Dec 102015
 

The Advantages of Inflation

Today I want to share one of my biggest secrets to success. I will explain how I generate $5,000 of value a year in passive wealth creation using my mortgage and other loans. It’s automatic, hassle free, hidden from my friends and the government, and is completely legitimate. 🙂

The Destroyer of Credit

Everyone knows that inflation drives up the cost of living and lowers the value of money. Thanks to inflation you don’t even need to have expired bread for your dough to be worthless. ? But here’s what some people may not know about inflation. Since money is so closely tied to debt, when our money loses value via inflation, so does our debt. 😀

15-12-inflation-cost-of-living

Think about it this way. Let’s say we owe the bank $100. After a year, if we haven’t touched the principal, then our $100 balance owed will have less purchasing power, assuming a positive inflation rate. Since $100 will be worth less in the future than today, our debt balance will become easier and easier to pay off as time goes on. 🙂

Continue reading »

Dec 142014
 

What you can buy for a Canadian dollar these days is absolute noncents. 😀 The loonie has sunken to a multi year low, valued at only $0.86 U.S. The lower Canadian dollar rate today means it’s more difficulty for Vancouverites to pick up milk and cheese for half the price across the border.

14-12-canadian-dollar-value

This Canadian dollar trend going lower will probably continue into next year due to lower commodity prices and a stronger U.S. economy. This is excellent news. 😀 When the price of oil and other goods fall it’s known as deflation. Many economists and central bankers would tell people that deflation is bad. But don’t let them fool you. Deflationary pressures can create an excellent environment for saving money and finding undervalued investments for those who know where to look. 😉

Continue reading »

Jun 222013
 

Guess what I found on Ebay. Money! But not just any money. It’s a 1923 one dollar bill. Spent $30 but I think it’s well worth it  (゜∀゜) I scanned both sides of it below right. Click to enlarge.

13_06_1923banknote1dollarThe face value is a dollar, meaning worth the same as a loonie if I decide to spend it. But back in the 1920’s $1 could actually buy approximately $13 worth of stuff in today’s dollars. Interesting to see the effects of inflation over many decades.  The market price of this banknote today is $38 according to one banknote pricing guide online. Since its value appreciates faster than inflation, this banknote is sort of a long term investment in a way 😀 Returns aren’t great but at least it’s tax free.

This is by far the oldest thing I now own lol. People over the years have exchanged this particular piece of paper for food, services, and other goods. It’s still in fine condition but the fact that it’s been well circulated gives it character 😀 During the economic boom known as the roaring 20s it could have been used to start a million dollar business. During the great depression when the unemployment rate was over 20% perhaps this dollar was used to buy food for a starving family so they could have something to eat that day. Who knows how many countless hands have touched this banknote, maybe even someone famous. It’s probably traveled around the whole country, and now it’s with me 🙂

The 1923 banknotes were eventually replaced by a new design in 1935 but during it’s time of circulation the world was a very difference place. Black and white movies like “Metropolis” were the pinnacle of cinema, even though they had no sound, lol. Jazz was the hippest music to listen to 🙂 And the first radio station to broadcast programs in all of North America was a Canadian station in Montreal. Women also fought and won their right to vote. Before this period in time women couldn’t even hold public office (appointed positions.) Here’s a look at what life was like in the 1920s. Continue reading »

Jun 222011
 

The Canadian Loonie edged up higher today. As of right now you can trade 1 Canadian dollar for 1.028 US dollar. And the US based S&P; 500 is trading at a discount compared to the Canadian S&P;/TSX Composite index so I decided to take this opportunity to buy some US stocks because it’s like taking money that’s worth more to buy assets that are worth less (in terms of relative valuation to Canadian equities.)

I went with over 139 shares of Intel Corp (INTC-Q.) They design and manufacture microprocessors. The computer you’re using to read this post probably has an Intel chip in it. They are trading at 10 times earnings, with a nice dividend of just under 4%. They are a recession proof company (everyone uses computers), a leader in their field, and still have growth potential.

Another one I bought today is KKR & Co (KKR-N.) They buy/sell and manage assets and provide financial services to their clients. They are only trading at 8 times earnings, very cheap, they understand the capital markets very well and I believe they can find ways to make a profit in economic uncertain times like now. Plus the 4.5% dividend is pretty nice.

Of course both securities I’ve bought are in my RRSP brokerage account so the dividends wont get hit with any US with-holding tax. And I’ve bought enough of both to take advantage of re-invested dividends (DRIP.)