Please Stand By

It's been a while since I've posted due to my computer passing on and I am now the owner of a $1500 paper weight.  I should be up and running later this week. My next post is an update to my new house purchase and how all the little things can start adding up. Thank you for your patience and continued support. To help the time pass for my avid readers, here's a link to a funny video courtesy of You Tube

Enjoy!

September: In like a lamb, out like a lion?

September is well known for market downswings. The beginning of September fooled most analysts and markets were higher then expected. Fears of a double dip recession in the states were looming over everyone but the markets pulled through. Now in the later half of September, markets are in a downswing and unlike most investors who are selling, I am looking for a good buying opportunity.

The dividends I've collected over the last few months are starting to burn a whole in my pocket. I've been saving them for the perfect time to either to add to my position in stocks I already own, or to invest in another company and expand my portfolio. The golden rule is to buy low, sell high; but it seems like the majority of people investing cannot fight the natural human reaction to sell in sliding markets to minimize their losses. Investing in dividend stocks allows you to easily overcome that human reaction and see downturns as a perfect time to buy. When everyone panics and starts to sell off, I'll be there with my big pile of dividends waiting to pounce on a good buy.

Dividend Investing 101: The Conclusion

After starting my path of self investing, I've learned many things in the last year that will forever guide me to my goal of financial freedom. I started writing this blog as a digital medium to show my friends and family a great way to invest for the future with as little risk as possible. To my surprise, a lot of people outside of my circle began reading it and emailed me thanking me for the great information. The way I see it, I get a lot of satisfaction out of helping people see that investing on your own is not scary at all. If you have ever used online banking, you're ready to do online trading.

The hardest part of self investing in dividend stocks is finding the right company to invest in so that your investment today will grow tomorrow, and in the future. As a self investor, I like banks, consumer goods and utility stocks because they provide widely used services to society now, and there's a very good chance they will continue to do so in the future. Everyone needs food to eat and use health and beauty products. Everyone uses energy to heat their homes and consume power to use technology. And everyone uses banks to pay their bills and keep their money safe. To me it only makes sense to invest in companies that have a definite future and overall steady income stream year round.

Here's a chart of common stocks that I either already own, or are on my watch list. I may prune the list or add to it in the future, but for now it's a good start. I do not endorse anyone to invest without first talking to a financial planner and will not be held accountable by anyone who chooses to invest in companies mentioned on this list, or on my blog. If you choose to invest on your own, then that is your own decision and you are accountable for your own actions(Sorry for the technicalities, my wife must be rubbing off on me).

In no particular order, here they are:

 Green highlights represent yields of 4% or more. I like seeing at least a 4% yield when purchasing common stocks otherwise you might as well invest in a GIC. Preferred shares are locked in at a certain percentage and are guaranteed to be paid out before common shares, but they do not get any dividend increases and I am after dividend growth.

So there you have it. I've shared the basic knowledge of dividend investing and hope you enjoyed the series. I'm sure I've lost some readers due to repeat information that I already posted, but who cares; Their loss is our gain! I'll be going back to my original posting style of adding some humor to make the financial world a little less boring. Until next time, here's to financial freedom!

Dividend Investing 101: Trading Accounts

In my last post I discussed the magic of dividend investing and how it's an easy choice for DIY investors. If you've been following my blog and are ready to take the big step of being a self investor, choosing the right account from the right discount brokerage can seem very complicated. Not all brokerages are created equal, so you really need to do your homework and find one that works for you and your investment style.

When researching which discount broker to use, you must read all the fine print and become familiar with fees associated with each type of trading account. Each brokerage has different conditions that when met, can either waive fees or lower commissions. I prefer to use discount brokerages through banks personally because I like seeing actual institutions where I can stop by and talk in person if needed. I've covered the different brokerages pros and cons in an earlier post which I highly recommend reading, so I'll focus on the actual types of accounts

Cash accounts are the basic type of trading account that allows you to invest your after tax income. Most cash accounts have an inactivity fee that is charged per quarter unless you execute a few trades, have a high enough balance, or sign up for paperless statements.You must pay taxes on any income generated from these accounts, so make sure you keep track of your investments to calculate your cost basis for tax purposes. (To keep my investing simple, I don't invest with cash accounts. Maybe one day when I have piles of money to burn and can afford to use an accountant, I will use mine more. )

Registered trading accounts are used to invest money that is tax sheltered. They have a yearly fee that can be waived if you have a high enough balance, usually $25000. I recommend getting one even if you have to pay the $100 yearly fee because it's a lot cheaper then paying any MER on mutual funds. Plus it allows you to invest in U.S companies and not have to pay any withholding tax on the dividends. No need to worry about taxes until you take money out after you retire...or need emergency money after Jr. blows up your house after a failed attempt at making a potato cannon.

