Jan 232015

Today’s post is about something of interest to a lot of people. :D Earlier this week the Bank of Canada surprised just about everyone with an interest rate cut from 1.00% to 0.75%. The Canadian dollar dropped to the lowest it’s been in years. Over 20 economists were surveyed prior to the Bank’s bomb shell reveal and not a single one of them expected the news, lol. Maybe economists are just there to make weather forecasters look good. :P

Even our country’s most prolific real estate blogger, Garth Turner, was taken by surprise. Just last week a commentator on his site named BlackDog pointed to a report which predicted this week’s interest rate cut, and Mr. Turner promptly replied to dismiss the report. Not even a best-selling Canadian author of 14 books on economic trends saw this announcement coming. It just goes to show how difficult it is to read the minds of central bankers. :?


The Rate Cut is good for:

  • Debtors who have variable rate mortgages, lines of credits, car loans, student loans, or other types of floating rate debts. Every $100,000 of debt one has will translate to about $20 a month of LESS interest one has to pay. :)
  • Investors in the stock market. Lower cost of borrowing is a type of monetary stimulus that has the same effect of printing money. The U.S. stock market has gained 100% over the last 6 years since it began it’s Q.E. programs.
  • Existing bond holders. Lower coupons on new bonds mean existing bonds are worth more.
  • Industries like manufacturing, exports, hospitality, tourism, companies with primarily $USD revenue, or any other businesses that benefits from a lower Canadian Loonie.
  • People who have debt in general. Lowering interest rates is inflationary which diminishes the value of one’s debt.
  • Home owners. Rate cuts drive real estate prices higher.

The Rate Cut is bad for:

  • Savers. High interest savings accounts are looking less attractive with the threat of inflation.
  • Consumers. Canadians import a lot of food and staple items from the U.S., which will cost more for us with a lower $CAD.
  • Cross border shoppers. Trips to the U.S. will become more expensive.
  • People living on a fixed income, like pensioners.
  • Retailers who’s suppliers are from outside of Canada

Thank you Stephen Poloz for this rate cut. :) I appreciate your continuing support to prop up the already inflated housing market in Vancouver and increasing my home’s value. You’ve successfully penalized all the savers and risk adverse members of the investing community by lowering the returns on their GICs and term deposits. You have instead rewarded the speculators and heavily leveraged investors, such as myself, by leaving more money in our pockets, :D and encouraging even more borrowing activity! :) Hurray for cheaper financing and more incentive to use debt because that’s exactly what Canadians need more of right now. I applaud your push for higher inflation with this rate cut. The 2% CPI in 2014 just wasn’t high enough. I’m sure making it even more expensive to live in this country is exactly what consumers want, especially when more people are out of work now than a month ago. :P

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Jan 202015
Choosing where to invest our money can be a big decision. Before investing in anything, we should examine the pros and cons as well as consider the possibility of losing money. There is a risk with every investment but there are also many different rewards that can be enjoyed. As the saying goes, you must spend money in order to make money. :)
Choosing Where to Invest Your Money
Once we have decided that it is time for you to start investing, we have the big decision of where to actually invest. The great thing about this decision is that we do not have to stick to one type of investment. We can build a portfolio of stocks, bonds, small companies, farmland, or real estate. These are just a few examples. There are many more options available than we can list here. Typically for beginning investors I recommend a diversified portfolio of index funds with low management fees.
After we figure out where we want to start, we should do research on those types of investments. We will want to be sure that there is a good chance that we’ll make a profit on our money. For example, if we are looking into purchasing stocks, we can look at the history of the stock prices of a specific company and it’s financial statements.
Choosing How to Manage Your Wealth
It can be a lot of work to manage our investments. That is why many people turn to portfolio management companies such as U.S. company J.P. Morgan wealth management, which conducts business all over the world, including Europe. I’ve also blogged about TD and Wealthsimple in the past for Canadians. When choosing a company, we will want to make sure that they offer all of the services we are looking for and be sure to pay attention to the various rates charged. :)
Random Useless Fact:
Nov 212014
When cutting expenses and finding ways to save money for retirement, a great vacation, college tuition or anything else, one of the first things to look at is insurance coverage. Below are some examples of common insurance types to consider.
Life Insurance
Life insurance can come in different forms. The least expensive is term insurance. It provides coverage a specified amount of time. Cait, a fellow blogger also from Vancouver, recently wrote that she was able to buy a term life insurance policy for just $24/month. Usually the younger someone signs up for life insurance, the cheaper the premiums. However, there are other life insurance products such as permanent life insurance which will cover someone’s entire life and create a savings account that can be eventually used.
Many insurance companies have an online presence these days. To research more about insurance in general, I think searching on Google for insurance agents is a good place to start for finding brokers near you. Then make an appointment with them to ask further questions. They can provide suggestions for how to reduce car insurance premiums or have a built-in savings account within a life insurance policy. Cait spoke with 3 different brokers before making her final decisions, so it’s okay to take your time. I’m really lucky to have group life insurance through my job. But if I wanted to have additional insurance I can buy private coverage as well.
Car Insurance
For those who qualify, there are several ways car insurance can be inexpensive. There are discounts for people who have good driving records, and in some parts of the world, for students who have good grades in school. This is very useful for families with teenagers because their age group has the highest insurance rates. All policies have a deductible that you must pay before the insurance company starts to pay, but this deductible can be reduced every year if the driver maintains a good driving record.
Home Insurance
A home is a large investment and proper home insurance coverage in important. However, there are ways to reduce the cost and still have excellent coverage. Bundling home and auto insurance with the same company can reduce the total premium by 10% or more. That’s why it’s a good idea to buy home and auto insurance from the same agency. :)  Installing fire and burglar alarms and other safety devices such as outdoor lighting could also help lower insurance costs. Personally I don’t have to worry about this one because my strata (HOA) corporation that runs the building takes care of it all. This is one benefit of living in a condo. :) My neighbours and I simply pay a monthly maintenance fees, and a small part of that is allocated to earthquake and fire insurance for the entire building. But as Jim mentions in the comments below we still need personal contents and flooding insurance.
Business Insurance
This can prevent a company from bankruptcy. For example, having liability insurance is critical if customers enter the business premises or if employees go into the customer’s homes. If there is an accident, and the business is not adequately covered, the owner could have to pay from his or her own personal finances. It’s best to speak with a financial advisor specializing in business development to help select the right kind of coverage for a business.
Random Useless Fact:
In the country of Denmark, the population of pigs is bigger than the population of people.
Nov 212014

