May 182017
 
cooking steak with Liquid

Welcome to this edition of cooking with Liquid. 😀 Today we’ll be making a simple yet delicious cheeseburger. As many of you may already know, McDonald’s recently started to sell its secret sauces in grocery stores across Canada. This is the first time ordinary consumers can recreate the iconic tastes of the famous restaurant at home without buying dozens of separate ingredients. So in today’s post let’s learn how to make the world renowned Big Mac sandwich! 🙂

Easy Big Mac Recipe

Ingredients:

  • Hamburger buns
  • Hamburger patties
  • Shredded lettuce
  • Chopped onions
  • Sliced pickles
  • Sliced cheddar cheese
  • McDonald’s Big Mac sauce

 

Cooking Instructions:

  1. Cook 2 hamburger patties.
  2. Place some lettuce and a slice of cheese on a bottom bun and toast it in an oven until the cheese melts.
  3. Place 1 cooked patty on top of the cheese, followed by another bottom bun.
  4. Continue stacking with Big Mac sauce, lettuce, pickles, another patty, and finally the top bun.

Eh Voila! Within 15 minutes you have yourself a juicy cheeseburger, Big Mac style. 🙂

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May 152017
 

Different Priorities for People in Different Income Groups

According to the U.S. Bureau of Labor Statistics, people from across the income spectrum have different priorities when it comes to their spending. The graph below from npr.org shows average spending patterns for U.S. households in 3 income categories — one just below the poverty line, one at the middle of the income distribution, and finally one at the top of the distribution. 🙂

Here are some interesting notes to take away from this data:

  • Everyone pretty much spends the same ratio of their income on housing, clothing, shoes, and entertainment.
  • Poorer households tend to spend a larger share of their income on home cooked meals and utilities.
  • Richer households allocate a bigger chunk of their spending to education and saving for retirement.

Some expenses are more elastic than others. They take up a bigger piece of the household budget if the household has more access to money. Earning more income is generally a good thing for financial security. But if all new income is being squandered on entertainment then that’s not going to help someone in retirement.

Since my priority is financial independence here is how I like to use the information from the chart. The average person buys a bigger home when he makes a bigger income, as represented by the data. But housing is one of the largest expenses and does not need to be bigger than necessary. By living in my current home for the past 8 years while doubling my income I have effectively reduced my spending on housing by 50% over time. 🙂 I can use these savings to put towards my retirement portfolio so I can reach FI/RE sooner. The same concept can be applied to transportation and gasoline as well. Instead of upgrading to a gas-guzzling luxury SUV, I’m still driving my 10 year old hatchback.

The idea is to keep expenses the same, while increasing income, and investing the difference. 🙂 Of course there are times when it’s appropriate to capitulate to lifestyle inflation. When I start a family I will probably need a larger home and a bigger car. Knowing when to delay gratification, and when to upgrade is a personal decision that everyone is capable of making for themselves in their own way. That’s why personal finance doesn’t start with our money. It actually starts with our personal priorities and values, I think.

 

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Random Useless Fact:

Say what you want about North Korea, but they are better at celebrating Earth Day than any other country.

May 112017
 

Investment Outlook

BlackRock, Inc. based in New York City, is the world’s largest asset manager with $5.4 trillion ($5,400,000,000,000) assets under management, which is even more than what Vanguard has. Due to its power and influence, BlackRock is often referred to as the world’s largest shadow bank. So when this company releases a report, investors tend to pay attention. 🙂

Last month BlackRock published its Q2 2017 global outlook. Below are some highlights.

BlackRock prefers equities over fixed income in general. For the next 5 years, BlackRock believes global equities (except U.S.) and emerging market equities are the best asset classes to be in. When it comes to debt BlackRock suggests high yield bonds and emerging market debts are likely to outperform.
 .
However, high yield bonds can be risky for investors with shorter investment horizons. So BlackRock says it actually prefers medium to long term U.S. investment grade bonds.
BlackRock also likes emerging market and global equities. It also believes the U.S. financial sector can benefit from rising interest rates if the trend of monetary tightening continues in the U.S.
 .

You can download the full BlackRock report here. 🙂

How does this change my current plan? Not much. After seeing the second chart, I have decided to continue investing in high yield bonds since it’s one of the best performers in the model. The duration is also relatively short (around 5 years.) This lowers interest rate risk. The only fixed income asset that has a higher yield is Latin American government bonds. But I don’t like it due to tax reasons. I can shelter U.S. investments in my RRSP thanks to NAFTA. But Brazilian investments in my portfolio will be subject to the full brunt of taxation. What about diversification though? I do want Latin American exposure. But that’s why I have equity of companies such as BNS conducting business there, instead of owning debt directly.

 

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Random Useless Fact:

This is how to annoy a gamer.

May 102017
 

The following post is contributed by a staff writer.

A credit report is a very important part of our financial lives, yet many of us rarely see ours. We simply let it carry us wherever its information allows us to go, not realizing what opportunities and money may be escaping from us because of what it says.

We all know that a bad credit score leads to higher interest rates, or even to denial for loans. And we all know that better scores get us lower rates and the opportunity to save a lot of money.

But what we don’t always fully appreciate is the possibility that something on our credit report may not be accurate. When that happens, we could lose dozens of points for several years before the negative element finally expires. By that time, it could cost us thousands of dollars–without us ever knowing it’s there.

Most people are intelligent enough to realize why some things are on their credit reports. They make late payments, file bankruptcy, or otherwise mismanage their money, and end up with the credit score they deserve.

But there can be things on your report that don’t belong there, and they can be hurting you financially. Going through the process of disputing credit reports that contained errors has proven very beneficial to many people over the years. Successful challenges typically stem from problems in these three areas.

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May 082017
 

How to Invest in U.S. Infrastructure 

Donald Trump’s policies focus on building infrastructure and prioritizing America first. With the U.S. economy growing stronger than Canada’s, I believe this is a good time to look south of the border for opportunities. Thanks to the Trump rally, the S&P 500 market index in the U.S. is up about 7% year to date. It appears the market could reach even higher by the end of the year. 🙂

One way to invest in a country’s growing infrastructure is to buy ownership in stable, and profitable cement and construction companies! But the concrete business isn’t always what it’s cracked up to be. 😄 There is a lot of competition in this space so it’s important to invest smartly. I have done research into several companies such as Martin Marietta Materials (MLM), Vulcan Materials (VMC), and others. But the company I liked most was Summit Materials Inc (NYSE:SUM)

Summit Materials is in the business of cement and small rocks called aggregates used to make roads and buildings. In addition to supplying aggregates to its customers, the company also uses its materials internally to produce ready-mix concrete and asphalt paving mix production. I like the widespread geography that Summit is operating in. It conducts business in over 20 states, including Texas, which borders Mexico. I’m looking forward to that wall being built. 🙂

I guess you can say this company rocks. 😄 Valuation wise SUM is slightly expensive, but is actually fairly valued when compared to its competitors in the market. Over the last year the company earned $0.88 per share. According to analysts, the company is expected to grow its earnings at 10.5% a year over the long run. We can use the Graham Formula which I’ve explained here, to determine the fair market value of this stock.

Doing so will give us a Graham value of $25.96 per share. (V = 0.88 x (8.5 + 2 * 10.5)

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