TFSA trading accounts are my absolute favorite. You can invest totally tax free and fee free( from what I've seen at least). If you are starting to invest from square one, a TFSA trading account is your best bet. I max my TFSA each year so that one day I will have a tax free dividend income, no matter how much money my wife and I make in the future. Even if you start with $50-$100 a month, start pooling your money and purchase some shares in a blue chip, dividend company and save the dividends to re-invest. You can buy shares from other companies in diffferent sectors each year to help deversify your portfolio. After 10 years, your little compounding machine will start to really take off.

That's a basic rundown of the different trading accounts. I know there are more accounts out there like margin and RESP accounts, but my idea of self investing is all about making it as easy as possible. The hardest part of setting up trading accounts is talking on the phone, or making an appointment to sign documents. Don't be frightened by the who investing in the stock market shpeel. I'd compare the process to opening up a chequing or savings account. It's that simple. If you have any questions, ask away with a comment or email.

Dividend Investing 101: The Magic of Dividend Stock

My last post was about the rules I follow when looking for dividend stocks to invest in. It’s impossible to pick the perfect company, but it has been a useful guideline for me since I started investing on my own and if it’s helpful to anyone else, then that’s a bonus.
I’ve covered many topics in my dividend investing series, but today I’d like to share with you what first attracted me to investing in dividend stocks.


I am a conservative investor by nature. I never gamble with my disposable income, and I would never take a large risk with my nest egg. To make a decent return on an investment, I knew there had to be some level of risk involved. GIC’s paid peanuts, and high interest TFSAs were a joke. When I first signed up for my TFSA, I was told I would be getting 2.5%. I opened it thinking it might help increase the amount I save by not paying tax on the interest. Well, within the same year they cut the interest rate to 1%. I could make more money collecting bottles then by leaving my money in the banks who, by the way, make hundreds of millions each quarter.

Why Mutual Funds Are A Joke

I looked at my mutual fund statements and they said I made 4% last year. What they didn’t show was the 2% they took off to manage the funds. So in actuality I made 6%. I never really made 4%, because the moment the stock market went down, the value of the fund was down and the 4% gain was non-existent. The value of mutual funds always fluctuate with the stock market, as shown in the diagram below.

The people who sold me mutual funds always said that when the stock market is down, it’s the best time to buy more mutual funds. I thought to myself “Why would I buy more mutual funds if they lose value at any given time?” It would be like buying more magic beans from the peddler because the first ones didn’t work. It went against all logic, but everyone I trusted invested in mutual funds, so I figured it was the way to go.

Behold The Power Of The Dividend

When investing in dividend stock, you are guaranteed a return on your investment as long as the dividend is maintained. If you invest in strong, blue chip companies, there is a very slim chance the dividend will be cut. In fact, there is a very good chance the dividend is increased which is what we are after.

When a stock like RIM (which does not pay a dividend) starts to lose value on the stock market, the people who invest in it become concerned and are ready to sell at the most opportune time before losing to much profit. This means they always have to be watching the markets and listening to analysts who are usually wrong all the time. And as the value of the stock decreases, more people sell driving the price down even further. That sounds like a lot of work and some sleepless nights for the average investor. The beauty of blue chip dividend stocks is, if the stock price goes down the yield increases as shown in the diagram below.

When the yield increases, the stock becomes very attractive to other dividend investors who will purchase shares as the stock price comes down, acting like a safety net in a way that drives the stock price back up. It’s proven that blue chip dividend companies rebound faster after market corrections and perform better over the long term then non-paying dividend companies: it’s all because of the increasing yield.

That is the magic of dividend investing. To me it seems logical to buy more shares of something that becomes more lucrative as the share price lowers. That is why I am excited about dividend investing and see mutual funds as only helping the people who sell them.

As a dividend investor, I sleep very well at night dreaming of little dollar signs that keep adding up in my pile of money. And when the markets are down, I get ready to buy more shares when everyone else is selling; their loss is my gain. I encourage people I meet who invest in mutual funds to read up on dividend investing to see how fun investing actually can be. Take control of your financial future!