The Loonie Bin

Update to Feedburner

2012-02-08T21:25:00.000-07:00

If anyone is still coming to this address, please update your bookmarks to www.thelooniebinblog.com and if you are a subscriber, please update your feed to http://feeds.feedburner.com/TheLoonieBin so that you are getting the correct, updated feed. Blogspot would automatically forward viewers to the new blog address but that will no longer happen. In a few weeks I will be deleting the old feed with blogspot in the address because, well I'm hosting the blog myself and I want to keep things as simple as possible.

Once again, if you are reading this in your reader, please update to the new feed http://feeds.feedburner.com/TheLoonieBin or head to www.thelooniebinblog.com and click the reader icon in the top right corner.

Thanks for your support and I hope to see you at the updated blog. Thank you!

Moving To Word Press

2012-02-04T17:36:00.001-07:00

Just to let you all know, I will be moving to Word Press this weekend. I'm keeping the same domain name so if you come to thelooniebinblog.com and it looks different, this is why. Please bare with my during the transition because it's only going to get better from here on in.

Please update your email addresses as well as your Feeds to the new site:

http://www.thelooniebinblog.com/

Watchlist For February 3rd, 2012

2012-02-03T17:14:00.000-07:00

Fortis and CN are now trading near their 52 week High and I don't know about you, but I don't like paying full price for anything that I don't have to. Also this week as mentioned Metro increased their dividend by 12% and is still trading near its 52 week High as well.

Facebook IPO is all over the financial news and to be honest I skip past all the articles. Tech stocks are way too volatile for my liking and I'm not very keen on Facebook as a business. It's only a matter of time before something better comes along just like anything in the Tech Sector. I'll stick to my dependable blue chip dividend payers, thanks.

Happy Friday Everyone!

TFSA Update

2012-02-01T19:46:00.000-07:00

If you have been following the Loonie Bin for a while, you might have noticed I am a huge advocate for Tax Free Saving Accounts. I know some people save for trips or perhaps a new car with their TFSA, but I use my account to make my money work for me. After some extensive research on a new stock for my TFSA, I've made a decision to add a financial stock to the mix.

Hello, Scotia Bank (BNS)!

I've had my eye on this stock since I started investing and decided to finally pull the trigger when it dipped last month. After researching the top 5 Canadian banks in December, It just added to my confidence to own shares in this company.

By adding 100 shares of BNS to my TFSA, I will be receiving an additional $208 tax free into my account.
Thanks to previous contributions that I invested in ENB and BCE, my tax free income will be:

ENB: $452

BCE: $214.50 (New dividend takes effect in April)

BNS: $208

$874.50

At this rate, I won't have to worry about Harper raising the age to claim Old Age Security! Ok, well it's a start in the right direction to say the least. If I were to keep my money in a plain old TFSA, I'd probably be making $250 on the same amount of money and that would be it. I'm gunning for dividend growth from all three companies this year and then I can watch even more money come through, all tax free!

How do you use your TFSA?

Watchlist Dividend Increase

2012-01-31T19:30:00.000-07:00

After reporting higher profits and revenues this last quarter, Metro increased its dividend from $0.77 cents per share, to $0.86 cents. That's a whopping 12% increase that will definitely help with the ever increasing food prices.

Consumer staples is an excellent sector to be invested in because no matter what state the economy is in, everyone has to eat! The TSX has a very limited selection in consumer staples so a lot of Canadian investors turn to the U.S for a more diverse selection.

I do not own shares in Metro because of the low dividend yield but I would like to include it in my portfolio once it's completed and that's why it's on my watch list. Even though Metro has an incredible dividend growth record, I personally consider it more of a growth stock. Today it closed at its 52 week high of $54.74 and even with its new dividend, it only yields 1.5%. Even if I bought in today, and the dividend increased 10% each year, after 15 years my yield would only be 5.6%. Like I said, once my portfolio is close to being complete, I will add MRU for some solid stock growth and minimal dividend payments.

Sunday Reading And Yakezie Carnival

2012-01-29T11:46:00.001-07:00

I have decided that Sunday would be an excellent day for a weekend reading post. Most people can sit down and relax for a while before their hectic week starts all over again so I thought it would be a perfect time to share some interesting reading material from my fellow bloggers.

I've been included in my first ever Yakezie Carnival and it feels great. There are lots of interesting posts from many bloggers in the Yakezie network. I would really like to thank The Amateur Financier for hosting the carnival this week and to my fellow Yakezie bloggers:

http://www.theamateurfinancier.com/blog/yakezie-carnival-winter-wonderings/

Part of the Yakezie Challenge is to selflessly promote others so I'd like to share some postings from some of my fellow challengers:

After College Money shares how he paid off $15,000 of student loans in one year. Great job, Eric!

American Debt Project tells about their 2012 savings goals.

Personal Finance Whiz asks how much he should have saved for retirement by the time he is 30. I wish I could write a post like that :(

Kamara over at The Modern Financial tells us to stop waiting for the new year to make RRSP contributions.

The Dividend Ninja asks us why we should invest in bonds. I'm not a huge fan of buying someone's debt, but having diversity in one's portfolio is always a good thing.

I'd also like to share with you some posts from my own, personal blog roll:

The Passive Income Earner lets you assess if the Smith Manoeuvre is right for you. I personally think it could be to risky, especially with a monster mortgage.

Susan Brunner gives us her take on Just Energy. I don't agree with their business model either.

The Dividend Guy compares the top 4 Canadian REITS.

Brad at Triage Investing Blog talks about the best time to make extra mortgage payments. I'm a firm believer in lump sum payments.

Dividend Monk shows us 6 solid dividend payers from the states. I'm pretty sure everyone knows these brands and I'm looking into GE myself.

Dividend Watchdog wrote about the latest dividend increase from CN.

My Own Advisor wrote about how credit cards can be better than cash. I think credit cards are great tools, but are dangerous in the hands of fools.

Enjoy the rest of the weekend, folks!

2012 Watchlist

2012-01-27T18:33:00.000-07:00

Well without further ado, here's is the watch list for Friday, January 26 2012:

Like always, the markets were all over the place this week. It seems if anyone gasps in Europe, the markets in North America are punished. The Loonie did hit parity with the U.S dollar this week which was a surprise to most people.

The hardest part of dividend investing is choosing the right time to buy into the right company. I'm not a financial adviser, but I can share with you what I look for in a company when I'm ready to hit the buy button. I've never been able to time the market very well, but I find looking at the basic information is the first step to making an educated decision. Buying when a stock is at its highest in a year might not be the best strategy to use. I like buying into solid companies after the markets dip just like they did last August and September thanks to investor speculation.

It will be interesting to see how this watch list will change over the next year. My wife loves shopping at RW&Co. which is a banner name under Reitmans so I will be watching RET.A closely. Have a great weekend everyone!

What do you think of my watch list?

2012 Dividend Watch List

2012-01-24T20:58:00.000-07:00

When it comes to the stock market, having a crystal ball to see future prices would sure make investing easy but luckily there is a more tangible method. Having a watch list lets you keep an eye on hopeful stocks to add to your portfolio or lower your average entry point if it's a stock you already own. Over the long term, it can also allow you to see how world events and speculation can often affect stock market prices.

I'd like to share with you my own, personal watch list for 2012 :

Every weekend I will be updating my watch list with the current data from Friday's stock market closing. I will be updating the current price, the 52 week lows and highs, the dividend and the yield. Companies that have increased their dividend since January 2011 are highlighted in blue. When the stock price is within 5% of its 52 week low, it will be highlighted with yellow. When the stock price is within 5% of its 52 week high, it will be highlighted in red. When the yield is 4% or larger, it will be highlighted in green.

Word of Warning

This list is by no means advice on which stocks to buy and I cannot be held accountable if you decide to buy any of the stocks from my list. This is merely a fun way to show you how to keep a watch list for yourself.

So now there is one more reason to look forward to the weekend! There was a lot of positive feedback from my dividend list in the past and I hope that there will be more in the future.

Do you have a watch list of your own?

Yakezie Challenge

2012-01-23T21:16:00.000-07:00

I'm very excited to announce that I just joined the Yakezie Challenge! For those of you that don't know about it, it's a challenge to improve your blog using the Alexa ranking system tool bar. Right now my rank is 5,031,011 which is rather on the hi side, but I'm determined to get a better ranking within six months.

A lot of my fellow bloggers have become members and they say it's a great way to build a stronger blogging network and allows others to see your blog that might not have had the opportunity before. I'm hoping to learn from these fellow members so that I can improve my blogging skills and the overall content on The Loonie Bin.

That being said, I've decided to start a weekly list of other blogs with like minded content on personal finance and early financial freedom. Look for the list later this week as I just got home and wanted to check in.

2012 Financial Goals

2012-01-19T18:27:00.000-07:00

Having goals is an important part of life. I believe having financial goals is often over looked thanks to low mortgage and interest rates. It seems that people would rather get what they want now, and waste extra money on interest over the span it would normally take to save up for the desired item or service.

I personally DESPISE interest with all my being. Actually, the one thing I despise more than interest is paying interest on interest. The last time I had to repay my line of credit, I would always pay the interest back the same day it appeared in my account so that I would at least limit the amount of extra interest that accrued. My hatred for interest is what drives my financial goals and sets me apart from my fellow bloggers.

My financial goals for 2012 are geared towards eliminating debt rather than increasing my financial investments. Here they are in no particular order:

Pay an extra $1,000 a month on my mortgage.

When I make lump sum payments on my mortgage it goes directly to the principle. Since I've started mid 2011, I've lowered my daily interest by $1.00 a day by making $1000 contributions every month. With my remaining 4 years on my mortgage term, that's $1460 that the bank doesn't get. If I can keep it up they will receive even less of my hard earned money. Wish me luck!

Contribute $5000 to my TFSA

I think TFSA's are a great investment vehicle. If I can save $416.66 a month I will be able to maximize my TFSA to its full potential and help build my tax-free dividend machine. This year in my TFSA account I stand to make $877 in dividend income, completely tax-free. If the stocks I own increase their dividend, then the amount I make will be even more.

Pay off my wife's student loan

For over the last three and a half years, we have been able to destroy my wife's $40,000 student loan with only $10,000 left to go. It will be a great feeling to eliminate this helpful yet annoying debt from our backs and there will be much celebrating to do once we make the last payment. One could only imagine the amount of interest we would have had to pay if we only made the minimum payments.

Sock away $50 a month into slush funds

I kept $10,000 in an emergency fund in case life happened; then I got married and it ALL went away. Then I managed to save up another $10,000 from working lots of overtime and it made me a whopping $100 in interest a year. Then I decided to put that money in my TFSA and invest it in blue chip stocks. Now that same $10,000 makes me $452 a year and is now worth $15,632.

I don't like large amounts of money sitting in an account waiting for an emergency to happen and get paid a dime while the bank makes a dollar on MY money. I'd rather use our line of credit if we need emergency money and pay it off as quickly as possible. Instead, this year I plan to create three slush funds instead of an emergency fund. One slush fund is for our vehicle maintenance, one is for house maintenance and one is for household purchases. I will keep adding money to each fund until it reaches a certain amount then re-direct the amount of money into each fund as it's used. Since it's only a total of $150, hopefully it will not be missed each month and will be allowed to grow fairly moderately.

My financial goals are not very exciting and may seem very boring but the last I checked, anything to do with finances was never very popular. My goals are set and in my mind can be easily accomplished with a little bit of willpower and drive. Even if I can't make all of them, at least my attempt will lead me in the right direction.

What are your 2012 financial goals? Leave a comment and tell me what you think of mine.

Keeping Track Part 2

2012-01-15T12:58:00.000-07:00

In an earlier post I showed my simple excel spreadsheet to keep track of my dividend investments. Now I will show you how I keep track of my dividend income every month.

With this layout I can see my total monthly dividend income at a glance. As more shares are purchased, I can easily add the amount paid by each share to the corresponding company. Dividend increases can also be added with ease and my totals will update accordingly. Not only does this layout allow me to anticipate how much my monthly income will be, it also allows me to document my dividend income for the year and can be used to check against any errors that may happen.

Having my dividend income calculated every month allows me in the future to plan my spending. Some months will have more income which may be needed to be saved for months with lower dividend income. Hopefully my dividend growth exceeds inflation and I'll be able to afford a $100 jar of jam to go with my $100 loaf of bread...yikes!

Each month I log onto my trading account and record my monthly transactions which helps me avoid any clerical errors. By updating my spreadsheets every month it helps spread the upkeep of organizing my financial records and avoids the guess work which comes from year end or God forbid, years of financial clutter.

