Feb 222016
 

Who Would You Tell?

Awhile ago you guys were asked who you would tell if you won the lottery.  Here are the results. Thanks to everyone who voted. 🙂

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Roughly a quarter of readers said they will keep the secret to themselves. I happen to be in this category as well. But I would tell my spouse if I had one. I think she would eventually find out sooner or later. Half of the people polled feel the same way and would tell their immediate family members. Only 4.6% would post it on Facebook and don’t mind if all their friends knew. We all have our reasons for how we voted. I personally think nothing bad will happen if nobody knows you’re rich. 🙂 But you can obviously put money to good use anytime.

Last month 3 tickets split the record $1.6 billion Powerball jackpot in the U.S. The winners have 60 days to make a decision on whether they want to take the lump sum payment, or the annuity payments spread out through 29 years, a dilemma most people wouldn’t mind having.

Option 1: Lump Sum

  • Divided among the 3 tickets, each cash lump sum will be $310 million.
  • The winner would get their money right away, but pay 40% in taxes. (The IRS taxes lottery winnings like income tax)
  • After tax lump sum will be $187 million for each winning ticket.

Option 2: Annuity Certain

  • Winning ticket holders will receive 30 payments over the next 29 years.
  • The first payment of $7.5 million will be made immediately, and slowly increase with interest to about $31 million on the final payment, with a combined total of $529 million.
  • If the winner dies the annuity payments will continue and go into his or her estate to be passed on to any heirs.
  • Powerball invests the entire cash value of the annuity in various U.S. government securities. The winner won’t be taxed on investment income within the annuity because Powerball will be the entity investing the money.

I would probably go with option 2 and choose the annuity over the lump sum just for the tax savings. 🙂 Which would you choose?

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Random Useless Fact

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By the way, I’m currently on vacation in the Caribbean right now and won’t be back until next week so I won’t be very active on the blog in the meantime. 🙂

May 222015
 

Those who invest in cocoa should put their money behind bars. Chocolate bars that is! 😀 Earlier this week in part 1 of my investing in chocolate series I wrote about the insatiable global appetite for chocolate and how to make money from that. 🙂 Today I’ll go into details about how I plan to do it.

Last week I purchased about $4,000 USD of chocolate companies, Hershey Co and Mondelez International Inc. 😀 Both are major players in the chocolate space and own some very high quality products and valuable brands. I bought 20 shares of HSY and 50 shares of MDLZ, which is roughly $2,000 of each company.

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As we can see I bought these 2 stocks in my US dollar TFSA for efficiency. I’ll post a tutorial on how to open a registered $USD account in the future if anyone’s interested. For now let’s go over some analysis to understand why I believe these companies should be in my long term investment portfolio.

The Hershey Company

Famous investor Warren Buffett said one of the secret formulas to a successful business is to “buy commodities, and sell brands.” That is exactly what Hershey is doing. 🙂 It purchases sugar, milk, cocoa, etc, and sells products that have major brand recognition. About half of the chocolate consumed in America is milk chocolate, and that is what Hershey is known for. 🙂 If someone goes into a candy store to buy a Hershey chocolate bar and the store owner says “sorry, we don’t have Hershey, but we have this other generic brand that is 20% cheaper,” then the customer will probably leave and try to find another store to get his Hershey fix. 😆 That is the power of brand loyalty. It automatically puts a 20% value premium over other businesses offering the same food. Check out some of the awesome brands Hershey is responsible for.

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Continue reading »

May 192015
 

Life is like a box of chocolates – full of nuts! 😛 They’re also similar in that we never know what we’re going to get. Life gave me a tax refund this year so I decided to put the money to good use and invest it in chocolate. I believe the cocoa industry will continue to grow and I don’t want to miss out on all the potential gains. 🙂

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Produced from the tropical cacao tree people have been cultivating cocoa for at least 3,000 years. It’s one of the oldest, sustainable food we know of. Dating back to circa 1,100 BC the Aztecs were the first to use it by making cocoa into a beverage. Over time cocoa products have become an important part of the world’s social fabric. 😉

The Global Cocoa Market 🍫

Generations of confectionery marketing experts worked hard to integrate chocolate into as many parts of our lives as possible. We eat chocolate at weddings, birthdays, anniversaries, and many other events. It’s also customary to buy chocolate on Valentines, Christmas, Easter, Halloween, and other holidays. It can be a part of breakfast, lunch, dinner, snacks, appetizers, and desserts. Globally about $100 billion worth of chocolate is eaten every year. It has even made it into the hospitality industry, especially in fancy hotels and restaurants where guests are offered complimentary chocolate.

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Continue reading »

Oct 312014
 

It’s that time of year again when we encourage kids to go beg for candy at random people’s houses. Yes, because taking candy from strangers when it’s dark outside is exactly the kind of thing we should be teaching children to do. 😛 Sometimes kids are forced to wear embarrassing costumes because parents think they look cute. Even animals are subject to such abuse. The National Retail Federation estimates that people will spend $350 million on Halloween costumes — for their pets. 😆 Some people make their own outfits, but it’s often more convenient to buy them from stores where the costumes are mask produced. 😀

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The Economics of Halloween

Halloween is big business. In the U.S. alone people anticipate spending an average of $80 this year on decorations, costumes, and candy, according to the National Retail Federation. That’s about 10% more than last year. Altogether Americans are expected to spend about $7.4 billion on Halloween in 2014. Which will be good for the economy. Below is a breakdown of the $7.4 billion U.S. Halloween spending by category.

  • Costumes – 38%
  • Candy – 30%
  • Decorations and Cards – 32%

October 31st is actually the chocolate industry’s most lucrative holiday for sales. More chocolate is purchased for Halloween than for Easter, Christmas, and even Valentines Day.

Chocolate will probably become more expensive in the future. It’s due to limited supply and a growing world wide demand. On the supply side the cocoa plant can only grow in very specific parts of the world, mainly near the equator in West Africa. Two countries in that area, Ivory Coast and Ghana, produce most of the global cocoa supply. It sounds like West Africa is a pretty sweet place to work in. 😀 But basically the production of cocoa cannot be easily scaled. And on the demand side consumers in developing economies of Asia and Latin American are quickly developing a sweet tooth for chocolate, with sales expected to increase by more than 20% over the next few years.

As global demand continues to increase the world’s largest chocolate manufacturers like Mars, Mondelez, Barry Callebaut, and Nestle have to raise prices in order to maintain their profit margins. Hershey has already announced they’ve increased their wholesale price this year by 8%. The global chocolate market is expected to grow from $83.2 billion in 2010 to $98.3 billion by 2016 at an estimated annual growth rate of 2.7% from 2011 to 2016.

Have a fun night everyone. 🙂 Stay safe. And for anyone who cares, just a friendly reminder to turn your clocks back on Sunday morning this weekend. 😉

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Random Useless Fact:
Many animal shelters won’t allow black cats to be adopted around Halloween, out of fear that they might be sacrificed or tortured during rituals.

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