Canadian Capitalist » Personal

Five Things You Don’t Know About Me

Canadian Capitalist — Thu, 11 Jan 2007 03:00:10 +0000

I thought I would avoid the bug that is going around the Blogosphere, but Nick of Bring the Cash Flow has tagged me into revealing five things you may not know about me. So, here we go:

I am one of those prototypical immigrants who arrive in Canada with $50 in their pocket. I came to Canada to study over ten years ago and have lived here ever since.
I have worked at four different companies in my nine-year career. Two of them have been start-ups.
I am a big P. G. Wodehouse fan. I think the old Jeeves and Wooster series on PBS, while very good, did little justice to his books.
I am fascinated by ancient Egyptian civilization and visiting the monuments in the Nile Valley is one of things on my to-do list.
My favourite possession is a pocket watch that my grandfather gave me. It was his father’s watch, doesn’t work anymore and is probably worth $5. Still, I wouldn’t part it for anything in the world.

It is now my turn to tag other bloggers and I’m going to tag Frugal Canadian, Growth in Value and The Dividend Guy.

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Taking Stock of 2006

Canadian Capitalist — Mon, 01 Jan 2007 04:02:04 +0000

As we bid adieu to 2006, it is time to take a look at how we performed against the goals we set for ourselves. I strongly encourage you to write down your financial goals; it is a great motivator to help you succeed.

Fully Funded our Retirement Plans: I have to admit that it was a bit easier this year because my spouse’s earned income in 2005 was much lower than normal.
Paid Down Consumer Debt: We fully paid down our auto loan and now have no consumer debt. Of course, we continue to pay off our credit cards in full every month.
Reduce Mortgage Debt: We made a few extra pre-payments on our mortgage using extra cash we were not counting on such as bonuses and profits from selling ESPP shares.
Invest Wisely: According to MS Money, our combined portfolios gained 9.5% over the year, compared to a 14% gain for the TSX and a 14% gain for the S&P 500 in C$ and a 14.6% gain for the Sleepy Portfolio. We continued our progress towards becoming mostly indexed in our retirement portfolios.
Contribute to RESPs: We continued to contribute to RESPs and collect the Canada Education Savings Grant for our boys.
Increase Net Worth by 15%: We blew past this goal posting a 28% increase in our net worth. Going forward, I am going to discontinue setting this goal because our net worth increases are now mostly driven by market returns and to a much lesser extent by our personal savings.
Spend Less than We Earn: Our expenses for the year increased compared to the last due to a variety of personal reasons, but we still spend less than we earn.

Our financial goals for 2007 are largely the same as last year though my first priority is getting our wills done.

Wishing you all a very happy and prosperous New Year!

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A Mutual Fund Investor

Canadian Capitalist — Fri, 17 Nov 2006 04:26:29 +0000

I have railed against mutual funds so many times that you would find it surprising (perhaps hypocritical) to find that a mutual fund is one of the top ten holdings in our combined portfolios. The mutual fund I hold is Leith Wheeler Canadian Equity Fund and I have some very good reasons for breaking the cardinal rule of avoiding mutual funds:

I hold the fund in the Group RRSP offered by my employer. The rules allow us to only invest in one or more of the eighty odd funds offered by the plan. I am allowed to contribute a certain percentage of my salary, 50% of which is matched by my employer and I am not allowed to withdraw these funds from the account.
The plan does offer some index funds but the fee differential between the index fund and the actively managed fund is only 15 basis points. In other words, the fees for the index funds are fairly high.
Leith Wheeler has an outstanding long-term record with a 10-year record of 15.2% compared to 10.2% for the TSX Composite Index. While this only reflects past performance, I am very comfortable with Leith Wheeler’s value style and contrarian bent that I am confident I will stick with the fund even through a rough patch.
The fund is fairly small at just under $500 million. This is an important consideration as I feel that it is difficult to outperform the index the larger a fund gets. In contrast, Canada’s largest mutual fund has total assets of more than $12 billion.

I realize that I might still be wrong and Leith Wheeler might turn out to be a dog of a mutual fund, but the damage will be limited as it is only 5% of our total holdings.

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Every Little Bit Adds Up

Canadian Capitalist — Tue, 07 Mar 2006 03:24:22 +0000

Many personal finance experts urge us to cut out our daily lattes or muffins or lunching out and save the difference. The $25 or $50 saved every week seems such a small, piddling amount, that it can’t possibly make a difference, right? It actually does and I have a personal story to illustrate the power of saving small amounts.

Recently, my wife was looking at her stock purchase plan account and was pleasantly surprised to find that she had just over $10,000 in the account. It all started with her contributing a small percentage of her salary to participate in the program. Her employer matches her contribution dollar for dollar and every two weeks, the combined amount is used to purchase shares.

My wife’s contributions to the plan work out to just over $25 per week. In a little over three years of saving a little bit of money every other week (and her employer’s stock has practically gone nowhere in that time period), she has accumulated a tidy sum. Granted, $10K is not a million dollars, but with a little bit of growth and continued addition to the savings, it can grow into a nice big chunk of cash. So gather together a few toonies every day and start saving, for a journey of a thousand miles begins but with a single step.

