, S&P, and Fitch. Entire countries can be graded as well. According to S&P Canada has the highest possible sovereign credit rating of AAA :D

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Random Useless Fact: Computer programs can be so inconsiderate sometimes.

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dat frown :(