Jan 142016
 

The following post was written by staff writer Peter.

Insurers use different factors to set the cost of your insurance. The amount you are charged by an insurance company is most often a reflection of how likely you are to make a claim – and how expensive that claim may be. Different insurers have different ways of treating these factors. Therefore, it’s always a good idea to shop around. The Internet is filled with helpful sites like CoverHound, which allow you to compare auto insurance prices quickly so you know the types of policies that are available to you. But even as you compare and contrast different insurance rates, you’re still likely to be asked why and how often.

Below we’ll highlight some of the main factors that come into play when comparing auto insurance quotes.

Age

According to Opposing News and Forbes, men pay an average $15,000 more for auto insurance, with high school boys being the most affected. Your age is among the most significant factors insurers look at. Young drivers have less experience at the wheel compared to their older counterparts and this makes them more susceptible to being involved in an accident. In effect, this means drivers aged between 17 and 25 pay the highest premiums. The sad news here is that this is one factor you cannot change.

Occupation

Some occupations require you to spend more time in your car, maybe even requiring you to carry important work equipment or park it in high-risk areas. So if you’re a scrap dealer or racecar driver, you’re probably paying more for auto insurance than a nurse, teacher or accountant.

The statistical nature of insurance pricing requires occupations that look similar to have some noticeable price difference. For instance, a company’s director may turn out paying more insurance rates compared to a director of a company. This is why you should always be as accurate as possible while describing your occupation.

Your Car

The kind of car you drive has a large bearing on the insurance rate you pay. However, the angle behind the type of car you drive is determined by:

  • Value: The more expensive your car is, the more it will cost to replace in case of an accident or theft. Pricier vehicles might also need more money to repair, especially when they are rare or with non-custom parts. But don’t assume just because your car is inexpensive that it will be cheaper to cover. Insurance covers more than the damage to your own car. It protects other road users likely to be affected by accidents you cause.
  • Power: The more speed and horsepower your vehicle has, the likelier you are to get involved in an expensive accident in insurer’s eyes. This translates to higher insurance costs.
  • Modifications: If modifying your car to get more power out of it, inform your insurer. This is likely to increase your premium, but choosing to remain quiet on the modifications may make your cover invalid when making a claim in future.
  • Desirability: A particularly desirable car attracts higher premiums because your insurer may consider you more susceptible to theft. You can improve your car’s security to offset this – or just get an ugly car.

Your Postcode

Where you live also has a bearing on your car insurance cost. If you live in an area where risk of accidents is greater, you will pay more. The same applies if you live somewhere vehicle crime levels are high. The cost of insurance may even vary between postcodes that are nearby. For example, a car that is streets away from you may have significantly higher prices due to its proximity near a dangerous stretch of road.

Your Car Usage

You may pay more for coverage when you use your car mainly for commuting, since you’re driving more on busy roads. Annual mileage is also another factor. The more you drive, the higher your chances are of getting involved in an accident.

Driving Record and No-Claims Bonus

Ever made any claims? Are there any points on your license? These are significant factors during the calculation of your car insurance, according to the DMV. As you apply for insurance, details of any claims you have made in the past five years will be required. Even if you were never at fault, any claims on your record are likely to push your premiums up to some extent. If you have no claims for a year or longer, you should get some no-claims bonus. Many insurers will accept up to five years of no-claims bonus, which will help reduce your costs.

Excesses

The more voluntary excess you agree to, the less your insurance will cost. This is because you have voluntarily shouldered a greater amount of risk. Potential payouts will be reduced and low-value claims are probably uneconomical for you anyway.

Alternatively, if you have no voluntary excess chosen, insurers will pay the full amount when you make a claim after deducting compulsory excess. Meaning your premium will become higher.

Type of Cover

There are three car insurance coverage levels:

  • Third party-only
  • Third party, fire and theft
  • Comprehensive

Third party-only is the most basic protection level, whereas comprehensive adds more levels to your coverage. You would think that the higher the coverage level you go for, the more expensive your premiums are likely to be. However, this is not always the case, so spend some time and check exactly what you are getting for the price. With a bit of forward planning you can now keep your insurance rates as low as possible and enjoy the full benefits that come with having the proper coverage for your car in the event of an accident.

 

 

Dec 302015
 

The following post was written by staff writer, Peter.

We’ve noted in previous entries how binary options are a legitimate form of trading. But careful readers will have noticed that we also cover the issue of binary options scams. Unfortunately, binary options trading is such a fast-growing segment of the online investment community that it has attracted some less than integritous brokers. Because most people who take part in online binary options trading will be newbies, it’s easy for these folks to get taken in by phonies and rip off artists. We don’t want you to be at all discouraged in your binary options trading career, so it’s important for you to learn in advance how to spot a con before you get conned. Here are a few ways to tell the difference between a bad apple and a reputable broker that can help you make money.