To me personally, it's a rewarding experience to see an updated spreadsheet with all my passive dividend income recorded on it. As each year passes, you can look back and see how your dividends have grown and the visual representation can show you which stocks haven't lived up to your dividend growth expectations. By investing in stocks that increase their dividends, the power of compounding will let you retire sooner than you ever thought possible.

How do you keep track of your dividend income?

Shaw Increases Dividend

2012-01-12T20:13:00.000-07:00

CALGARY, ALBERTA--(Marketwire - Jan. 12, 2012) - Shaw Communications Inc. ("Shaw") (TSX:SJR.B) (NYSE:SJR) announced today that its Board of Directors has increased the equivalent annual dividend rate to $0.97 on its Class B Non-Voting Participating Shares and $0.9675 on its Class A Participating Shares. This represents an increase of 5% or $0.05 per share. Shaw's dividends are declared and paid on a monthly basis and this increase will commence March 29, 2012. Based on the January 11, 2012 closing stock price, the new dividend rate represents a yield of 4.7%.

I just found out that Shaw increased their dividend today by 5%. My philosophy when investing is to invest in what you know. My telephone, T.V and Internet all come from Shaw so naturally I own shares.

My initial investment in Shaw was yielding 4.39% but after a few dividend increases it's yielding 4.84%. Normally my yield after a few dividend increases would be a lot higher, but for some reason Shaw's stock price is hovering around my entry price and hasn't gone up over the past few years. I read recently that the number of subscribers is dwindling and that Jim Shaw's retirement package is draining the company's profits so investors are spooked.

When there is no stock growth, it's hard to justify increasing the dividend. Hopefully Shaw can get their act in gear and start making a recovery. I will keep a small stake in Shaw until they are unable to maintain the dividend or they lower their standard in quality and service.

Do you own shares in SJR.B?

Buying To Impress

2012-01-10T22:19:00.002-07:00

A coworker of mine was excited to tell me that he bought a brand new truck the other day. After congratulating him I asked him how much he paid. I almost choked on my water when he told me "Only $62,000". I asked him why he paid so much for something that's only going to depreciate and rust? He replied, "Because I'm young and it's a super sexy truck and besides, the sticker price was $75,000 so I got a great deal". Why is it that a person would rather spend $62,000 on a vehicle instead of , I don't know, putting a down payment on a house!?

It seems that most people let their spending define who they are. What's worse is that they are willing to go into debt to maintain the illusion. Wearing $350 jeans and $300 sunglasses have a magical way of transporting a person from their dull, mundane life into the rich and fabulous lifestyle they have always dreamed of. That is until the credit card bill arrives and reality rears its ugly head.

I remember one time I was working in a parking garage installing a new fire alarm system when a fancy green Jaguar pulled into a stall nearby. I couldn't help but laugh when the door opened and out popped a tall, lanky man in a suit that was 3 sizes to small and had a pattern like my grandmother's old couch. I assumed in order to pay for the sports car this man had to cut corners in his clothing budget and most likely other sources. I guess wearing flood pants was worth driving such a nice car.

Delusional thinking will have us believe that the more items we have, the happier we will be. When the thrill of the buy is gone, and the buyer's remorse sets in, that's when the problems start. Depression is becoming more and more common place each year. As blood pressure rises from stress, the body becomes more worn out and lowers life expectancy. All of a sudden that frivolous spending doesn't seem as exciting as it once did.

So what can one do to battle this urge to spend ridiculous amounts of money to make us feel important? Quitting cold turkey would kill most thrill spenders, so I suggest a slow and steady approach. Instead of spending $350 on a pair of jeans, spend $350 on four pairs of jeans for the entire year. Even better spend $90 on jeans, then take your grandparents out for lunch and ask them about the tough economic times when they were younger. I guarantee you will learn to be more thrifty with your money.

I don't plan to impress people with fancy clothing, a giant house or an expensive sports car. My plan is to impress people with how early I can afford to retire. Now that's something worth giving up designer labels for if you ask me!

Keeping Track of Dividends

2012-01-08T15:01:00.000-07:00

I was recently asked in an email from Art if I could share the layout of my spreadsheet that I use to keep track of my dividend investments. Well Art, I'd be more than happy to share this with my readers because without you all, there would be no Loonie Bin.

By keeping track of my investments with a spreadsheet, I save a lot of time by using formulas to calculate averages and yields that would otherwise take forever. It may take a while to setup the layout and formulas in the beginning, but once it's complete you'll have fully functional way of keeping track of your dividends which can be updated with ease. Below is an example of my personal spreadsheet layout:

Under the first column I keep track of the stock ticker symbol. Once you have been trading for a while and reading up on each company, the stock symbols become second nature and are easy to recognize.

Next there's the initial purchase price. I keep it simple by only using the amount the stock purchase cost me. Some people like to include the trading commission for how much the entire transaction cost them but I personally feel that trading fees are just another cost in life; much like ticket fees to performances or gratuities in restaurants.

In the next column I keep track of the number of shares I currently own of each stock. I personally like to buy in lots of 100 to make it easier to keep track of everything. Also if you buy 50 shares here and 20 shares there, you spend a lot of extra money on commissions each time you hit the buy or sell button.

Next I keep track of the current dividend that each stock pays per year. The data under this column can be changed at any time without effecting the formulas of other columns. This allows me to increase, or God forbid, decrease any dividend amount at any given time.

The yield column uses a formula of dividend/share price. By using the formula, the yield will be updated automatically if either the purchase price or the dividend changes. Beneath the column I use a formula to calculate what my average yield is on my dividend investments.

My favourite column is the expected yearly dividend. I choose to colour it green because it's the expected money that gets paid to me each and every year and is the tangible profit from dividend investing. I use a simple formula of multiplying the number of shares by the dividend to calculate my expected yearly dividend payout. Beneath the column I keep a sum of all my dividends to easily calculate my entire yearly expected dividend income.

Last but not least, there is the total price of the initial investment. It is easily calculated by multiplying the share purchase price by the number of shares. I keep it near the end so that I can visually see the difference between what my investment pays me and what it ended up costing me initially. Then beneath the column I add up the total amount my dividend investments cost.

So there you have it; simple yet very effective. Life is complicated enough, so why make something as simple as dividend investing more complicated than it has to be? Stay tuned as I will be introducing a simple spreadsheet next week that helps me calculate my monthly dividend income for easy reference. If you need help with setting up formulas, please don't hesitate to shoot me an email and I will try to help you the best I can. I look forward to your comments and critiques.

Enjoy the rest of your Sunday, folks!

Health and Wealth: Spinach

2012-01-06T14:36:00.000-07:00

Since being healthy is key to enjoying your wealth later on down the road, I will be focusing some posts towards living a healthy lifestyle as promised. After doing some research on certain types of vegetables, I'd like to share some interesting facts on the super food known as spinach.

Growing up I was told that Spinach was a very good source of iron, and that's what made Popeye super strong so I never objected to eating it. It wasn't until I was older that I found out how amazingly good it is for you. Not only is it a good source of iron, but it's also an excellent source of:

Vitamin A
Vitamin C
Vitamin B2
Vitamin B6
Vitamin E
Vitamin K
Magnesium
Manganese
Folate
Betaine
Calcium
Potassium
Folic Acid
Copper
Protein
Phosphorus
Niacin
Selenium
Omega 3 fatty acids
Zinc

That's a pretty impressive list for such a little leaf. The antioxidants found in spinach are very important for cell development and general health as they stop chain reactions that can damage or cause cells to die.

Not only is spinach extremely good for you, it's extremely cheap as well. Around here it sells for roughly $1.50 a bunch and it will keep for a week or two when put in the fridge crisper. I recommend eating it raw or lightly steamed. Never boil spinach as it loses its nutritional value rather quickly.

My wife and I like to put spinach in lasagna, on pizza, in pasta sauce and even IN the pasta we make. We make spinach salad with a strawberry vinaigrette or mandarin orange dressing. We've even started to make smoothies with spinach being the base and adding fruit and other greens to it, thanks to my sister in-law's influence over the Christmas holiday. You can even start out small by simply changing out the lettuce on your sandwich with a few leaves of spinach.

There are countless ways to include spinach in your daily diet. With a quick search of the web you can find some interesting and delicious recipes to help maintain a healthy lifestyle while you wait for the dividends to roll in.

How do you eat your spinach?

Dividend Income For December

2012-01-04T22:27:00.000-07:00

With December in the rear view mirror, it looks like it's time for another dividend income update. According to my accounts, my dividend income for December 2010 was $297. This year my dividend income for the month of December was $369. Thanks to re-invested dividends and my employer contributions, I was able to purchase additional shares to add to my portfolio along with the dividend increases along the way. If only that $369 was $3690, then I could just rollover and go back to sleep instead of dreading my morning commute. It seems like it's so far away, but by maintaining my investment strategy it's something I can easily attain.

Now that the year is over, I always spend some time going over my various spreadsheets and make changes and updates. All my dividend increases are added, and any new shares are added accordingly. I recommend using a spreadsheet program to keep track of your investments. Not only does it make it easier, it's very rewarding to see your past dividend payments and compare them to even larger payments of the present.

How do you keep track of your investments?

New Year, More Dividends

2012-01-01T18:19:00.000-07:00

Happy New Year, everyone! I can't believe 2011 is over already. It seems like yesterday that we moved into our new house and had to carry two mortgages! I hope 2012 will be a year full of joy and happiness for each and everyone. As an investor, a new year means new opportunities and perhaps more dividend increases to look forward to.

When I first started out a few years ago, I didn't know very much about investing at all. After reading about investing as much as I could, I'm very happy to have found an investment strategy that works for me and doesn't require very much time at all. I've learned many things from my mentor Think Dividends and from following Tom Connolly and his report to give me confidence in my investment decisions. Each dividend increase I receive only reinforces the fact that investing in dividend stocks is a winning strategy.

After looking back through some of my spreadsheets, I see that my initial dividend income for 2010 was $2696. By the end of the year, it had already grown to $2758 from dividend increases alone. After re-investing those dividends and regular matched contributions from my employer, and maxing out my TFSA, the dividend income I expect to earn heading into 2012 is $4149. Just think about my co-workers who haven't signed up for the contribution matching after working there for over 5 years; I'm pretty sure they would be kicking themselves if they took the time to figure it out.

Here's to a great new year and to new opportunities!

Life Is What You Make It

2011-12-27T22:58:00.000-07:00

Would you rather lay on a beach in a tropical location, or eat a burger at a fast food place? How about watch a movie on your own brand new big screen TV or have a few beers at the local pub? I'm pretty sure everyone would want the trip and the TV, right?

Well, life is all about choices that we make everyday. Some people choose to smoke because they love smelling like an ashtray, coughing up phlegm when they laugh, and enjoy lowering their life expectancy. Did you notice I never mentioned anything about the costs of smoking? People who choose to smoke make their own, personal choice to pay money for something that they enjoy. It's their own right as a human being in a free society to do whatever legally makes them happy.

I choose not to smoke due to the health and financial implications. By choosing not to smoke, I make a conscious decision to not spend $15 a day on a package of cigarettes. It doesn't take a rocket surgeon to see how fast $15 a day adds up to $5475 a year. That's a lot of money that could be spent on a nice trip or a very nice TV.

Right now I work beside a McDonalds and almost every day my co-workers grab fast food for lunch. They ask me why I never live a little and eat fast food like they do. I tell them I'd rather take my wife out for dinner each week then spend it eating grease with my co-workers. They just laugh and call me cheap, then complain the week after payday that they are broke and have no money. If eating fast food is living a little then man, I must be missing out!

It's the little things that we pay for each week, like a coffee or fast food, that will not add any real benefit to our lives but can add up to something more meaningful over time. Let's say you eat out for lunch each work day:

$10 a day x 5 days a week= $50 a week

You could go out for decent dinner each week for that amount of money or you could save that money:

$50 a week x 4 weeks= $200 a month

With $200 you could buy yourself some nice clothes or get tickets to a concert but you could always save it for something even better:

$200 a month x 12 months= $2400 a year

With $2400 a year you could go on a trip or save for two years and go on a nice trip somewhere warm. Imagine if you have kids how much of their education would be paid for:

$2400 a year x 18 years= $43,200 not including interest or compounding growth.

That sure is a lot of money to have instead of eating a burger or soup and sandwich everyday. I personally choose to look past small treats each day or week and look at a bigger, more rewarding experience down the road. If spending $2.00 on a coffee is what brings you joy then knock yourself out. If spending $6.00 on a beer and smiling at a pretty waitress makes you happy then by all means, enjoy it! If ordering pizza for your family every Friday is your favourite thing then all the power to you. If cutting out all the junk spending allows you to take your kids to Disneyland then hey, good for you!

