Jul 162015
 

Earlier this year a Vancouver house with a $5 million assessed value was put on the market for $6 million. Guess how much it ended up selling for? Hint, it’s in the upscale Shaughnessy neighbourhood. :)

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After 12 days and multiple bids from 10 prospective buyers the 78 year old home was sold for $8 million, lol. Welcome to Vancouver. You’re welcome to buy a house here, as long as you’re willing to pay $2 million over the asking price. 😛

Our hot real estate market is about to get even more extreme because yesterday morning the Bank of Canada announced another 0.25% rate cut. Holy pumpernickel! Now it will be even harder to raise rates in the future without pricking the bubble. 📌

The Effects of the Rate Cut ✂

The overnight lending rate was lowered to 0.5% in an attempt to boost capital expenditure and drive companies to spend more on hiring and manufacturing. However this will also unintentionally persuade already heavily indebted consumers to take on even more debt.

The problem with monetary policy is that it affects the entire country even though places like Vancouver really don’t need any further easing of credit. A better solution would have been to address the faltering economy in some parts of Canada, like Alberta, using targeted fiscal policy instead of a blanket rate cut. But that’s just my personal opinion.

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Jul 012015
 

The European debt crisis is so confusing, it’s like Greek to me. lol 😀 As of yesterday Greece became the first developed country to default to the International Monetary Fund (IMF) to the tune of €1.6 billion. Overall Greece owes about €300 billion to all its creditors.

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A referendum in Greece will be held this upcoming weekend to decide if the Greek people would like to stay in the European Union and continue using the Euro, or exit the EU and revert back to their old national currency. What happens next is the million-euro question. A Greece exit (Grexit) should not have a large direct impact on other countries. But here are some lessens we can take away from the predicament facing Greece right now.

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Jun 062015
 

Nobody wants to see a disastrous oil spill. But when there’s a large solar energy spill, we just call it a nice day. 😀 ☀️

Investing in green energy has been a tough sell in the past because it wasn’t economically viable. But we have reached an inflection point where the a risk vs reward for renewable energy has become an attractive option for investors looking for relatively safe, and long term returns. :) Renewable energy comes from a source that is not depleted when used. There are many forms of renewable energy such as solar, wind, and hydro.

Wind Power

People have harnessed the power of the wind for thousands of years, using sail boats propelled by wind energy for transportation. For centuries we’ve also used wind mills on farm to pump water for irrigating crops. And now it’s time for wind power to go mainstream and become a bigger part of our society. :)

Renewable Energy - I'M A Big Fan

European countries are the leaders in the space of renewables. Last year UK wind power smashed annual records generating 28 terawatt-hours of electricity, which is enough to supply the needs of more than 6.7 million UK households. Renewables also provide Germany with a lot of clean energy. According to Berlin-based think tank, Agora Energiewende, nearly 26% of Germany’s power generation comes from clean sources like wind. 😀 Electricity output from renewables has grown 700% in that country since 1990. As Europe’s largest economy, it’s a pretty big deal to see Germany’s government and its people invest so much into green technology. Then there’s Denmark, getting 40% of it’s overall electricity from renewable energy sources. The latest figures put the country well on track to meet its 2020 goal of getting 50% of its power from clean sources. Denmark has long been a pioneer in wind power, having installed its first turbines in the mid-1970s, and has even more ambitious aims in sight, including a 100% renewable country by 2050. Now that’s ambitious! But it’s totally possible. Last year, onshore wind was also declared the cheapest form of energy in Denmark.

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Jun 052015
 

Receiving a higher educational degree affords many opportunities for future careers and for earning a larger salary. Attending a college or university after graduating high school is a path many students choose to take. While a college degree opens many doors for success, it often comes with a hefty cost. Tuition costs are often on the rise, and many students cannot afford to pay for school upfront or during their studies.

Student loans are a reality for many, and loans can quickly accumulate. Being readily informed about student loans in advance can eliminate some of the burden after graduation.

A Different Generation

Thirty years ago, those wanting to pursue a college degree worked hard to afford it. Money was saved many years in advance, and people sacrificed wants to accrue a solid financial ground to go to college.