The following post is written by staff writer, Peter.

Many finance bloggers are saying that they start to get a lot of search traffic regarding binary options and binary options trading. Some people even mail us asking if they should use binary options in order to save money or to increase their monthly revenues. For this reason I have created this very short guide that will tell people what binary options are and how they work.

When trading binary options you will have to predict into what direction the value of a financial asset will move during a certain time frame. The value of an asset can either go up or go down during a certain time frame. As such, seemingly your winning odds are 50%. Your winning odds would indeed be 50% in case you would be investing randomly without any thought behind it. However, that’s not how you are supposed to do it. You will have to make predictions based on real information such as research and so-called technical analysis, which is the analysis of the movement of assets using charts.

Does all this sound complicated? – Well, yes. And it actually is. The most important thing binary options companies do not reveal is that it’s actually very difficult to win in binary options. While you definitely can win in binary options, you actually need to put in some effort to make it.

There are of course a lot of scams out there as well. Unfortunately it seems that a very large number of binary options companies are pure fraud. There are definitely legit ones out there but for the average dude it’s very difficult to distinguish the good ones from the bad ones. While you can find reviews of various binary options sites on different blogs and web pages, the majority of these sites get paid to post positive reviews, so you can’t even trust these sites either.

So, all in all, it might seem a good idea to just skip binary options from the list of investment opportunities you should be interested in. Instead, if you really want to trade and to invest into something, you should do this with legit Forex trading or traditional stock trading. Binary options are expected to change in the future and to more closely resemble to legitimate trading. This will happen once various countries decide to officially legalize and regulate this business. But this process is not expected to take place until several years in the future. So, in short, (for now at least) you should stay away from binary options.


Nov 082014

Precious metals don’t provide a steady stream of income and sometimes require an annual storage fee. However, it could still make sense to invest in them for several reasons. First, the demand for gold in China and India is huge, and central banks all over the world buy them to hedge against political turmoil, hyperinflation, invasion, economic warfare, and environmental disasters – things that can happen at any time. Gold is a proven long-term wealth asset that’s useful when the market is sliding deep into crisis.

Gold is also bought as insurance against fiat currencies. When investors lose confidence in the dollar, gold prices go up and vice versa. Currently the price of gold is wavering at around $1,150 – $1,180 per ounce. Fifty years ago an ounce of gold could be traded for about 13 barrels of crude oil. Back then oil was under $10 U.S. a barrel. Today in 2014 oil costs more than $80 a barrel because the U.S. dollar has lost a lot of value. However an ounce of gold today is still worth about 13 barrels oil. :) People often discuss the strength of one currency against another. But in the long run no fiat currency can keep up with real money and hard assets.


One way investors can get exposure to gold and be paid in precious metal dividends is through physical dividend programs. Dividend programs that involve precious metals allow companies to pay shareholders with physical gold and/or silver rather than cash.

Physical dividend programs usually allow stockholders of participating companies to tailor-fit the dividend payouts. The dividends can be purely precious metals payment, or mixed with cash. Investors may change their dividend payout preference whenever they desire. Endeavor Mining Corporation is one of the mining companies that can pay its investors with physical gold. Neil Woodyer, the company’s CEO, said that paying shareholders with the precious yellow metal is part of Endeavor Mining Corporation’s “crusade in rebuilding investor confidence in the gold sector.”

Physical dividend programs sound interesting. I wonder if there are any companies in Canada that offers it.

Random Useless Fact:

1 ton of discarded cell phones contain more pure gold than 1 ton of newly mined gold ore. (source)