By becoming more conscious of your spending habits, and focusing on bigger financial goals, then any reward is within your reach.

The Loonie Bin: Christmas Edition

2011-12-23T17:55:00.000-07:00

I really struggled to come up with right post for Christmas. I could have wrote, "The top ten ways to save money at Christmas" or "Get ready for boxing day sales", but it just didn't seem right. I worry sometimes that the true meaning of Christmas will be forever lost.

Society tells us that when December rolls around, we have to fight through the masses at shopping malls and buy presents for our loved ones. While you're out looking for the latest fad like Tickle Me Elmo or Leapster 2, there are people in this world who are searching for scraps of food to feed their family. While we sit down to a giant turkey feast, others sit down to mourn the death of a loved one whose life ended needlessly. I personally believe there are enough resources to give every human being on this planet the basic needs they require to live a long and healthy life. Somewhere along road we have lost our way as a species, and mankind has become corrupt with greed. How can a few households in this world have an abundance of wealth that could never be spent in a hundred lifetimes yet every day, thousands of people die because they have nothing to eat.

I found a video on YouTube from an old Charlie Chaplin movie called The Great Dictator which is a satire on Nazism and Adolph Hitler. It was edited with new scenes and music and the speech by Charlie sums up everything I'm trying to write here. I can't help but feel moved every time I watch it and I want to share it with everyone I care about. Please watch the video and share it with everyone if you felt touched by it.

Does all this sound hypocritical coming from a man writing a blog about his journey to financial freedom? Maybe, but I have an overwhelming desire to not be forced to work almost every day of my life. I need shelter, so I applied for a mortgage to pay an outrageous amount of money for a house in a city that has access to incredible amounts of land and they even have the gull to sell me back the topsoil they scraped off of it. I need to eat so I make money to buy mass produced, chemically treated food and have to pay even more money to eat naturally grown food. I work to make money to buy clothing and some choose to pay insane amounts of money for a certain label on them, and so that others acknowledge that label which means absolutely nothing except for status. It is my dream to break free from this rat trap and to share my knowledge of how to do it with anyone who cares to listen.

This Christmas, spend more time with you family instead of wasting large amounts of money on junk that will just be broken or outdated in a year or two. Instead of feeding the face-less corporations, pay off your debt and free yourself from the invisible bondage that debt creates. Teach others to be efficient with their money instead of blowing it on designer labels or expensive vehicles. Show them that they will be loved no matter what they own and that status means nothing when you are happy and are loved.

I want to thank all my readers and followers for all of your support this year. Have a very Merry Christmas!

Cutting Back On TV

2011-12-20T21:30:00.000-07:00

We just finished a one year, new home package with Shaw that gave us almost every channel, hi-speed internet, a brand new HD PVR, new modem/wireless router and home phone for roughly $88 a month. It was a fantastic deal which saved us around $80 a month.

Now that the offer expired my wife and I sat down and decided how much we really wanted to spend on this kind of entertainment. Spending over $2000 a year on TV, phone and internet seemed a little excessive to me. Having a home phone that costs us less than $30 a month is a must. After growing up in a small town and using dial-up, hi-speed internet is also a must and anyone who has used dial-up will agree with me. That leaves TV as the only service we can really change.

When I was a child, TV was the ultimate form of entertainment. I remember watching some amazing TV shows that helped shape my sense of humor and will be forever engrained in my memory. As I grew older I judged all the new television programs based on my memory of past shows and came to the conclusion that TV programming is going downhill. Just watch an episode of Jersey Shore and you'll see what I mean. That being said, as I watch episodes of my favorite shows from the past, it seems like I might have given them too much credit. Watching an episode of "Dukes of Hazard" or "A-Team" in my thirties makes me laugh at how corny those shows really were. I've come to the conclusion that television has been headed down a slippery slope a lot longer than I thought.

We decided to limit the amount of channels to keep the costs to a minimum and to allocate the funds to perhaps a holiday fund instead. By cutting our services from $168 to the bare package of $100, we are going to save $68 each month. Over the course of a year, our savings will add up to $816 which is a huge chunk of a nice vacation somewhere warm. By limiting the channels we watch, we can also spend more time on other hobbies and perhaps more updates on a certain blog.

With more and more TV programs available online for free, it makes perfect sense to watch them there, rather than pay for it through a cable bill. Some may not know it, but GlobalTV.com and CTV.ca are excellent sources to watch some of your favourite TV shows for FREE. So now instead of planning which TV shows to watch this winter, we can spend more time planning our next holiday getaway.

Dividend Income for November

2011-12-16T17:15:00.000-07:00

Well it's been a very exciting month as a dividend investor with so many new dividend increases that I never had time to write about my dividend income for November. After tallying up exactly how much was deposited into my trading account, I remembered that this month is one of my lowest paying months.

My dividend income for the month of November was $95.16 in 2010. It has increased $7.92 a year later and is now $103.08 thanks to dividend increases. That's a growth of 8.32% which is an excellent step ahead of inflation, allowing my money to keep its buying power in the future. This is an excellent example of how an initial investment can keep growing with dividend increases alone.

This month I took some of my dividend money, along with new investment contributions and purchased an entirely new stock for my portfolio as well as increased the amount of my shares in another company I own. These investments will increase my November monthly income to $227 which will really help balance my monthly income, but I'm not too worried about living month to month when I retire. Have a good weekend everyone and here's to many, many more dividend increases!

Fortis Dividend Increase

2011-12-13T19:13:00.002-07:00

ST. JOHN'S, NEWFOUNDLAND AND LABRADOR--(Marketwire - Dec. 13, 2011) - The Board of Directors of Fortis Inc. (the "Corporation") (TSX:FTS) has declared a common share dividend of $0.30 per share on the issued and outstanding fully paid Common Shares of the Corporation, payable on March 1, 2012 to the Common Shareholders of Record at the close of business on February 15, 2012.

The 3.4 per cent increase in the quarterly common share dividend to $0.30 from $0.29 extends the Corporation's record of annual common share dividend payment increases to 39 consecutive years, the longest record of any public corporation in Canada.

While I was breaking my back earning a living, I checked my smart phone at coffee to find out that Fortis increased its dividend by 3.4% today. It's my third raise this month and it's been 4 years since I've received a raise at my day job. Can you see why I'm so passionate about dividend investing?

My initial yield on Fortis was 4.05% and today my yield on the same investment is 4.34%. Slowly but surely my yield is increasing every year with each consecutive dividend increase. Here's a look at Fortis Inc dividend growth history, courtesy of my friend Think Dividends:

Do you own shares in Fortis?

The Big 5: RBC

2011-12-13T18:32:00.001-07:00

The Merchants Bank of Halifax was founded in 1867 in Halifax, Nova Scotia. Its name was later changed to a "more comprehensive" The Royal Bank of Canada in 1901. RBC was Canada's largest bank by market cap for many years until TD stole the title this year.

Here is RBC at a glance as of December 13, 2011:

Symbol on TSX    RY
Current Close             $48.57
52 Week High            $61.53
52 Week Low            $43.30
EPS                             3.22
Annual Dividend         $2.16
Current Yield              4.44%

After calculating RBC's dividend payout ratio to be 67%, one might be worried about future dividend payouts. I think RBC will recover eventually seeing as the ratio was over 70% when I started writing the big 5 series. The following chart represents RBC's dividend growth from 2000 and into 2012.

The Big 5: CIBC

2011-12-10T20:08:00.002-07:00

In 1961, the Canadian Imperial Bank of Commerce was the product of a merger between the Canadian Bank of Commerce (1867) and the Imperial Bank of Canada (1875). At that time, CIBC had the most branches and most resources than any other bank in Canada.

Here is CIBC at a glance as of Dec 10, 2011:

Symbol on TSX     CM
Current Close        $71.92
52 week High        $85.56
52 week Low        $67.32
EPS                       7.33
Annual Dividend    $3.60
Current Yield         5.00%

CIBC has never missed a regular dividend payment since the first payment in 1868. The dividend payout ratio is a very conservative 49% which means the dividend will be easily maintained. The following chart represents CIBC's dividend from 2000 and its current amount going into 2012.

Happy New Year From Bell

2011-12-08T16:23:00.001-07:00

From BCE.ca:

MONTRÉAL, December 8, 2011 – BCE Inc. (TSX, NYSE: BCE) today announced a 5% increase in its annual common share dividend from $2.07 to $2.17 per share for 2012, and plans for the use of its year-end 2011 surplus cash balance that include a Normal Course Issuer Bid (NCIB) program for up to $250 million and a $750 million voluntary prepayment in December 2011 to Bell Canada's defined benefit pension plan to reduce its future pension obligation.

Just when I thought December couldn't get any better! With a second dividend increase to my portfolio this month, I couldn't be happier. My original purchase price for BCE was $27.84 with a yield of 6.5%. After the 5% dividend increase along with a few others in between, my original investment is now paying me 7.8%.

A lot of my friends and co-workers don't understand why I get so excited every time there is a dividend increase within my portfolio. The way I see it, each increase brings me one step closer to an early retirement so why wouldn't I be happy about it! The only downfall from all this is that I never purchased more of BCE while the price was right. I have enrolled in a drip for BCE and plan to make a new contribution to my TFSA in the new year and use that money to grab some more shares when the price is right.

Do you own shares in BCE?

Merry Christmas From Enbridge

2011-12-07T17:35:00.001-07:00

"(Marketwire - Dec. 7, 2011) - Enbridge Inc. (TSX:ENB) (NYSE:ENB) today announced that its Board of Directors has declared a quarterly dividend of $0.2825 per common share, payable on March 1, 2012 to shareholders of record on February 15, 2012. The dividend reflects a 15% increase from the prior quarterly rate. Enbridge also announced its 2012 guidance for adjusted earnings of $1.58 to $1.74 per share."

Well I received my Christmas present early this year. It seems like only yesterday I took a leap of faith... along with our 5 figure emergency fund and made my first purchase on the stock market. Even though the stock decreased 4% right after my initial purchase and my wife was about to kill me, I kept my cool because I knew this was a solid investment over the long term. I'd like to thank my brother for telling me about this wonderful company and in the future I look forward to increasing my holdings for the long haul.

I initially purchased my shares at $48.53 and my initial yield was 3.5%. A few years later with multiple dividend increases and amazing capital gains, my yield on my very first stock pick is now 4.65%. Making almost 5% a year on just one investment is huge, especially when the bank is paying me .25% in interest for my savings.

Do you own shares in Enbridge?

The Big 5: Scotiabank

2011-12-04T11:34:00.003-07:00

The Bank of Nova Scotia was established in Halifax N.S in 1832. Scotiabank has deemed itself "Canada's International Bank" and with good reason. They have branches in more than 50 countries throughout the world and was the first Canadian bank to establish a branch outside the United States and United Kingdom. By expanding its international operations when the other Big 5 were trying to merge with each other, Scotiabank has catapulted itself to being the third largest bank in Canada by market capitalization.

Here is a quick rundown of Scotiabank as of Dec 4, 2011:

Symbol on TSX-      BNS
Current Close-         $48.99
52 week High-         $61.28
52 week Low-         $48.02
EPS-                        $4.55
Anual Dividend         $2.08
Current Yield            4.24%

Scotiabank has continued to pay its dividend every year since its inception in 1833. With a dividend payout ratio of 46%, I'm sure Scotiabank will be able to continue the tradition for many years to come. Here's a look at Scotia's dividends since 2000. Keep in mind they had a stock split in 2004 and the dividend was adjusted accordingly.

The Big 5: BMO

2011-11-28T20:56:00.001-07:00

The Bank of Montreal was established in 1817, making it the oldest bank in Canada. In 1925, BMO merged with the Molson bank, which was founded by the sons of brewery legend John Molson. With 182 years running, BMO Financial Group has the longest dividend payout record of any company in Canada.

Here's a quick rundown of BMO as of Nov 28, 2011:

Symbol on TSX- BMO
Current Close-    $56.74
52 Week High-   $63.94
52 Week Low-   $55.02
EPS-                  $5.02
Annual Dividend- $2.80
Current Yield-     4.93%

BMO is the only bank out of the Big 5 to not increase their dividend in 2011 which is, to say the least, disappointing for a company with a market cap of $36 Billion. I've also calculated BMO's current dividend payout ratio to be 54% which is relatively low. The following chart represents BMO's dividend and how it's grown, relatively speaking, since 2000 and what the dividend is heading into 2012. That's quite the plateau BMO, you better pick up the slack!