As generations evolved, the mentality of being deserving of a college education took over. With this way of thinking came generations of graduating high school seniors unprepared to pay for their continuing education. Therefore, student loans became popular.

College students soon learned that borrowing money from the federal government or a private lender allowed them to pay for college without having to save in advance. Money was spent easily without realizing that it would all need to be paid back, plus interest, shortly after graduation. A new problem quickly surfaced.

Reality vs. Fantasy

Many recent college graduates have the idealistic dream that the perfect job with a fantastic salary is just around the corner. An apartment with a view, a great new wardrobe, and a new car are surely just a paycheck away. Unfortunately, when that unexpected first bill for those student loans taken out four years ago arrives, reality quickly sets in.

Even if a graduate is fortunate enough to land a job in his career, money coming in will likely go out even quicker. A crippling student loan payment can hamper a person’s budget or even lead to more debt if a credit card is utilized to make ends meet.

If a student loan is necessary, however, being informed about different student loan options and choosing the best fit for your personal needs is critical. Consulting online resources, such as SimpleTuition, to research different options for student loans is extremely helpful.

Being Proactive

Sitting down in the early years of high school to create a plan for paying for college is an excellent way to proactively combat student debt. Students and their parents are making the decision to have the entire four-year college experience paid off before even graduating high school.

This takes a lot of planning and some sacrifice on the part of the student and family, but the benefits far outweigh the drawbacks. For one, completing college with no acquired student loan debt will provide a larger amount of money to be available for other expenses.

Interest on federal student loans often does not begin until after college graduation. However, once the interest begins, a majority of the payment will first be applied to the interest. The principal is hardly touched at all, leading to a longer time necessary to fully pay off the loan.

College is an excellent opportunity to learn and grow into a more educated person. While cost is an important factor in choosing to attend college, money should not inhibit anyone from earning a higher degree. Pre-paying for college or taking out a reasonable amount of student loan debt are both feasible options for students.

Sources:

SimpleTuition — http://www.simpletuition.com/student-loans/guaranteed/

Freedomthirtyfiveblog — http://www.freedomthirtyfiveblog.com/2013/09/go-with-flow-student-loan-debt.html

Student Loan Info — https://www.consumer.ftc.gov/articles/0160-student-loans

May 282015
 

Economics is the only profession where you can gain great eminence without ever being right. Remember earlier this year when just about everyone anticipated higher interest rates, but then the Bank of Canada slashed rates instead? If mainstream economic predictions were right interest rates would be a lot higher by now, our wages would have grown to keep up with the cost of living, and Vancouver real estate would become more affordable. But that is clearly not the world we live in today. Nobody has a crystal ball to see into the future. If they did, the only people winning the lottery would be fortune tellers. It’s funny how the same people who laugh at fortune tellers take economists seriously. 😛 Okay, enough bashing on economists. They are actually good and respectable professionals. And we need them to make weather forecasters look good. 😛 Sorry.

Economics is complicated, but it doesn’t have to be hard. One way to understand the current situation we’re in is to read more history, and fewer forecasts. If we’re going to buy a specific stock we can look at its historical chart and determine what events caused it to move higher or lower. Reading stories or biographies of famous investors like George Soros, Peter Lynch, or Benjamin Graham can give a sense of how the smart minds think about situations and prepare us for when history repeats itself.

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Financial markets have a very safe way of predicting the future. They cause it. 😀 But don’t count on anyone to tell us when and how the next recession is going to happen. My Apple shares are up 50% over the last year, some bulls believe it still has room to rise. But bearish pundits think the stock market could correct at any moment. Some think the Canadian real estate market will remain elevated, while others below the bubble will burst so it’s better to rent than to buy right now. At the end of the day all of those are just peoples’ opinions. They’re only right until they’re wrong.

There will always be conflicting forecasts. Markets can rise and fall, but not do both at the same time. There are two sides to the same coin. When advocates of one side are right the other side loses. But there’s actually a third side to the coin that not everyone knows about; the edge! That’s where we want to be. We want to straddle the edge so we can take advantage of both sides, be it bullish or bearish, and spread out our financial risk. We can’t predict the future but we can sure prepare for it. :)

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Random Useless Fact

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