  • Read Reviews from Reputable Sources. If you know anything about the internet, you understand that reviews aren’t always what they seem. There are plenty of companies which pay for phony reviews, in order to appear to be more legitimate than they actually are. Don’t be fooled. Read reviews only from independent sources, which are themselves reputed to be above reproach. For example, binary options brokers in Canada are a specific bunch, and are reviewed through the above link by an independent body of researchers and investors devoted to investing in this geographic and regulatory region. Binary options rules have a lot to do with the country or region you live in. A broker that may work for someone from France probably won’t work for an American, so make sure that the reviews are real and are specified for specific user bases. If they’re too general or too glowing, they’re probably a little too good to be true.
  • Use Brokers that Offer Free Trials. One scammy technique used by some bad brokers is to draw in new users with promises of fast cash, without providing them with the educational resources to learn the ropes before risking their capital. Don’t trade with a broker that doesn’t offer a free trial program, through which you can see how your money would grow or be depleted with real trade decisions, minus the risk.
  • Use a Broker With a History. There are real life horror stories you’ll sometimes see online, where users find a brand new broker offering great opportunities, only to find the broker offline and their deposited money lost after a few trades or months. Don’t let this happen to you. Only trade with binary options brokers that have many months or years of trading history. This way the only worry you’ll have is about the decisions which you directly control, not about the legitimacy about the site you’re using. This broker choice strategy goes for any broker you use in any form of investment, but it’s especially relevant for a investment variety which is as novel and quickly changing as binary

 

There are plenty of great binary options brokers out there, and very few scams. But the scams do exist. Protect yourself by trading only with brokers like the ones which pass the above tests.

Oct 262015
 

What a Liberal Government Means for Canadian Investors 📈

Last week the charismatic Justin Trudeau lead the Liberals to win the 2015 federal election. I’m sure his good looks has nothing to do his popularity and success. 😛

15-10-justin-trudeau-in-front-of-parliament

Justin pledged to make meaningful policy changes to the country that could benefit millions. But will his commitments help you? The jury is still out on the long-term effects, but here’s a TL;DR summary of what Trudeau’s government means for Canadian personal finance and investors in the short term.

The new Liberal majority government will…
HelpHinder
  • spenders
  • low-income seniors
  • stock market investors
  • students
  • most middle-class workers
  • savers
  • high-income households
  • single-income nuclear families

These are only generalizations. The rest of this post will explain individual policies that could affect your pocket book. Keep in mind that just because politicians promised something during their campaign, it doesn’t mean they will always follow through. Any of these policy changes below could be altered or cut completely going forward.

Borrowing To Invest. 💲 Going back into Deficit. 

According to the federal finance department, Canada’s government had a $1.9 billion surplus in the 2014-2015 fiscal year. :) But the new Liberal government under Trudeau plans to run a $10 billion deficit for each of the next 3 years, before balancing the budget again in 2019.

Going into more debt as a way to expand economic output isn’t necessarily a bad idea. $10 billion is peanuts relative to our $1,827 billion/year economy (0.6%.) Also, our national debt to GDP ratio is quite low by international standards, which means we can borrow money at ridiculously low costs. New 10 year Canadian government bonds are currently yielding 1.5% in annual interest.

After factoring in inflation, there might actually be no real cost to tax-payers, lol. :) Craig Alexander, the Vice President at the C.D. Howe Institute, said that despite digging deeper into debt, the debt to GDP ratio of Canada is still going to decrease over the next three years because our GDP is expected to increase as well. 😀

About a third of the new spending will go towards much-needed public transportation and infrastructure development and repairs. This means building more roads, highways, bridges, etc. This should improve the country’s productivity because gridlock and urban densification are causing major problems right now in large cities such as Toronto, Montreal, and parts of Vancouver. The other two-third of public spending is planned for social housing, seniors centers, and clean energy projects like solar and wind farms.

Due to more deficits and fiscal stimulus the Bank of Canada will be less likely to further cut interest rates for the time being.

What this means for you: Invest your money. Historically the S&P/TSX Composite performed well during times of deficit spending. Below is a graph I put together using stock market returns and government budget information courtesy of the CBC. During the two decades from 1995 to 2014 there have been 9 years where the government ran a deficit budget. And the stock market had positive returns in 8 out of those 9 years.

15-10-budget-vs-stock-market-return-tsx

Economic stimulus increases employment and grows the economy so people and businesses feel more optimistic about their investments which tend to be bullish for the financial markets. :) In particular I would consider investing in stocks or sectors that have exposure to financials, cannabis, industrial goods, construction, utilities, preferred shares, and green technology (solar panels, wind, etc.)