The Big Five: TD Canada Trust

2011-11-24T19:35:00.001-07:00

Seeing as how the five largest banks in Canada are getting totally hammered on the TSX, I thought it would be a great time to start a series of five on each bank. This ties in well with my new strategy of the "Dog of the Big 5" where I purchase shares in the most attractively priced Canadian bank each year. Almost everyone uses banks to keep their money safe and almost everyone pays banking fees or mortgages. Why not take back some of your hard earned money through dividends and become a shareholder. I think I'll start off with the bank that had the hardest fall from its 52 week high, TD Canada Trust.

The Bank of Toronto was founded back in 1855 and was later merged with the Dominion Bank in 1955 to form, you guessed it, The Toronto Dominion Bank. Then in 2000 The Toronto Dominion Bank acquired Canada Trust and merged to become TD Canada Trust. TD has recently become Canada's largest company by market capitalization at an amazing $65-billion. For those of you that don't know, market capitalization is the total market value of a company's outstanding shares.

Here is a quick summary of TD as of Nov 24, 2011:

Symbol TSX -         TD
Current close price- $68.70
52 Week High-    $86.82
52 Week Low-        $68.55
EPS-                       $5.83
Annual dividend-      $2.72
Current Yield-          3.96%

As for dividends, TD has never missed a dividend payment since 1857. It currently has a very conservative dividend payout ratio of 47%. TD has increased its dividend twice in 2011 by a total of 11.5% after a two year stalemate. The following chart represents TD's dividend and how it's grown since 2000 to its current amount going into 2012.

Trim Your Utility Bills This Winter

2011-11-20T16:04:00.000-07:00

Winter is finally here in Edmonton. When I woke up this morning it was -28 °C and my furnace was working hard to keep up with my meager setting of 18°C. I never look forward to winter from a financial perspective because my utility bills skyrocket like no tomorrow. Instead of moving to BC, I stick to a strict regime of simple tasks and creative gadgets to help keep my winter utility bills to a minimum.

Baby, it's cold outside

Programmable thermostats are great for saving energy during winter and their even better when you actually install them. I've seen quite a few thermostats still in the package in friend's basements that haven't had time to install them. Also when shopping for a programmable thermostat make sure you invest in a quality product with the settings you desire. Stay away from wally-world specials that will only last a few years. Prepare to spend $75 or more for one that will last.

A common misconception is to set the heat down to 11° when no one is home and then have it cranked to 20° when there are people at home. That sudden increase of 9° puts a huge workload on your furnace and will use the same, if not more energy than keeping the setting at a constant temperature. For example, our thermostat is set to 16° at 11pm while we sleep. Then at 6 am it's set for 18° while we get ready for work and at 8 am it goes back down to 16°. When 4 pm rolls around the heat is back up to balmy 19° as the outside temperature plummets and we all settle in for a long winters nap. I personally wouldn't set the temperature difference more than 4° or else the energy savings is lost. When guests come over you can turn up the heat so you don't look like a total cheapskate. For the in-laws you can turn it down to keep visits to a minimum.

Don't be a cheapskate and change your furnace filter at least four times a year. To help me remember, I change them on the official start date of each season. I changed the furnace filter on September 21 and plan to change it again on December 21. You may also want to vacuum out your blower motor in September as well to keep it clean and allowing it to run more efficiently.

"Turn ~~down~~ OFF the lights, baby."

I am like the light Nazi in my house. As soon as I leave the room the lights are off until needed again. A lot of people think it's no big deal to leave lights on for no reason and they are happy to have power bills over $100 and upwards of $200 during the winter months; not this cowboy. My wife never thought much about turning lights off when no one is in the room. Now that she pays for the power bill herself, she's all about saving power and keeping that bill to a minimum.

When it comes to Christmas lights, LEDs are the way to go! Every year they become cheaper and cheaper and now they are very reasonably priced so I bought enough to replace our old, faded set. To be even more efficient, we purchased a programmable switch to turn the lights on for 2 hours, from 7 to 9pm each night. Not only does it save power if we forget to turn them off, it's added security for when we are not home. Criminals look for outside timers, but by having a programmable switch it gives the illusion that we might be home.

Garages are for vehicles, not junk!

If you're lucky to have a garage, don't keep it full of junk during the winter months. Make room for your vehicle(s) and save yourself from having to plug them in. My attached, insulated garage is not heated and even on nights when it's -35°C it's only -1°c inside. It makes for a pleasant morning drive to work in a heated vehicle and not having to scrap the windows. You may also want to adjust your garage door opener after a few weeks of cold weather. I noticed some gaps where I see light coming in from outside so I adjusted the amount it closes and the gaps were gone allowing more heat to stay in my garage.

If you don't have a garage and are forced to plug your vehicle in, I highly suggest you buy a timer for your extension cord. A lot of people keep their vehicle block heater plugged in over night, when really it only needs to be on for two hours prior to when you want to start your engine. A block heater is a purely resistive load, which means it's using power constantly while being plugged in. By using an outdoor timer on your extension cord, it only uses power for that two hour window which means you save a ton of money on your next power bill.

These are just a few ways you can help trim your utility bills this winter without looking like a cheapskate. The more money you save now, means even more money saved down the road from compounded growth. I'll have more energy savings tips later on after Christmas. I tend to keep the real cheap looking ones like poly on your windows and wearing sweaters and extra blankets for when you won't have guests over for Christmas parties and when the real cold weather hits. Stay Frosty, Everyone!

Regurgitated Information

2011-11-16T23:09:00.000-07:00

I'm amazed at the amount of financial blogs out there these days. There must be ~~dozens and dozens~~ millions upon millions of them in all different languages, symbols and formats. One thing I've noticed is the insane amount of regurgitated information that keeps resurfacing day in and day out. If I see one more "Top ten ways to save more money" post I'm going to lose it! There's only so many ways to squeeze money to make it last, that after a while you go from living life to scrounging the streets looking for lost change.

So instead of spitting out boring, common sense infused jargon, I'm going to give you some new and exciting ways to save money and increase your cash flow.

Collect Empty Bottles

Old world flavor meets new age environmentalism in the exciting event of collecting bottles. Normally reserved for the uber thrifty and vagabonds, you too can participate in this low demand, high reward venture. One empty bottle is worth .10 cents in Alberta. If you would collect a mere 100,000 empty bottles you would walk away with a cool $10,000 dollars in cold hard cash, tax free of course. Already have a full time job or are just too lazy? Why not have your kids do it for you! Nothing gets kids more motivated then competing for their parents love, so why not use it to your advantage. Not only is collecting bottles good for the environment, you are also taking jobs away from thousands of bums, forcing them to find permanent employment and finally contributing to society.

Cut Your Own Hair

Tired of being left out of conversations at work? Why not save money AND be the talk of the office by cutting your own hair. No need to pay a trained professional excess money to for such a meager task. All you need is a set of clippers and your imagination; the possibilities are endless! Not coordinated enough to do it yourself? Why not ask your wife to help out. You can cut her hair as well and save even more money! As the clippings hit the floor, just imagine your new found popularity and how excited your co-workers will be to see you during your next presentation. I smell a promotion!

~~Steal~~ Borrow Your Neighbors Wi-Fi

Tired of paying outrageous internet bills? Why not create an internet connection out of thin air! Yes thanks to modern technology, the internet is whizzing past your face, and possibly causing tumors, at the speed of light! All you need is a wire-less network card and a questionable conscience and you too can share in the fun of free internet. Don't worry, your neighbor has plenty of bandwidth to go around, they won't miss it one bit. If your neighbor has put up a password protected connection, try using the password "admin". Bingo, we have a winner!

We here at The Loonie Bin strive to bring quality instead of quantity to our readers. We hope you enjoyed these new and exciting ways to save money and encourage you to tell us what you would like to see more of in terms of quality posts. In no way shape or form has the author of this post been watching Monty Python while writing on his blog.

Book Review: The Strategic Dividend Investor

2011-11-12T15:40:00.000-07:00

I just finished reading a great book from author Daniel Peris called The Strategic Dividend Investor. Peris is a leading portfolio manager who works for Federated Investors which is located in Pittsburgh. I've read a few dividend investment books over the years and Strategic Dividend
Investor has bumped its way to the top.

"Trader Nation"

One of the greater points Peris makes in his book is about Trader Nation. He explains that more and more people are making money by taking advantage of near-term stock price movements. Instead of investing in the stock market, more and more people are "playing" the stock market like a game at a casino. Yes sometimes you win and some win big, but most of the time you lose.

Peris also explains the difference between investing in the stock market and investing in companies through the stock market. The stock market is full of volatility and is constantly changing on the whim of speculation. Just because a share price drops 5% in a day or week doesn't mean an established company is affected by it. Investors need to step back and realize that the quality businesses we invest in our not anywhere near as volatile as the stock market itself.

"The Strategic Dividend Investor outlines the key issues you need to address in order to create a solid dividend portfolio, including how to:

View the stock market as a business venture rather than as a platform for speculation.
Strike the right balance between current yield and dividend growth.
Learn to assess the ability and inclination of a company to pay and increase its dividend over time."

I could post excerpts from this book all day but I highly recommend reading The Strategic Dividend Investor for yourself. It's a light read compared to some text book written investment books and even hardened dividend investor Tom Connolly recommends this book too.

Road to Retirement Update

2011-11-08T17:36:00.001-07:00

Since August my wife has been working like a champ at paying down her student loans. She paid $3000 towards her student loan and only has $13000 left until her dreaded loan is paid off. In the last 3 years she has paid over $32000 and she can finally see the light. I am very proud of her accomplishment and she is amazed at the amount of money we have saved in interest. I know a lot of people only make minimum payments and choose to be oblivious to the amount of interest they are paying. Our philosophy is to get rid of it now, and enjoy the savings down the road.

On another note I have made a lump sum payment of $3000 towards our beast of a mortgage. By making that lump sum payment we save $.60 a day in interest. Laugh all you want but that's $18 a month or $216 a year that the bloody bank doesn't get! I also found out my bank allows lump sum payments right at the teller so no more annoying appointments. If I can keep up the lump sum payments I can save over $100,000 in interest and decades off my mortgage.

Once the student loan is wiped out we can focus both barrels at our Mortgage to get it paid down to a respectable level before the rates increase and we are reduced to one income when operation "stay at home dad" takes effect. We will see how things pan out because life never goes according to your plan.

Do you make lump sum payments or accelerated payments on your mortgage?

You Can't Enjoy Wealth With Poor Health

2011-11-05T13:36:00.000-06:00

One important fact that is often overlooked with most financial blogs is your health. I'm a little biased towards posting about dividend investing because I find it so fascinating, but what's the point of attaining wealth over time if you're not going to be around long enough to enjoy it! So from now on I'm going to include more postings about general health, nutrition, fitness and how to incorporate them into financially fit lifestyle.

Finding Deals Before Everyone Else

Saturday is a big event for me. While most people are still snuggled in their warm bed, I'm out shopping for groceries with list in hand of all the great deals I found the night before. I plan out what our meals are according to what's on sale and stock up of non-perishable items or frozen items when it's a super great bargain. The hardest part is only buying healthy and nutritious items while avoiding the empty calories and junk food which is everywhere you turn. There are many times my list is super short with just fruit and vegetables because everything else was either processed or junk food. By avoiding the chips, cookies and cardboard not only do we save money, but we fortify our health and increase our lifespan.

Don't get me wrong; eating twigs and moss and living till I'm 110 would be slow and painful death for me. I mean who doesn't like Oreos? The only problem is that they are made with hydrogenated oils which are super bad for your heart. So when I walk pass my favorite cookie of all time, I think about all the trans fats and keep on walking. I try my hardest to avoid anything that comes in a box or is infused with sugar, but I can't help it when the odd bag of potato chips just falls into the cart as I walk by; at least that's what I tell my wife!

Making A Conscience Effort

I know it can be hard to eat healthy when there are so many unhealthy choices around every corner. I could also sit here all day preaching about eating healthy while I myself am nibbling on leftover Halloween candy, but instead I'd like to show you what I do personally that make healthy eating a little easier.

While I'm grocery shopping or looking for something to eat, I personally think of my body as an expensive car. Now if I spent $250 000 on a car, I definitely would not be filling it up with el cheapo regular gas. I would be putting in premium fuel to make it run more efficiently and prolong the life of the engine. So if you only have one body in this life, why would you treat it any differently than a prized sports car?

