Oct 272016
 

Received My SolarShare Bond Certificate!

If you meet someone new, start talking about global warming. It’s a real icebreaker! 😄 Climate change is very real and as a concerned citizen I want to help however I can. According to top scientists, earth is the only known planet with bacon. This is why I care so deeply about protecting the world.

So about a month ago I purchased $10,000 of bonds from SolarShare, which is a renewable energy company that allows investors to earn a competitive return while doing something good for the environment. I am finally stepping up and doing my part to save the planet and the next generation of food animals. 😉

Well this week I received a letter from the President of the company along with a certificate that looked so awesome I decided to frame it and hang it up. 🙂

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The small words on the certificate say that SolarShare “acknowledges itself indebted and promises to pay, in Canadian money, to the Investor….” This piece of paper represents my $10,000 investment. But it’s actually a copy. The original certificate is securely kept with SolarShare for safe-keeping. It feels good to have someone else owe me money for a change, haha. 😉

2 Ways to Invest

The future looks green, and I’m not just talking about money. 😛 SolarShare offers 2 types of bonds that investors can buy; a 5-year bond with 5% return, or a 15-year self-amortizing bond with 6% return.

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The 5 year bond has a lower minimum investment so folks who don’t have a lot of money can still take part investing in solar energy. But I bought the 15-year bond because I like the higher interest rate. 🙂 In either case, interest is paid semi-annually to an investor’s bank account via electronic fund transfer, or by direct deposit into a registered account.

The 5-year option works just like any other bond, which I’ve explained in the past. But the 15-year bond I purchased is self-amortized which means it works more like a mortgage. Every 6 months I will receive a payment made up of both principal and interest. This will continue for 15 years, or 30 payments in total, until all my principal is paid back in full.

So how much will I receive each payment? I know there’s a way to calculate the amount, but unfortunately math is not my strong suit. If I had a nickel for every time someone said I’m bad at math, I reckon I’d have 47 cents. But thankfully SolarShare sent me a customized payment schedule so I don’t have to do any math. Phew. 🙂

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As we can see, every year I’ll earn $1,020.40 of income from this bond. By the end of the 15th year, I will have received over $15,000 for my initial $10,000 investment.

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Aug 242015
 

How to make money in oil regardless of market conditions

Drilling for oil can be such a boring job. ? At least it provides a good income, though. But it’s becoming harder these days to find work in the oilfields. A year ago oil was trading at $90/barrel. Today, WTI has fallen below $40/barrel. Canadian crude is selling for even less, at around $30/barrel. Ouch!

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Many oil producers are currently operating at a loss because $40/barrel is below their break-even point. It can take many years for oil prices to turn around. The problem is we don’t know exactly when the recovery will happen. If we did, we would probably all be retired right now. 🙂

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Oil stocks are not doing so hot these days. However, there are other ways to still make money from the oil industry, despite the bleak market conditions. 🙂 One way is to write covered calls. But today I’d like to discuss a different approach.

Since the start of this year, Western Energy Services Corp (WRG), has lost about 23% of its value. It could be worse, considering the price of crude oil has fallen about 27% over the same period. But who knows how much lower WRG shares can fall if the price of oil drops further? Fortunately, this company also issues bonds.

When Stocks Underperform, Look Towards Bonds

So last week I bought $5,000 face value of Western Energy Services bonds, with a 7.875% coupon interest rate, maturing in January 2019. I was able to buy it pretty much at par value, which is nice. 🙂 Even though the company is barely making a profit, it’s still obligated to pay me 7.875% every year. Interest is paid to bond holders before dividends are paid to shareholders. ?

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Related Post: What is a bond?

Thanks to the new bond investment my passive income is now $393.75 a year higher. Woohoo! ?  The yield to maturity for this high yield bond is about 8% a year. This rate of return is safe 🙂 as long as the company doesn’t file for bankruptcy protection before January, 2019. Here are some benefits of buying the bond of this company rather than its stock.

  • The bond pays 8% annual return. The stock only pays a 6.5% annual dividend.
  • Bonds are inherently less risky than stocks.
  • The stock dividend might get cut if the price of oil remains at these low levels. But the bond interest rate does not change.
  • If the company goes bankrupt the stock holders will lose all their money. But the bond holders can liquidate the company’s assets to recoup some of their losses.

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