Archive for April, 2007

Give Yourself a (Financial) Education

April 30, 2007


In a long-running rebate on the merits of Group RESP plans, a remark by a commenter touched a nerve:

To work with mutual funds or stocks, parents need to know what they are doing. This takes a lot of time and planning. I am too busy for that.

As you can imagine, I am not very sympathetic to the argument. If you are like me, you are exchanging eight hours of your precious time every weekday for a pay check and you owe it to yourself and your family to be an effective steward of your money. The reality of modern life is that, financially, we are on our own. Our retirement, our kids’ education and our general financial well being depends on how well we look after our money.

To become a successful investor, you should lay a strong foundation by taking the time to read a few good books. After that, you only need a few hours to devise an asset allocation, invest accordingly and spend about fifteen minutes every year to rebalance your portfolio.

If you have worked your way through my recommended books, you don’t have to sacrifice your leisure hours (unless you buy individual stocks or write a blog) to constantly keep up. Over the years, I’ve learnt both from reading and from experience that there are only a handful of rules for being a successful investor:

  1. Don’t take stupid risks.
  2. Diversify.
  3. Minimize expenses and taxes.
  4. Don’t trade too much.

That’s all there is to investing. Now, you can get on with gardening or photography or whatever with the confidence that you will do better than the vast majority of investors who are busy chasing the latest hot tip they heard on Market Call.

This and That

April 26, 2007

  1. The Bank of Canada decided to keep interest rates steady and the prime rate charged by the major banks stays at 6%. The statement seems to indicate that the Bank will maintain the current interest rate in its next meeting.
  2. The federal government has enacted a legislation that drops the minimum down payment required to get a conventional mortgage from 25% of the value of a home to 20%. Earlier, the mortgage loan insurance would have cost 1% for a homebuyer who wants to get a mortgage of more than 75% but less than 80% of the property value.
  3. Ellen Roseman writes in The Toronto Star that mortgage life insurance is usually a bad deal for consumers.
  4. A report in The Globe and Mail says that “high costs, questionable benefits and lax disclosure regulations” of principal protected notes (PPNs) are attracting the attention of regulators and the federal government.
  5. Steady Hand’s Tom Bradley opines that foreigners are overpaying for our public companies and Canadians will have a good opportunity to buy back these assets at lower prices in the future.

New Batch of Canadian Money Blogs

April 25, 2007


Here are some of the new entrants in the Canadian Personal Finance blogosphere:

A Canadian and Her Money is written by Money Diva, a 32-year old consultant who has amassed a significant nest egg for someone her age. She updates us on her net worth, discusses what she does to grow it, her long-term plans etc. (Feed)

Crunch Money promises to help to “get a better understanding about some of the financial products you might be hearing about from your broker, advisor, brother, sister, father, or the media”. The blogger has covered topics like Principal-Protected Notes, Segregated Funds and socially responsible investing. Posts are detailed and well written. (RSS Feed)

Debt Be Gone: A couple in their late twenties, who are deep in debt, are on a mission to eliminate their consumer debt, increase their income and save for a home and retirement. They detail their progress in their blog. They are making great progress having paid down $10K in about six months. (RSS Feed)

Investoid is written by a 25-year old former tech entrepreneur from Alberta. The blog mostly deals with investment topics and individual stocks are sometimes discussed. (RSS Feed)

In Re: money, a 27 year-old Torontonian promises to discuss issues specific to Canadian small business, self-employment and taxes and investing, though I can’t say I am a fan of buying penny stocks. (RSS Feed)

Actuary Promod Sharma writes the Riscario Insider Blog. He explains that “riscario” is a combination of risk, care and scenarios and writes to “help Canadians learn about financial risks and how to reduce them”. (RSS Feed)