It's hard to always make healthy choices in your life, but by conditioning your mind to make it a simple process of what goes in your gas tank, you can relate better to what healthy food does for your "engine" rather than filling it up with empty calories or "low octane" fuel. This thought process works really well for myself, but everyone is different. The key is to find out what works for you and to stick with it. Why not think about the government taking all of your money instead of you living long enough to enjoy retirement. That also works good too!

To my dozens of readers: What tricks or thought process do you use to promote healthy eating?

Dividend Income For October

2011-11-01T20:14:00.000-06:00

Well October has come and gone already so now it's time for the monthly dividend income update. My dividend income for the month of October is $336. As a comparison, my dividend income for Oct 2010 was $299. That means my dividend income increased 12.3% just from dividend increases alone. Take that inflation!

Just when things seemed to be returning to normal in world markets, they sure took a dive in a hurry. One of the best things about having dividend paying stock in my portfolio is that they recover so quickly due to the increased yield. Why wouldn't investors want to buy more stock when it's value priced and it gives a better return on your long term investment; it just makes sense.

I'm living proof that anyone can learn how to make their money work for them instead of the other way around. Hopefully my dozens of readers will learn a thing or two and enjoy their own journey to financial freedom.

Financial Tales Of Terror! II

2011-10-29T12:40:00.000-06:00

Halloween is just around the corner and it's time for another installment of...

Financial Tales of Terror!

As Read By: The Librarian

(For those of you who have no idea who that is, watch this clip courtesy of Hillarious House of Frightenstein on You Tube here)

My first story is about a man who purchased a big ticket item to entertain his friends. What he didn't realize is that it ended up costing him his soul..savings! Muhahahah...*cough*cough*gasp*... I call this one:

The Tale Of The Blind Sided Couch Potato

Rick couldn't wait to be the envy of his friends every Sunday. He finally found a good deal on a big screen TV he wanted from his local big box store. As he eagerly approached the sales counter, the clerk asked him if he wanted to sign up for store credit card and pay nothing for a whole year. "Hell yeah!", cheered Rick as he signed the dotted line without reading the fine print. As Rick was driving home he had a big grin on his face and thought of all the other toys he can buy with the $3000 he just saved himself from paying. Little did he know that boxed up TV was about to take him on a financial roller coaster of scary...things!

Sunday afternoon couldn't come fast enough and Rick invited all of his friends over to watch the game on his brand new big screen. "The best part is I don't have to pay for it for a whole year.", Chimed Rick. "Ooooh nice score bro", exclaimed his friends. As weeks went by, the luster of the new TV wore away and each Sunday came and passed. Summer turned to fall, and soon winter followed and time was running out for Rick to pay off his credit card purchase. "I have plenty of time to come up with the money", thought Rick.

With a week left to pay for the TV, Rick went outside to start his vehicle to go to work. After turning the key, the engine whined and black smoke started coming out of his hood. "Your engine cratered and it's gonna cost $5000", explained the generic mechanic type character as he slammed down the hood on Rick's vehicle.

With his finances tapped out, Rick had no choice but to wait to pay off the TV so he could get his mode of transportation fixed.

A few months later Rick received a letter in the mail from the big box store from which he purchased the TV. As Rick began reading the letter his face turned white and the letter fell from his fingers and floated to the floor. Because Rick took longer than 12 months to pay for the TV, he was charged a full year of 30% interest on top of the original cost of the TV. His $3000 TV was now going to cost him $3900. So much for the good deal, Rick!

Wasn't that a terrifying story of high interest store credit!... No?... Well maybe this next one will scare the life out of you. I call this one:

The Tale Of The Never Ending Loan

Janet loved working at her retail job. She would get a employee discount so she would always spend her extra money on the newest clothes and instead of putting money into an emergency fund. Even though she saved money by using public transit and living with a roommate, she loved going to live shows or go on a night on the town with the girls. Life seemed good for Janet, but what she didn't realize is that life likes to throw a few curve balls to keep things interesting.

One day Janet came to work with her $6 Mocha Latte in hand, only to find out that the store was losing money so Janet had her hours reduced. "Not a biggie, I'll just find a part time job", said carefree Janet. After looking through the newspaper she realized times were tough, and there weren't a lot of jobs out there. When she returned home that night, her roommate was waiting for her with a look of concern on her face. "Umm, I forgot to tell you that we received a letter from our landlord a few months ago, and that our rent is going up in a few days," the roommate announced. For the first time in her life, Janet felt worried. What was she going to do? She needed more money and she needed it fast.

That night she went for a walk to calm her racing mind. Suddenly it started to pour rain and Janet did not have her umbrella so she dashed under a nearby canopy. As Janet collected herself in her newly found shelter, she noticed a green glow above her head. As she looked up she saw the words "Payday Loans" flash above her, calling out like a beacon of hope. "I've never noticed this place here before", she thought to herself as the ominous thunder roared in the background.

She entered through the door and heard the door chimes ring above here head. Just then a short little man popped up behind the counter. "Well hello there, how are you little lady?" chimed the short man. "Not so good. I'm a little short this month and could really use some cash right now," replied Janet as she approached the counter. "Would you like to borrow some money, then pay us back on you next payday?" asked the short man. Janet was so relieved to hear the good news that she nodded her head with excitement and the man pulled out a few pieces of paper. The short man had an even bigger grin on his face now and had Janet fill out the appropriate paperwork without reading all the details...yada yada...let me skip forward a little bit here.....Janet finally got home with the $600. She figured she'd ask for more money since the man was so nice and she deserved to buy some new clothes to make herself feel better.

Well when the rent was due, Janet had enough money to pay all her bills and buy that new outfit she had promised herself. When pay day rolled around she decided to stop by and pay back that nice man at the pay day loan store. When she opened the door the short man greeted her as usual and Janet approached the counter. The short man pulled out the contract, did some fancy calculations on his calculator and asked for a total amount of $690. "But I thought I owed you $600", cried Janet. The short man explained to her the outrageous interest rates that cash advance businesses are legally allowed to charge and the high risks they take to lend money. Janet looked confused and thought about how she would get the extra money. The ever smiling short man leaned in close and asked her, "Would you like to borrow some more money?" Janet thought to herself for a moment and said, "You know, I could use a new outfit". The short man laughed maniacally as he pulled out more paperwork and Janet smiled nervously as she unknowingly became trapped in a debt-cycle from...Hell!

Oh my goodness, wasn't that a very scary story of financial terror? It wasn't? Are you kidding me, I was absolutely terrified at all the wasted money. I don't think I'll be able to sleep anymore..... you.. you're laughing.

Curses! I thought these stories would scare the pants off of you. I'll have to come up with some even more terrifying tales of financial terror for next year. Until then, have a happy Halloween and good bye...for now.

TFSA- So Much More Then A Savings Account

2011-10-22T01:34:00.001-06:00

Back in 2008 the federal government announced that there would be a new savings account that would allow your earnings to grow tax-free. I wasn't very excited at the time because you were only allowed to contribute $5000 and the highest interest rate the banks were offering were 2.5%. Little did I know in 2009 when I put $5000 in my shiny new TFSA that I was partaking in the most amazing savings vehicle every assembled....

If you haven't heard about tax free savings accounts yet then congratulations, you've made it out of your coma! This is a detailed account of what I've done with my TFSA. I'm sure there are better strategies out there but I spend a minimal amount of time on my tax-free trading account and it's doing very well.

Now I myself never realized the true potential that TFSAs offered back in 2009. I remember opening up a "savings" TFSA with my bank and they offered a 2.5% return. I kept my money in for almost a full year until I noticed that my interest rate of 2.5% was reduced to 1.5%. That was right around the time I started learning about dividend investing and then it hit me; if I opened a tax-free trading account, I could earn a lot more money without paying any tax.

The first business day of 2010 I transferred $10,000 into my newly created tax free trading account and purchased 200 shares of ENB. The next few days the stock price dropped and I thought the world was ending. My wife was furious with me but I fought the temptation to sell and naturally the stock recovered. Then one day in March my life changed forever; a dividend payment was deposited into my account for $85. A warm fuzzy feeling came over me when I made my money work for me instead of the other way around. From that day forward I became addicted to dividends.

By the end of 2010 the stock value in my tax free trading account increased by $1516 and I was paid $340 in dividends. That's a far cry from the $150 I would have been paid if it had still been in the crappy savings account from my bank. I noticed the interest rate from my original savings account was even further reduced to 1% while the yield in my tax free trading account increased from 3.5% to 4%. How did my yield increase while the banks were reducing their interest rates? It was all thanks to a little Christmas gift from Enbridge; they increased their dividend by 15% for March of 2011.

2011 was an interesting year for us. We had just purchased a new house and a lot of my funds were tied up paying two mortgages. I really wanted to contribute more money into my tax free trading account since the contribution room increased by another $5000. I had 100 shares of BCE in a cash trading account that I bought in 2011 and I was paying taxes on the dividends. If I stuck shares of BCE in my tax-free trading account I would deem them sold and pay taxes on the capital gains. It would only be small amount, less than $50 to be precise so I went with it and added my BCE shares into my tax-free trading account. My yield increased from 4% to 5.7% and the total dividend coming in each year increased from $340 to $599.

October is almost over now, and after the market dips of August and September and a looming economic uncertainty, my tax-free trading account is still doing amazingly well. I deposited a total of $13000 and my trading account is currently worth $18,900. Sure beats the $390 I would have made in that damn savings account I first opened.

From here on in I plan to maximize my TFSA with any contribution room I have left. I also would like to get my wife's TFSA maxed out as well, but that's not likely until her last student loan is paid off first. I will keep investing in quality Canadian blue chip stocks and re-invest the dividends to allow the maximum amount of compounding. I hope to get either a bank or some sort of consumer goods in my TFSA next, whichever gives the highest yield in the end. Hopefully when I plan to retire I will have created a self sufficient, tax-free income supply that will compliment my other retirement income. That is if the Federal government doesn't screw over my plan and change the TFSA rules on me.

What do you do with your TFSA?

RRSPs: Are They Really The Best Way To Save?

2011-10-15T15:38:00.001-06:00

For the most part of my life I've been told that RRSPs are THE best way to save for retirement. Every year I would contribute whatever I could afford in order to get nice refund cheque from the government and would feel super rich depositing it into my account. Like thousands of other Canadians, I would delude myself into thinking it was free money when really it was my own hard earned cash!

The short term aspect of RRSPs seems like a win/win situation; you contribute money to your retirement, which lowers your annual income and the excess tax you've already paid is refunded to you. Since you're penalized for early withdraws from your RRSP called withholding taxes, it stops the urge to touch that money and allows it to compound tax-free. During the last few years of becoming financially aware, I've started to question if RRSPs truly are, "all that and a bag of chips".

The Long Claw Of The Government

Now I know everyone's situation is different with income levels, dependents and items to claim so the following information is from my perspective. My wife and I roughly make the same amount of money, and we just so happen to be in the middle of tax bracket. For us to contribute enough money to sneak into a lower tax bracket, we would both have to contribute fifteen thousand dollars to come away with a large return. That's a lot of money to sock away when it could be used for paying off the student loan and the mortgage. Not only is it a lot of money, it's locked away where it doesn't make financial sense to touch it. What happens if one of us gets sick or a major incident in our life requires us to need that money? We would lose a large sum of money in withholding taxes and we would lose that contribution room in our RRSP forever. It kind of makes it seem like your nest egg is kept on the highest mountain top and is guarded by giant eagle ready to claw away at your savings if you ever want to use it. I wonder if the eagle gets benefits and a federal pension?

Death And Taxes

Taxes have become a constant in life so unless you become a vagabond with no fixed address, you better get used to paying them. I for one hate paying taxes but they are a necessary evil. Some would argue it's better to postpone paying tax until you retire. That way when you aren't making any money your tax rate will be lower when you withdraw from your RRSP. While that does make sense, there is no way to tell what taxes will be like in the future. Sure there is a possibility that taxes will be the same or lower, but I subscribe to reality and have been around long enough to know nothing ever decreases. So technically by contributing to RRSPs you defer paying taxes now, only to pay less tax in the future which could essentially be a higher amount then they are now. I'm pretty sure the government gave a HUGE bonus to whoever invented RRSPs and developed the tax laws around it. Kind of makes you want to waive a white flag and live in the woods, doesn't it?

So Now What?

