Aug 222013
 
Earlier this year I wrote about buying a Saskatchewan property at an auction 🙂 But I had to raise $25,000 by the completion date, or I lose my deposit forever! 🙁 The seller has since pushed back the original completion date to October (lucky me) but regardless of the extension I’ve successfully secured the rest of my downpayment now 🙂

But what knocked my toque off is that I’ve managed to exceed what I actually need and somehow doubled the size of my property fund to $50,000 😯 And it’s all thanks to liquidity.

“Always aim for the Moon, even if you miss, you’ll land among the stars.”

― W. Clement Stone

I have definitely landed among the stars 😀 A few months ago I had no cash savings, and no rainy day fund. Today, I can literally buy a brand new BMW 3 series or an Audi A5 in cash!!! 13_08_audiconvertible

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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.

13_05_babysceptical

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 😀 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) 😀

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 😉

Apr 142013
 

It’s almost been 5 years since I started this journey to financial freedom. How am I doing so far? As shown on the right side bar I’m making about $5,100 of dividend income a year 🙂 Which is only about 20% of my annual living expenses. So it appears I still have a long way to go but I feel good about the future 😀 One thing I could do to reach financial independence sooner is downgrade my lifestyle just a little bit. Right now I live in a large two bedroom apartment, and drive a pretty sweet car. But I realize I don’t need these things to be happy. So I thought to myself what if I lived a more modest lifestyle? Let’s see what this alternative life for me would look like.

Passive Income: $6,500

In order to make life simpler I plan to pay off all my debts. I don’t have enough cash in the bank to do this. Big surprise lol 😉 So I’m going to sell my home, car, Saskatchewan farm, gold and silver, and all other financial assets, except my stocks. After fees, commission, and taxes, the total amount resulting from a complete liquidation of these assets should be about $425,000. So after paying off all my $390,000 of debt I will have $35,000 left over 😀 If I put this all into a diversified portfolio of dividing growth stocks with an average yield of 4% I’ll be making an additional $1,400 a year. Combined with my existing $5,100 mentioned earlier, my total passive income would be $6,500. 

Expense: $12,000

So where am I going to live if I sell my apartment? Thankfully there are many affordable places for rent in the Greater Vancouver area. I don’t mind living in a smaller place. It’s not like I’m using the entire 800+ sqft space in my current apartment anyway. Since I have no car anymore I’ll be taking public transit to get around. It’s more green anyway 😉 Here’s what my new spending would look like.

 13_04_modestlifestyle

Conclusion: $6,500  / $12,000 = 54%

And just like that, if I were to do this today I would already be half way to financial freedom. Woot! Big jump from 20% eh. Who knew just changing a couple of things can have such a big impact on expenses. Besides housing and transportation there wouldn’t be any noticeable downgrades compared to what I have today 🙂 Holy hamburgers, $6,500 of annual dividend income by investing for the last 5 years means in 5 more years I can probably make $13,000 of passive income and actually retire for real.  What an exciting thought! 5 more years. Instead of freedom 35, I can probably get there by 30 🙂 All I have to do for now is liquidate my assets, pay off all my debt, and downsize a bit. It’s almost hard to believe that people can spend just 10 years of their lives in the rat race and then retire forever by diversifying their investments and living with low expectations, yet the math totally works out. Does that mean I’ll aim for freedom 30 now?

net worth, freedom 35

Of course NOT 🙂 Although I would certainly enjoy the simple lifestyle of living on a modest income with no debt to worry about, the reality is not so simple. I want to get married some day so a 1 bedroom basement suite probably won’t be enough eventually. There’s also the possibility of having children, and caring for aging parents. I have to look past my selfish desires for freedom and plan for loved ones to be included in my future life beyond financial independence. So selling my apartment, farm, etc right now is probably not the wisest plan to build long term wealth eh? 😉

