Archive for July, 2009

Questions on Canceling Mortgage Life Insurance and Stock Ex-Dividend Date

July 20, 2009


In today’s post, I’ll try and answer two more questions that were sent in to the Personal Finance Clinic. You may also want to check out Triaging My Way to Financial Success and Money Gardener for more questions that were sent in to the clinic.

Tony asks:

We currently have mortgage life insurance, but what I’ve been reading lately leads me to believe that it may not be the smartest decision. Are we better adding the value of our mortgage onto each spouse’s life insurance policy and canceling the mortgage life insurance?

The drawbacks of Mortgage Life Insurance were pointed out in an earlier post (See Mortgage Insurance versus Life Insurance). I think it makes sense to first obtain or increase an adequate amount of term-life insurance and after the policies come through, cancel the mortgage life insurance. A chat with a licensed insurance broker should clarify matters.

Bryce asks:

When buying a dividend stock or even a corporate bond, is it best to wait till a little before the dividend is paid out to buy the stock?

The short answer is no. This article on Investopedia explains terms such as declaration date, ex-dividend date, record date and payment date. Unfortunately, you cannot make more money by purchasing a stock before the ex-dividend date. The stock price will usually drop by roughly the amount of dividend payment on the ex-dividend date.

This and That: Stock Market History, Emerging Markets, International Diversification and more…

July 16, 2009

  1. In Stocks for the Long Run, Jeremy Siegel looks at US stock market history going back to 1802. Jason Zweig questions the validity of stock market data from the 1800s.
  2. Investors frequently confuse economic growth with stock market returns. William Bernstein argues that the two don’t always move in sync. Even if it, stock market prospects may be baked into prices already.
  3. Dan Bortolotti writes in FP Magazine that even though the job market is dismal these days, demographic trends indicate that a massive labour shortage is looming. Kevin Press, who writes the Today’s Economy Blog also notes that HR departments are developing plans to gain a edge in the coming war for talent.
  4. Investors are questioning the value of international diversification after markets around the world fell sharply at the same time. Larry Swedroe shows that diversification still works over the long run but there is no guarantee that it will work every year.
  5. Canadian Money Forum members share ideas on how they saved big dollars on their weddings.
  6. Million Dollar Journey featured guest posts on making your own wine.
  7. Steadyhand’s Tom Bradley outlines the five lessons investors have learned from the recession all over again.
  8. Psst! Are you curious to know how much your co-workers are making? Preet finds out that does just that.
  9. Now that the 1% RBC Direct Investing bonus has been credited, Four Pillars wonders if he should switch to Questrade. Personally, I’m hoping another brokerage would offer 1% to move my accounts to them!
  10. Canadian Financial Stuff reviewed and liked 75 Ways to Save Gas.
  11. Michael James paid extra attention to a new credit card agreement mailed out to him and wonders if it contains a liability loophole if the card is compromised.
  12. Larry MacDonald finds out that data found on iShares websites on its ETFs are not always what they appear to be.

Media hat tips: David Berman, who writes the Globe Investor Market Blog, cited this post in The trouble with ETFs. Rob Carrick listed this blog among his favourites on BNN. Thanks guys.

Have a great weekend everyone!

The Pixar Phenomenon

July 15, 2009


And now for something completely different…

[Still from movie Up]

I recently took our kids to see Disney Pixar’s Up and came away amazed at how consistently Pixar Studios churns out one hit movie after another. Starting with Toy Story in 1995, every one of the ten movies released by the animation studio has been a commercial, and perhaps more importantly, a critical success. Even Cars, which would rank as a relative failure in Pixar’s book, received a rating of 75% on Rotten Tomatoes and grossed more than $450 million worldwide. What’s more, competitors have not been able to capture Pixar’s on-screen or box-office magic with a few exceptions — Shrek and Kung Fu Panda — come to mind.

So, what is Pixar’s secret sauce? One theory holds that the success can be traced to how differently the studio operates compared to the rest of Hollywood. Whatever it is, it would be interesting to see if Pixar can keep up its hot streak with its upcoming features: Toy Story 3, Newt, The Bear and the Bow and Cars 2.