Apart from stuffing money in a mattress or hiring Tina Turner to be the mayor of my own tax-free barter town, the government will get their taxes either now or in the future. Are RRSPs the best retirement savings vehicle? Everyone will have a different opinion after weighing their own personal pros and cons. One thing is for certain; they do allow you to pay less tax when you are younger and have more expenses. Majority of retired people have little or no debt, so it may prove better to postpone paying as much tax now and letting your financially backed future self pick up the tab. If you can afford to max out your RRSP each year then good on ya. I am still going to contribute to my RRSPs, but I don't think I'm going to max them out. I'd rather spread my money out and maximize my TFSA and whittle away at my mortgage instead. In the end it's at least better to contribute something then nothing at all.

To my dozens of readers: What's your take on RRSPs?

Give Thanks Edition

2011-10-08T12:13:00.000-06:00

I can tell by the rise of gasoline prices that it must be Thanksgiving weekend! I remember when I was a kid, the only important thing about thanksgiving was a day off from school. Now that I'm older it really makes me stop and think about everything I am thankful for and that extra day off from work; well that's just a bonus!

My wife and I are very lucky to have our health. As far as we know there are no problems and we both have a clean bill of health. One thing I have noticed is the rise of cancer in the population, and not just older people it's with the young people as well. I've talked to my family doctor and she says not to worry about cancer until my 40's, but I think there's nothing wrong with preventative maintenance. I used to get a physical every two years but now I started going once a year and I've tried to incorporate more exercise and healthy eating into my lifestyle. We both try to eat healthy, but we all know how hard that is when our society is bombarded with fast food commercials and the food that our grandparents ate is now called "Organic" and is double the price. I am very thankful that my wife and I both have our health, and have food in our fridge when so many in this world are sick and starving.

We are very blessed to have a new house this year. Even though we live in a large city, we built in a very quiet neighborhood that makes us both feel safe and secure. It's a great house that will last us for the next phase of our life with enough room for two little ones when the time comes. With a nice house comes a nice mortgage, but we are also blessed with two great jobs and the smarts to make extra mortgage payments each year. I am very thankful to have a roof over our heads when so many people lost their house to disaster or foreclosure.

Having great friends and family is what helps gets us through the thick and thin. My wife and I both grew up in happy families and while no family is perfect, it gave us the solid start that some kids don't have access to. It seems as I get older, there's less time available for friends, and my friends have families now of their own which makes it even harder to hang out. I think once our backyard is ready next year there will be many, many BBQ's parties for years to come. I am very grateful for my amazing friends and family. They are a great support system to have in a world full of craziness and chaos.

I know this blog is supposed to be about financial freedom, but it's important to take time out and be grateful for what we have this weekend. Perhaps look at our lives and change the things we are not proud of, or steer our life around the "rocks" that we can't change. Have a great Thanksgiving weekend, everyone!

What are you grateful for this weekend?

Dividend Income For September

2011-10-04T21:18:00.000-06:00

Sorry for the delay in my postings, September has been a very busy month for me. I've been working very hard at my job and preparing for my first Fall as a homeowner. Everyone seems to work hard for their money but since I've discovered dividend investing, I've finally found a sure fire way to make my money work for me.

My total dividend income was $368.21 for the month of September. I was probably watching T.V. or deciding which ice cream I wanted for dessert when my dividends were paid to me; that's about how hard I work for them. My dividend income for last September was $284. That 29.5% increase was brought on by dividend increases and re-invested dividend income that I used to purchase more shares. My compounding machine is coming along quite nicely even though the markets are turbulent.

INVEST OR PAY OFF DEBT?

It's very tempting to funnel money away for investing purposes, especially when the markets are low. I think it's important to find a balance between paying down debt and investing in the stock market. If you have a mortgage, you'd be a fool not to make extra payments when you have extra money to invest. It seems painful I know, paying even more money then what that bank takes out every month, but those extra payment go right to the principle which lowers the amount of money you pay in interest each month.

To show you how big of a nerd I am, I will let you in on a secret of mine. Every two weeks when a mortgage payment goes through, I compare the old balance to the new balance and find that the amount that goes toward the principle increases by .29 cents each time. My wife thinks I'm crazy but I get excited knowing my mortgage is slowly getting smaller and smaller. Perhaps I am a little "Loonie".

To my dozens of readers, do you have any quirks when it comes to paying down debt?

Road To Retirement Update

2011-09-20T22:19:00.000-06:00

I've been very busy in the last few weeks, as you might have noticed by the lack of posts. I'm trying to get everything finished in our yard before the cold weather hits next month. A lot of money has been spent this summer on our yard and the coffers are lower then I'd like them to be. I'm going to initiate a savings spree over the winter to get back on track to maximize our TFSA and put extra money on my wife's student loan. I can hear my wife sighing with excitement already!

We were carrying two mortgages for the first 5 months this year and we were so relieved when our condo sold in May. It set us back quite a bit financially and it took us a few months to get back into our regular savings routine. My goal was to put an extra $1000 down each month on our mortgage but because of the setback, I'll only be able to put $5000 down this year. That means I'm going to have to try and make up the difference next year. I guess I could always play guitar on the street corner and jam with that guy who plays the nose flute...

As for my wife's student loan, we are on track for paying it off in one year's time with $1000 being paid down each month. Once her student loan is paid off we can redirect the money towards more suitable things like paying off the last vehicle, paying down the mortgage, maximizing TFSAs or putting it towards the baby fund. We are very blessed to have two well paying jobs and could not be moving this fast to retirement without them. I know once we have kids things are going to change big time when one of us stops working, but with anything in life you have to hang on and take the good with the bad.

At this stage of our lives I thinks its more important to focus on debt repayment rather then investing, especially with all the recessions and economic uncertainty. Paying down debt is a guaranteed return on your money and once it's gone it can take a lot of excess worry off your plate and let you enjoy life to its fullest.

What stage are you at in your own road to retirement?

Give Credit Where Credit Is Due

2011-09-14T20:44:00.001-06:00

It seems that "Saving" has become a dreaded word these days. Since credit is so easily available from multiple sources it gives people a false sense of wealth so they splurge and buy what they want, when they want it. From an early age I was taught you can't always get what you want and I thank God my parents raised me that way. Too many people use credit like it's free money and they don't seem to feel the repercussions until it's too late.

Minimum Payments Are For Chumps

One of the worst things I've heard someone say is, "I have room on my credit card to buy it". They think they can afford the new purchase, but what I hear is that they are carrying a balance close to their limit and they love giving away free money each month. I bet if you asked the average person on the street, they couldn't tell you what the interest rate is on their credit card(s), yet they gladly fork over money month after month upwards of 19-29%. That's an insane amount of money, especially when they banks won't even give you a 1% return in a normal savings account. Let's say you carry a $3000 Balance on a credit card charging you 19% a year.

Credit Card Interest Paid: .19 x 3000 = $570 a year

That's a nice romantic weekend away or a good chunk of a big screen TV that your giving away because you're "livin' the life" with money that isn't yours to begin with.

Learn How To Use Credit

I have a dirty secret to share with you: I don't know what my credit card interest rate is. More importantly, it doesn't matter what the rate is because I pay my balance off every month. I use my credit card the way it's supposed to be used, as a tool for purchasing and not a high interest rate loan. The first step towards a good credit card mentality is to realize that you can only spend what you make. If your bills add up to more then you bring home in a month then you are living beyond your means. If you need to use a credit card to make it through the month then you are living beyond your means. You better cut back on frivolous spending or you're going to regret it

Make a budget and stick with it. If you find yourself heading towards a spending spree think about the consequences of your actions. I like to imagine money being thrown into a furnace when I start spending foolishly with credit. It helps me realize that the money I spend on interest is just a wasted expense.

If credit is a real problem, it's probably a good idea to only use credit cards when you have to like booking airfare, concert tickets or online purchases. Using cash lets you physically see your money being spent so when the stack starts to shrink, you begin to think twice before making purchases.

Do you have control when it comes to credit?

Dividend Income For August

2011-09-02T11:30:00.001-06:00

Where did the Summer go? It seems like I just got home from Nova Scotia and now August is over. Well in that case I thought I would start updating my passive income for each month. This is proof to all the non believers that investing in dividend paying stocks actually works and you can see the income increases as more stocks are purchased and dividends are re-invested. August dividend income isn't the highest, it's about one third of what I normally make in dividend income a month, but it all evens out in the end.

Dividend Income For The Month Of August

Shaw (SJR.B) $15.33

Royal Bank (RY) $54.00

Emera (EMA) $32.50

Total $101.83

Now as the rich people roll their eyes and click the X, I'll show you what my dividend income was two years ago.

Total $0

Now I'll show you what my dividend income was last year.

Shaw (SJR.B) $14.66

Royal Bank (RY) $ 50.00

Emera (EMA) $ 28.25

Total $92.91

All three companies I chose, as a rookie investor I might add, increased their dividend from the following year. To the average person reading this, an increase of $8.92 might not seem that impressive, but that's an increase of 9.6% and I did ABSOLUTELY NOTHING to get it. I was probably eating or on Facebook when the dividends were deposited into my account; it's that simple.

Now that I have $101.83 for doing nothing but being handsome, I'll throw it on the pile of previous dividend payments and let it grow until I buy more dividend paying stocks and keep the cycle going.

Stock Market Decline In August?

The stock market plunged? Oh, I hadn't noticed because I was on vacation in early August. What I did notice was that some stocks I had my eye on were on sale so I bought some. I increased my position in Sun Life and bought into AGF management. I wish I had more money to invest, but I had other expenses with the new house. You never win when you play the stock market, but you can make money when you invest wisely. The smart way to spend money is to buy when something you want is on sale, right? Why would it be any different when you are buying stocks. I believe the Intelligent Investor said to buy when everyone is selling so that's what I do and it makes absolute sense. Well enough investment jibber jabber, time to go enjoy my well earned day off and make the most of my four day weekend visiting family.

Have a good weekend, everyone!

The Importance Of Emergency Funds

2011-08-30T20:28:00.000-06:00

No matter how much you plan out your finances, life always throws curve balls. Engines die, hot water tanks burst and faulty parking garage doors smash your windshield *sigh*. That's why it's very important to set aside funds every month into an emergency fund. It could be $50 a month for a single person and increase from there depending on the size of your family and depending on your luck. Some people just don't get a break.

How My Emergency Fund Works

~~My wife and~~ I put $100 away a month into a simple savings account to keep an emergency bubble just in case. Some people get a case of "the spends" when they see money stockpiled in their savings account. I on the other hand have a problem seeing a large sum of money not paying down my Mortgage or any debt we have. I remember the second year of TFSA when I took our $10,000 bubble and transferred it into a tax free trading account and purchased 200 shares of Enbridge. My wife was very concerned and to be honest I was a little worried as well, but a year and a half later my TFSA contribution is worth over $13,000 and pays me a 99% guaranteed $400 a year in tax free money. As my contribution room grows so will my dividends and with that, my peace of mind.

I try and save three months of expenses in an emergency savings account in case of job loss or sickness. When I start going over that limit I started putting that $100 a month towards other things like TFSA, the house maintenance account, or special purchases. I've been told many times by my wife that a samurai sword does not qualify as a special purchase, but I beg to differ.

Need A Good Night's Sleep?

One thing I've learned since leaving the nest is that it's a great feeling to pay all your bills and have a positive bank statement. My wife slowly learned this since leaving University and now she aims to keep her balance above $500 each month. Now I know not everyone has that luxury, but with the right attitude anyone can save at least a little amount of money every month. If you can't then you are not living within your means. Back in the early 1900's people made enough money to put food on the table, clothes on their backs, put a roof over their heads and were still able to save a little bit of their money. Nowadays people have to buy big houses, wear designer labels and eat out at expensive restaurants and they have to carry a balance on their credit cards to do it . Am I the only one who sees this as a problem?

Whether you make a lot or a little, an emergency fund can turn an "oh no!" into an "oh well". If you have a hard time saving money, you just haven't had a big enough financial scare. Kick yourself in the pants and start saving small amounts of money for an emergency fund today. Your future self will thank you.

Do you have an Emergency Fund?

Making The Most Of The Grocery Bill

2011-08-23T20:53:00.000-06:00

I remember the first few days after returning from our Honeymoon. We didn't have much food so my wife decided to go grocery shopping. She went to the most expensive store in the city and bought everything at full price. When she came home and I saw the receipt I almost died! See, she was used to shopping with a credit card from BOMAD, (Bank of Mom and Dad). She didn't pay attention to prices, she just bought what she wanted and gave the cashier the piece of plastic and everything was fine. Well she saw the light after her money buys the groceries now and she leaves me in charge of finding the best prices with Friday's flyers.

"FRANKS and BEANS!"