Nevertheless it’s very reassuring to know that if I became unemployed tomorrow I should have a pretty good financial cushion to fall back on. This sense of security is more important to me than going on extravagant vacations or leasing a new Lexus, and is also why I will continue to invest my savings and use financial leverage to build up even more passive income! I was talking with my realtor last week and he said the farm I bought last year with $20,000 of my own money has appreciated by $10,000 already, which makes for a 50% return on investment so far (゜∀゜) Check back later this month as I’ll update the official numbers on my blog when the FCC publishes their semi-annual farmland value report. This is why investing rules! Luckily the kinds of assets that I’m heavily invested in like stocks, housing, and rural land, have all performed relatively well over the last 5 years especially in North America 😀 But how will my luck fair in the next 5 years? We’ll just have to wait and see 😉

Nov 072012
 

The Struggle is Real

Do you make less money than other people who do the same work as you? If so, then you may be a victim of beauty discrimination, which is a serious matter, and affects millions of ugly people around the world. According to an article from nydailynews.com, “Handsome men earn, on average, 5 percent more than their less-attractive counterparts, while attractive women make 4 percent more. Over the course of a good-looking man’s career, he will earn roughly $250,000 more than a comparable, yet unattractive, employee.”

Egad! I know for a fact that I’m making below average wage in my field of work (media design) but I think that has everything to do with my limited work experience and not my level of attractiveness, at least I hope.

The article further explains “the less good-looking you are in America, the more likely you are to be poor, receive worse performance reviews at work, and get a longer prison sentences if you land in jail. And you’ll be going through it alone – unattractive people are also statistically less likely to be married.”

Ouch, that’s pretty darn depressing. 🙁 Managers also put a heavy emphasis on looks. When asked to rank factors that come into play when evaluating a candidate, appearance was a higher priority than where an applicant went to college.

 

“This is the new reality of the job market,” explained one New York recruiter. “It’s better to be average and good-looking than brilliant and unattractive.”

Oh dear. Are we really that shallow? So much for inner beauty. *Sigh* I used to think spending money on plastic surgery, botox, or other cosmetic procedures were just for losers who had low self esteem. But now I realize I had it all wrong before. From a financial point of view making yourself look more attractive is apparently one of the best investments you can make in your lifetime. If you’ve had cosmetic surgery before, what was your reason to do it?

Personally I think I’m a solid *above average* looking chap.  However, if I went in for some cosmetic dentistry and eyelid surgery, and maybe even a nose job, then I can potentially make a quarter million dollars more throughout my career. And I do have the required capital (~$30,000 at most) to pay for it all today, which is well worth the investment if the study is correct.

 

Oct 092012
 

Affordability doesn’t always mean cheap vs expensive prices. If a gallon of milk is cheaper in the US than in Canada that doesn’t automatically mean milk is more affordable for Americans, although in this case that does seem to be true (>_<) What I mean though is that affordability can also refer to our purchasing power in a local economy. For example, an affordable beer index. Below is the a chart from The Economist showing how many minutes a person who makes the median income in a country has to work to afford half a liter of beer, which is roughly 1 pint I believe.

Known for its high income earners and low cost to do business, the most affordable place to make a living and drink beer is in the US. On the other hand beer is more pricey in Britain and Japan, and not surprisingly they are also less affordable for people to buy. But of course affordability isn’t just about the price. For example, according to the IMF, CIA, and the World Bank, people in Romania and China make just a fraction of what Canadians make, (about $5000 to $9,000 a year if converted all to US dollars), yet they don’t have to work as long as us to earn themselves a drink because their beer is so cheap. That means if you lived in those countries and worked an average job, you would be able to do more with your salary than doing a similar average job in Canada. Well at least you can do more drinking (^_-)

So if you live in a country near the bottom of the chart then you should be thankful that you can enjoy one of life’s simpler luxuries without breaking the bank. But if you live in a country above that average line, then you might want to think twice about going out for a drink next time because depending on your priorities, you may find a better use for your hard earned money elsewhere.

I’ve always thought that alcohol in Canada was expensive and over priced. But I’ve made the mistake of only comparing Canada to the US. Now I’ve realized that we don’t have it all that bad :0) I don’t feel upset anymore about paying more money for beer because I know it’s still more affordable than what most people in the world have to deal with.