Goodbye annual $10,000 TFSA contribution limit 😭

The Tax-Free Savings Account annual contribution limit will revert back to $5,500 and increase in $500 increments based on inflation. This will make it harder for Canadians to save and won’t benefit the middle class. There’s a rumor that the TFSA only helps the rich get richer. But that’s baloney! The TFSA actually helps anyone who wants to save get richer. Here’s a table courtesy of the National Post which shows that many low and middle-income families still managed to max out their TFSA contribution rooms in 2013 when the limit was still $5,500.

Continue reading »

Oct 222015
 

Purchasing a 100 Oz Silver Bullion

Gold and silver may not be good investments, but I consider them to be a form of currency because they store financial value that can be easily exchanged for goods, services, or other currencies relatively quickly. :)

The idea of sitting on cash to stay safe and secure sounds innocent enough. But that’s only if we isolate the discussion to one domestic country. Today the world economy is more connected than ever before. Due to low commodity prices Canada’s economy isn’t as productive as it once was. This drives down the price of our currency because global investors are less confident in our productivity. Over the last year the Loonie has lost 20% of its value relative to the $US.

This affects Canadian’s ability to trade with other countries because it makes importing goods like fruits and gasoline from the U.S. more expensive. :( However, those who held some silver as a substitute for the Canadian currency during this time would have kept most of their purchasing power. That’s because the price of silver has increased 13% over the past 12 months when priced against the Canadian dollar. 😉

So earlier this week on Tuesday I went out to my local bullion dealer and bought a 100 ounce silver bar for $2,241 CAD. The shape reminds me of an iPhone 6 Plus, except the silver is almost 3 times thicker measuring 2 cm (3/4 inch) thick. And it weighs about 3.11 Kg (6.86 lb,) which is literally 18 times the weight of an iPhone 6 plus, lol. Who needs the gym when you can workout at home with silver? 😛

15-10-100oz-royal-canadian-mint-silver-bullion

This highly purified block of silver was produced by the Royal Canadian Mint. The front of the silver bar shows the RCM signature stamp and the year it was produced (2011,) along with a serial number. The bar is also engraved with the weight of silver in it, and the purity of the metal. :) RCM is known for its quality and its brand is recognized worldwide. There is some clear scratching and general wear on the bullion, but nothing too noticeable. Overall I give this purchase 8/10. :) Great product. A+ experience. Would buy again! After taking some pictures I’ve stored the bullion in my safety deposit box at my bank. I don’t plan to sell it until I retire, or run into some kind of emergency.

Last year I blogged some step by step instructions on how to convert one’s wages into physical silver. This 100 oz bar I purchased represents about 4% of my income for this year. So instead of making 100% of my money in Canadian dollars I’ve essentially divested 4% of cash earnings into precious metals. I’ve also converted about 16% of my income this year into U.S. dollars and bought U.S. stocks. 😀 Diversification isn’t only about asset allocation. It’s about a holistic financial perspective, including currency considerations. 😉

Continue reading »

Oct 222015
 

The following post is my staff writer, Peter.

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In the past decade, the global economy has suffered more than a few troublesome episodes where billions of dollars have been wiped off stock exchanges due to financial fluctuations. Such episodes have far-reaching effects over all of our lives, and what’s worse is that such occurrences are just about impossible to predict.

This has lead many to ponder just how safe making an investment can be, and whether it is any more safe than that other speculative activity – gambling.

Finance basics

Making an investment can be a highly profitable activity and can do much to help secure your long-term future. By investing a quantity of your money into a business, you can help it grow, and in turn, enjoy the dividends earned by its future profitability.

Those lucky enough to have invested in the likes of Apple early on have reaped spectacular benefits. And as such, the question amongst many investors is how to judge the next areas of growth. Whilst traditional manufacturing industries have been decimated by the digital revolution, other industries such as online gaming have seen sites like Lucky Nugget Casino show impressive growth due to their abilities to provide a range of casino games that can be enjoyed from the convenience of a mobile device.

Despite such technological success, investors should always be wary of the fickle nature of new technologies, as for every Facebook, there is the unfortunate example of MySpace who threw away early innovations in social media development to cause many financial headaches for their investors.

Different Duration

The differing timelines for gambling and investment are worth considering in that a huge profit or loss can be achieved within a matter of minutes in a casino or in sports betting. Whereas the time taken to see a large return on a stock investment can often be a case of years or even decades. It took over five years for stocks to return to their pre-recession levels of 2007, and as a result the canny investor should always have an awareness of their own long-term financial strategy.

The sheer variety of investment options on offer should be able to supply even the most cautious investor with a large scope for financial reliability and assurance. However, for those seeking a more short-term fix of adrenaline and quicker payout potential, then the doors to the world of gambling are always open.