Now before you click the X to close this window, I'm not going to preach to everyone that you can live off $15 a week for groceries by eating rice and twigs. I like food; I just don't like paying full price. I spend thirty minutes every Friday night looking at flyers to every grocery store within five to ten minutes of where I live. I make a list of everything I'll need for the week by searching what's on sale and pray the princess will like it. Cheese whiz, Eggo Waffles, and canned chili are just a few of many things that are frowned upon.

I tend to steer clear of processed food, sadly. No more delicious TV dinners, bologna sandwiches or Kraft dinner for this cowboy. Yes, processed food is sometimes cheaper, but it's also proven that it lowers your life expectancy which will severely hinder early retirement. I stick with basic, healthy ingredients which are cheaper and better for you. I look for low prices on fruits and vegetables in the flyers that appeal to both my wife and I and incorporate them into meal plans. Whenever possible I buy in bulk to save even more money.

Bulk, Bulk Baby...

Even though there are only two of us, I still buy our groceries in bulk as much as possible. Why not buy 40 granola bars at a time? Who couldn't use 8 liters of grape juice? I bought a nice freezer to store any extra perishables so they don't go to waste. Why not pay $14 for 5.5lbs of lean grown beef when you pay around $4 per pound when it's individually packaged. I just separate it into 1 lb servings with freezer bags and let it defrost the night before in the fridge.

The best thing to do is stock up on non-perishables when they are insanely priced. Toilet paper will never go bad and everyone uses it so why not buy it when it's a good price? The same thing goes for toiletries and personal hygiene, buy it low and keep your friends at the same time! I tend to buy my non-perishables at the cheaper places like Wal-mart and Superstore, and buy the perishables at Sobey's or Safeway. The quality is a little higher and the cost is relatively low in comparison to the Superstore fruit that rots before you get it home.

Their Loss Is Our Gain

Each week the grocery stores put items on sale below their cost called loss leaders. The idea is that you will stop by their store and purchase other items at the same time thus increasing the amount you normally wouldn't have spent in the first place. If it's a great deal and we need it I will usually pick it up on my way home from work. I get it for cheap, and the store manager will weep.

Stick To A Budget

Now spending $100 on toilet paper is never a bad thing, but your next meal might consist of tooth picks and a can of tuna. The trick is to make a food budget that you can live with. With just the two of us we started with $100 a week for groceries. We found we could lower that to $75 and still eat well, allowing us put that $100 towards something else. Find what works for you and try your best to stick with it. If you go over budget don't panic, just spend less the following week to make up for it.

For the most part eating healthy can be cheaper. If you fork over extra cash for expensive organic food then you will need a large food budget. You best bet is to hit the farmers market in the summer or find independent growers to find organic food much cheaper than the grocery stores. You'd be amazed at the money you save if you head to the store with a well planned out list; and you don't have to become a coupon fiend either. Try it out and see for yourself.

Do you make a plan when it comes to groceries?

Sweat Equity

2011-08-18T20:09:00.000-06:00

Since buying a new house this last winter, I never seem to be able to catch up on my savings. New furniture, appliances, cellular blinds, fence, landscaping; it just never ends! I even sold my amazing BBQ just to seal the deal when we sold our condo (I'm not going to lie, I really miss it). I know these expenses are part of a new home ownership, but there are ways of cutting down on the cost. I'm talking getting down and dirty with sweat equity.

Time Is Money

The wealthy call it being cheap, but I think sweat equity is a smart way to save money. It's a good feeling to work hard all day and to actually see the fruits of your labor, but there are some limitations. Depending on your skills in construction, motor skills and coordination you may just want to sit this one out and supply beer to your less inept friends or co-workers.

I myself work in construction so I am right at home when it comes to home maintenance and home improvement projects. My neighbors are computer programmers and were going to have a fence built by a contractor. I told them I would compromise and have the 6x6 posts installed by the contractor and would rather build the rest of the fence myself. They agreed and I saved myself a pile of money by doing the work myself. My other neighbor got a quote for his landscaping at tally of $4000 for dirt, final grade and sod. I bought the dirt for $700 which included the guy spreading it out with a bobcat. It took me an afternoon to level it out for final grade inspection which cost me $200 from a guy who did it part time. Then I bought the sod for $1000 and by the afternoon I was watering my new lawn.

Grand total: $1900- A far cry from what my neighbor paid and there's money in the bank for shrubs, bushes and a shed.

Start Small And Work Your Way Up

You don't have to work in construction to put sweat equity in your home. Start small with easy tasks and as your skills progress, take on more challenging jobs down the road. The last time I checked it wasn't rocket science to shovel dirt or mix concrete. The internet is an amazing source for do-it-yourself'ers. There's lots of step by step instructions out there and you can print them off for easy reference. Take some time and learn each tools name and its function. Get comfortable with power tools and learn to use them safely.

Home depot has drop in classes on the weekends to teach basic home renovation projects. If you do hire a contractor, get your money's worth and ask them lots of questions to help you learn directly from the pros and increase your overall know how.

I think building a fence and getting the landscaping finished is enough work for this year seeing as we only had our rough grade approved in July. I left a large area for a vegetable garden to be ready for spring and I look forward to having fresh produce next year. So that just leaves a deck, brick fire pit area and shed for next summer. Time to start saving so that the only thing I have to worry about is the mosquitoes!

What have you done to put some sweat equity into your home?

Creating A Retirement Plan

2011-08-13T12:39:00.000-06:00

The first step to any successful retirement is... to have a plan! Yes, having a plan may seem obvious, but a majority of North Americans have no clue when they want to retire or how they plan to finance it. Some people even plan on winning the lottery to finance their retirement. All I can say to that is good luck! So what's my plan?

I started saving for my retirement from an early age. Ever since I can remember getting a pay cheque as a teenager, each month $100 was deducted from my account and was invested in mutual funds. I had no idea what mutual fund it was, but I trusted our family friend who signed me up for it and never thought twice about it. I didn't have a solid plan back, but at least I started saving for it. I work with a lot of people who are 20 - 27 years old and they have absolutely nothing saved for retirement and the more I talk to them about retirement savings, the more they ignore me. To each their own.

Now that I'm married and in my thirties, I have a more detailed plan of when I'd like to retire and how I'm going finance it. Right now, the age I'd like to retire at would be 50. Since my wife does not share my financial savvy, I've pushed my official retirement age back to a more realistic number of 55. That gives me 23 years to pay off my mortgage, possibly raise two children and save up enough money to be financially free. Now that I have an official time line, my goals that I must accomplish along the way can be carefully planned for and more easily executed with a rough plan.

Goal No. 1- Pay off the mortgage

My wife and I just bought a house last December. We both have good jobs so we moved from our condo to a nice two story in a very nice and quiet neighborhood in Edmonton. We basically doubled our mortgage and now have a balance of roughly $300,000. For now, I put $1000 in an account each month that is strictly for emergencies only (Not the BOGO at the shoe store like my wife suggests). Every 6 months I transfer the funds from the emergency account and make a payment on the principle of our mortgage. How do I keep from spending that money on a motor sports or tropical vacations? Simple! I think about the interest that a $300,000 mortgage generates at these low interest rates and then I imagine when they climb above 8% and my mortgage payment doubles. For me that's all it takes. By making these extra payments and piling on any extra money that may surface, I plan to have the mortgage paid off in 13 years. Am I crazy; yes. Can it be done; yes.

Goal No. 2- Raise Two Children

Even though we don't have kids yet, my wife and I plan on raising two children. Why only two kids? One parent per child seems like an excellent ratio for family fun and supervision purposes. Yes kids take a lot of money to raise, but I'm pretty sure they don't cost as much as everyone says. My kids are not going to wear major labels until they pay for them with their own money. I've already devised a plan to pay for post secondary education while saving for my own retirement using a Tax Free Trading Account. Every year I purchase $5000 worth of dividend stock. Each year I re-invest the dividends to purchase even more shares. In 20 years I will have invested over 100,000 in my TFSA and depending on dividend growth, my return on my investment should easily be above 10%. If $14,000 tax free a year isn't enough to help my child out for secondary education, then they are going to take up a trade. When the kids are done secondary education, then the dividends are reinvested until I retire a few years later.

Goal No. 3- Saving For Retirement

When it comes to saving for retirement, I basically save 15% of my yearly earnings. Through my work they have an RRSP matching program that will match up to $1.50 an hour. They also have a share purchasing program as well so I can invest up to 5% of my yearly earnings in my company's stock and they will match what I contribute. We also contribute $10,000 a year to our TFSA and grow our nest egg tax free.

I used to invest my money in mutual funds just like everyone else, but I found a better vehicle that is a proven strategy to make my nest egg grow and keep growing even during retirement. I invest my RRSP and TFSA money in Canadian dividend paying companies which regularly increase their dividends. My total dividend income for 2010 was $2696.00 and my yield for dividends was a guaranteed 4.78%. My total dividend income has now increased with dividend increases and additional purchased shares. My 2011 dividend income is now $3432.00 and my yield is 5.04%. Not bad for just starting out. I could only imagine how big my nest egg would be if I started this strategy from the beginning.

Now of course no matter how much you plan for it, Life Happens! Things always change and my strategy can be stalled or re-directed, but at least it's here for a rough guide and example for others.

Do you have a plan for your retirement?

The Loonie Bin- Mobile Addition

2011-08-05T08:02:00.001-06:00

Greetings from Cape Breton, Nova Scotia! I've been on holidays for the past week and it's been really nice to escape the hectic life of the big city. I downloaded a blogger mobile app to create this post and I'm not sure how it's going to turn out so please bear with me.
In my journey to financial freedom there's one important lesson I have learned which is often overlooked and that is; life is short! 
I've met a lot of people who always have to work and never take vacations. They slave away and are obsessed with the all mighty dollar, squirreling away any money they can so they can retire early. What these people don't realize is that by the time they retire, their mind and body is so worn out that they can't enjoy retirement. What's worse, you could work yourself into an early grave and your nest egg of savings will be given to someone else! Like anything in life, you need to find a balance.

My wife and I both work full time and after a long week of work and house upkeep, we throughly enjoy a weekend of relaxing. Whether it's spending a few hours out in the garden, going for a long walk or watching a movie, we try and make the most of it without spending a lot of money. The money we save by living this way we put towards a trip every year. Sure we could save that money each year and retire that much sooner, but I would rather live life while I can and save more efficiently for retirement.

Everyone seems to work hard for there money, but why not have your money work hard for you! Ever since I started investing on my own my nest egg has done very well in comparison to investing in mutual funds and contrary to popular belief, it's just as easy as online banking.
Even now, with the stock markets heading into the toilet, I sleep like a baby because I know that I'll still be making over 5% this year. Better yet I'll be making 6% next year and 7% the next thanks to investing in dividend paying stocks.

The next time you find yourself stuck in a rut, take a break from the rat race and learn to enjoy the little things in life. Take a walk and stop and smell the roses once in a while. Eat your lunch outside if possible and watch the birds or squirrels. Enjoying nature is free for everyone and is a great stress reliever.

So the next time you feel like money is ruling your life, take a step back and remember to find a balance.Life is short, so don't let it pass you by.

The Squeaky Wheel Gets The Oil

2011-07-29T22:33:00.001-06:00

I've never been a fan of cell phones but they are hard to avoid this day and age. I was able to keep my last cell phone for five years and until recently it worked fine for me. I'd keep it on me at work in case anyone had to get a hold of me for emergencies; even though my wife felt it was justified to call me during work hours to tell me that a Victoria's Secret was opening in West Edmonton Mall as soon as she found out. Well after five years, and since the phone would barely ring anymore, I decided to upgrade to a smart phone. I knew I wanted an Android phone because Apple is too greedy, and Windows phones just don't compare. I decided on a Motorola Atrix because it was the fastest phone available at the time.

I really like it since now I can check my stocks during coffee and play the odd game of Angry Birds when I have a few moments. My new Cell Phone plan I signed up for was $65 and seemed fair since my old plan for a cell phone which had a calculator, told me the time and had no call display was costing me $33.

A week after getting my new phone, I got a call from Bell wanting me to upgrade my phone. I told them I had just bought a new Atrix and their response was, "Oh...good." I was curious what they were going to offer me seeing as they took the time to call me and they said basically the same plan I have. I casually asked if there was any way for them to make it an actual deal and the salesperson put me on hold. A minute later they came back and said they could offer me 10% off my bill each month. I said sold and my monthly bill was magically reduced to $59.