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What is in my Wallet?

Canadian Capitalist — Mon, 13 Feb 2006 03:58:14 +0000

There is a meme going around where bloggers reveal the contents of their wallets and I thought I’d join the fun. Here are my very old black leather wallet’s contents:

Driver’s License.
CAA Membership card.
Prescription Drug Benefit card.
Air Miles Collector’s card.
Aeroplan Collector’s card.
Ontario Health card.
President’s Choice Financial Debit card.
President’s Choice Financial MasterCard.
American Express Platinum Cash Rebate card.
Ottawa Public Library card.
Royal Bank Client card.
Royal Bank Gold Visa.
Costco Executive Member card.
Postage Booklet with three 50¢ stamps.
Lick’s Loyalty card. (“Enjoy Five Delicious Meals and receive a complimentary homeburger with small fries”)
$15 cash.
$1 in Canadian Tire money.

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My Money Mistakes

Canadian Capitalist — Fri, 10 Feb 2006 03:55:22 +0000

MyMoneyBlog is hosting a reverse carnival in which personal finance bloggers confess their dirty little money secrets. Here are the skeletons in my cupboard:

I once had tons of in-the-money options in a technology company, which at one point was 70% of my net worth. Let’s just say it ended very badly.
My very first investment was in a venture capital fund, which I bought for its generous tax credits. The fund is down 60% and I can’t even sell it because it has a minimum holding period. Though I bought it at the recommendation of an “advisor”, I should have been more diligent with my money.
Invested money in JDS Uniphase (TSX: JDU) and Nortel (TSX: NT). Enough said.
Bought above-mentioned stocks in my retirement account. Couldn’t even get a capital loss out of the two dogs.
Bought a technology mutual fund at the peak of the bubble because the fund returned around 90% in the previous year. I sold at a 70% loss, but at least I got capital losses out of it.
Researched Apple (AAPL), which was selling at a split-adjusted $7 and almost had that much cash on the balance sheet but did not buy. It is $64 now.
Our sons are six months old and we are only now getting a term-life insurance and a will. We should have done it sooner.
When I first started working, I wasn’t very diligent about saving. My “latte factor” was eating lunch out everyday.

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New Year Resolutions

Canadian Capitalist — Fri, 30 Dec 2005 03:14:25 +0000

As 2005 draws to a close, it is that time of the year to make resolutions (and hopefully keep them). Here are my financial resolutions for the New Year:

Fully fund our RRSP accounts. I have to admit that money has been a bit tight this year (spouse on maternity leave) and we have only contributed 78% of our eligibility for 2005.
Pay down consumer debt. Unfortunately, we had to use our secured line of credit to purchase a family van. Now, I would like to pay it off as soon as possible.
Reduce mortgage debt. Since, money will also be tight in 2006, I don’t see how we will be able to make a lump sum pre-payment on our mortgage. We will continue to pay about $200 more towards our mortgage every month.
Continue to invest wisely. In 2005, my portfolio returned 13.5%. I initiated a small position in a bond index fund and increased my exposure to international markets (by buying EFA). I’ll be looking to initiate exposure to REITs and emerging markets.
Reduce expenses. Despite our decreased cash flow, we plan to spend far less than we earn.
Start and fund an education savings plan (RESP) for our kids.
Increase our net worth by 15%.

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Virus Attack!

Canadian Capitalist — Thu, 15 Dec 2005 04:05:41 +0000

My laptop first got infected with the SpyAxe virus and then with something called the Smitfraud-C trojan. I spent hours and hours trying to clean my computer and finally decided to just reinstall Windows. If it weren’t for Microsoft Money, I would just install Linux and spend my time more productively!

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Financial Goals for 2006: Net Worth

Canadian Capitalist — Sat, 10 Dec 2005 19:36:29 +0000

It is already December and time to start setting financial goals for 2006. I believe that our net worth should grow every year and double every five years and taking into account our personal situation, my net worth goal for 2006 is:

Increase our household net worth by 15%

Historically, our net worth growth has been a bit uneven, owing to the cash-value of the stock options at one my previous employers.

2001: 190%
2002: -35%
2003: 115%
2004: 25%
2005: 22%
CAGR: 38%

It is getting harder and harder to significantly grow our net worth, which is now a nice multiple of our annual household income. A good percentage of our net worth growth is now driven by gains in our portfolio, which makes it difficult to set goals. If stocks do well in 2006, we should be able to easily achieve our goal.

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Shopping for a Van

Canadian Capitalist — Wed, 30 Nov -0001 00:00:00 +0000

With recent additions to our family, our 92 Honda Accord is starting to feel very cramped even during short family outings. So, I have started shopping for a van that fits the following criteria:

Clean, well-maintained Honda Odyssey or Toyota Sienna
Recent model with 50k – 100k clicks
Private sale, so that I pay only 8% tax instead of 15%

Online resources that I find very useful:

Canadian Driver magazine features Used Car Reviews and a guide to pricing used cars.
The Canadian Red Book, available at local libraries provides a useful guide to retail prices.
Autotrader lists dealer and private vehicles for sale.

I would also appreciate any comments or suggestions, as the last vehicle I purchased was more than seven years ago.

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