It was a great feeling to get a deal like that when so many people would have just hung up or not asked for something. My high was cut short after the first bill arrived. My cell phone bill went from $33 a month to $119. My mouth dropped and after reading through my bill, it turns out they charged me a fee for a hardware change of $35 and the rest was a retro bill for my old phone/ new phone switch over. I called up Bell and asked them to explain every part of my bill to me because it was literally a mess. Charges were deleted and others were re-applied and even the rep said it was confusing. I told him I was a little upset about my cell phone bill going from $33 to $120 and he said he can't change the cell phone billing, but he could waive the $35 new hardware charge. I was very relieved to hear that and I told him that would make me a satisfied customer again.

So many people would have complained about the bill and just paid it, but after taking some time and talking to the right people I was able to save that extra money. I've also noticed over the years that if you call and complain about unfair charges to a service provider, it really depends on who answers your call. Most of the time the person on the other end can't help you and you hang up feeling frustrated. Other times you call up and the person on the other end seems to be jumping through fiery hoops and putting their job on the line to totally fix the problem.

My theory is that the people who don't help you are probably brand new and are following proper company protocol so they won't get fired. The people who do help you out probably have been working there a long time and WANT to get fired by any means possible. My advice is to write down the name of the person who is helping you. If they don't fix your problem, call back again and if the same person answers, hang up and call back until you find someone who does help you. I never ask for the manager because that probably pisses them off and makes them less likely to help you out.

Depending on the situation, the squeaky wheel does get the oil. Be warned though; the squeaky wheel can also be replaced so use your discretion, especially at the workplace! If you feel weird when complaining about extra charges or asking for a deal remember one thing; it never hurts to ask.

I'm Back

2011-07-27T23:01:00.000-06:00

After a long needed break, I've decided to return to The Loonie Bin. Instead of focusing mostly on dividend investing, I'll be writing about my journey to early retirement and all the steps in between.

Stay tuned for regular updates and a new look for The Loonie Bin in the next few weeks.

2011-04-03T09:43:00.000-06:00

Scotia Bank Dividend History

2011-03-13T15:46:00.001-06:00

Now that BNS has increased its dividend last week, let's take a closer look at its dividend growth for the last 15 years.

With an average increase of 12.89% every year, BNS is a strong addition to any dividend growth portfolio. If an investor bought shares on Jan 2, 1996 the cost per share was $30.25 and the yield was a mere 1.05% . If that same investor held on to those shares over the years, the return on that initial investment would now be 6.87%.

Personally I would not have bought in with such a low yield, but it does show you that there is a potential for growing returns over the years that keeps your investment ahead of inflation. You'll be happy with your increasing dividends when a loaf of bread costs $20.00 in the near future, trust me!

CIBC is the next big bank in line to declare its dividend and hopefully they follow TD and BNS with an dividend increase; only time will tell.

Have a good week!

Scotia Bank Dividend Increase

2011-03-08T16:47:00.001-07:00

Although you wouldn't have known it from the 1.43% loss today, BNS raised its quarterly dividend by three cents to $0.52 per share. That's the second major bank to raise dividends since 2009 and that 6% increase will be welcomed with open arms to patient dividend investors.

I had the chance to buy shares at $46.50 a share but I ran out of funds when I sold all my mutual funds. Had I done that, my return on my investment would have gone from 4.2% to almost 4.5%. Not a huge increase, but it will keep inflation at bay and get the ball rolling for the other big banks.

Which Canadian big bank will raise its dividend next?

TD Bank Dividend History

2011-03-06T16:18:00.000-07:00

Now that we finally have a dividend increase from one of the big five Canadian banks, let's take a look at the dividend growth history for TD bank for the last 15 years.

Compliments of Think Dividends

At first glance TD's dividend growth may look like it's all over the map, but it averages just over 12% per year. That's a very solid dividend growth record even though there was no increase in 2010.

If an investor had bought TD shares on the first trading day of January 1996, they would have paid $24.63 per share with a yield of 4% on their initial investment. If the shares were kept over the last 15 years, the yield on that same investment would be 10.71%. That's the meat and potatoes of dividend investing right there; a proven, growing return year after year that allows your investment to stay ahead of inflation.

If only I had someone guide my investments back then instead of being stuck in the mutual fund rut like so many others. I probably would have been able to shave four to six years off of my retirement date. C'est la vie! Oh well, the way I see it now is every dividend increase brings me one step closer to financial freedom.

Have a good week everyone!

TD Dividend Increase

2011-03-03T16:49:00.001-07:00

It's nice to come home after a long day at work to hear about a dividend increase. TD Bank has increased its quarterly dividend from $0.61 per share to $0.66 which is an increase of 8.2% .

My yield on TD went from 3.68% to 3.98% and brought my total dividend yield up .02%.

I was sure Royal Bank was going to announce a dividend increase today as well seeing as the share price rose 5.23% but alas no. Perhaps CIBC or Scotia Bank will have a dividend increase for us next month.

Any predictions as to which of the big 5 will be the next to raise their dividend?

Possible Stock Split

2011-02-26T09:55:00.001-07:00

Well it was officially clarified yesterday that there might be a possible stock split for Enbridge share holders.

"(Marketwire - 02/25/11) - Enbridge Inc. today provided clarification with respect to the proposed two-for-one stock split announced February 22, 2011.If approved by shareholders at the Company's Annual and Special Meeting May 11, 2011, the record date for the stock split is expected to be May 25, 2011."

So what does this mean for my Enbridge shares? Basically my shares will double and the value and dividend will be halved. Some would argue that you don't gain anything with a stock split, but I see it as an opportunity for stock growth.

When talking to people about investing in solid companies the first thing they ask is, "How much are the shares?" When I tell them that they are over $50 a share the response is usually "Wow, that's expensive!" Most dividend paying stocks tend to be stagnant once they rise over $60. Depending on the dividend, as the yield starts to decrease, so does the appeal to investors. By lowering the share price, you allow more investors to buy in which increases earnings for the company. Enbridge has split their shares in '99 as well as '05 allowing more investors to buy in at a more affordable price.

From what I've seen with stock splits, there is usually spike in share price before the stock split occurs. If you purchased ENB at its current value of $57.75 and it increased $3.00 before it spilt, then you would be ahead of the same person who bought in at $30.38. I will be buying more ENB next month because I am very confident that my Enbridge shares will be with me along the road to early retirement and beyond.

(Disclosure: Long ENB )

Rogers Dividend Increase

2011-02-20T21:03:00.001-07:00

Sorry for the old news but I've been without internet access for the last few days and we headed out of town to Grande Prairie for the long weekend. Once I was able to log on I found out the Rogers communication's board of directors had increased their annual dividend by a solid 11% from $1.28 to $1.42 which is a very nice increase.

Recently RCI.B had dropped from a high of over $41 a share to almost its 52 week low and personally I was ready to sell some shares to buy some JNJ to put in my RRSP account, but I'm very glad I changed my mind. Seeing as RCI.B is close to it's 52 week low I reckon it would be a good time to nabb some shares as share prices tend to rise after dividend increases.

I promise to update the stock watch list when I get back to Edmonton tomorrow afternoon and I will be adding some new elements to the Loonie bin so stay tuned for new Flash animations and updated graphics.

Have a great weekend.

RRSP Challenge

2011-02-16T18:02:00.000-07:00

It's that time of year again and one thing is for sure; If I read one more RRSP blog post I think I'm going to be sick. Just kidding! Although there are thousands of them out there, my post is a little different.

Ever since I can remember, I have been told to save money for retirement in an RRSP. Any money I contribute will be deducted from my income and I'll get some of the money I paid in taxes back from the government. Like most people, I was always excited to see that government check in my mailbox and It felt like I was getting free money. In reality it was MY money to begin with and the government was collecting interest on it and I was not.

It seems a lot of people think that way when it comes to tax time. I've even heard of people telling their employer to increase the amount of taxes they take off their pay cheque each month just so they have a huge refund at the end of the year. It is fair to assume that these people are not financial wizards and the only way they could amass a large sum of money is having it hidden from them. If I can just help one of these "over payers" to stop this silly strategy and see the "light", then maybe there is hope for this blog after all.

I have devised a strategy that allows me to pay less taxes throughout the year, and then end up owing the government money and not paying it back. My employer matches my RRSP contributions all year long and reduces the amount of taxes I pay each month. Basically my refund is distributed equally across twelve months which means my hard earned money is available to me every paycheck. No more free interest for the government to collect on my hard earned money and only pay me back the principle amount. I use the extra money every month to pay down debt so that the principle is reduced over the whole year, minimizing the amount of interest I pay overall.

So when February rolls around, I purchase Quicktax (I know it's called turbotax now, but that name is stupid ;) and I enter all my tax forms and I figure out what it's going to take to get me owing $1.99 in taxes. Why $1.99 you ask? Well the Canadian government has a policy for money transactions that if the amount is less the $2.00, then no money is owed or paid out. I first learned about this when my refund of .75 cents was not paid to me a few years ago, and ever since that day I've made it my goal at tax time to end up owing the government money and not having to pay it. Even though it might seem futile, it's the only legal way of getting back at them. Plus it makes me feel better.

I challenge all my readers to owe the government money without having to legally pay this tax season and enjoy the feeling of screwing over the government, no matter how insignificant it might be.

Dividends: The Ultimate Tenant

2011-02-07T21:31:00.005-07:00

In my last post I talked about a potential rental property and the pros and cons of being a landlord. Even though our condo would make an excellent rental property, we chose to list it and forgo the headaches that renting to tenants would bring. Finding the perfect tenant is like finding a needle in a haystack. Someone who would pay the rent on time, take care of the place like they owned it, would rent from you for the long term and would increase the rent on their own merit according to inflation. If only such a tenant would exist....oh wait, they do!

Hello Dividends!

Dividends as tenants you say? Why not! There is no human being on earth that can compare to a dividend payment when it comes to renting.

They pay the rent on time

Dividends are either paid quarterly or monthly depending on the stock. I see dividends deposited into my trading account like clockwork with no NSF showing up, no excuses and no leg work on my part. My dividends are so efficient at paying "rent" that I don't even have to keep track of them.

Absolutely no upkeep

For some reason, human beings like to make holes in walls. Dividends don't. Dividends are well mannered and they don't feel the need to cause leaks, scratch walls, start fires, dent ceilings, wear out appliances, wear out flooring, smoke, have pets with weak bladders, leave the lights on because utilities are included, or feel the need to have parties. Actually, dividends can have as many parties as they want. There is nothing better than more dividends.

Long Term Income

Dividends don't need to move, or choose to one day own a home. They are quite content to live in my trading accounts and to grow more dividends over time. You may have to look for more companies to invest in that have a proven dividend growth history, but they are a lot easier to find than good tenants.

Keep up with inflation

Inflation increases the cost of goods and services, and dividends don't mind increases in "rent" to offset the costs. As dividends are increased over time, it allows your retirement dollar to keep its buying power for the long term. No renter ever likes rent increases, but when the landlords property taxes and utilities go up, the rent is sure to follow.

Although dividends are not 100% guaranteed to be paid, there is nothing, and I mean NOTHING more guaranteed in life then dividends. If a company were to up and cut their dividend completely, you could evict your shares from your trading account for not paying the rent and sell them. Trying to evict tenants for not paying the rent on the other hand is a long and frustrating battle.

Some might argue that a rental property's value increases over the years more predictably then an investment would. The only problem with houses getting older is that the materials they are built from do not last forever. New windows or a new fence might not seem like much trouble, but when houses get to 40 or 50 years and the roof and foundation starts to go, then things start to add up. And while your fixing all these problems, where do your tenants live? No tenants means no income.

Personally I'd rather stick with dividends paying me rent then a tenant any day. No crappy renters, no phone calls to fix the furnace, and no time spent in small claims court to recoup unpaid rent. I'll let the power of compounding increase my investments over time more effectively than any appreciating piece of property. I can just imagine the money I will save on Tylenol alone!

FYI

The dividend list is now available from under the main menu in case you are all wondering.

Renting Property

2011-01-30T23:13:00.003-07:00

It's been over a month now since we moved into our new house. The condo we lived in previously is listed on the market. I bought the apartment style condo when I was a single guy because of the location and the 1100 sq ft meant it was big enough for a small family for the future. It's located two blocks from a future train/transit stop, and only one block away from grocery stores, drugstores, a liquor store, all five major Canadian banks AND a Tim Hortons! Since it's situated in such a convenient location and it's fairly large, the thought of renting it had crossed my mind. I thought of all the great tax breaks that are available for rental properties and the sound of the cash register started to chime. Then I heard the record scratch ...Vrrrp. Reality set in and I remember why I don't want to be a landlord; dealing with renters.

I can hear the cries of fallacy from Vancouver and Toronto already so please hear me out first. Any time I talk to people who have rental properties in Edmonton, the only complaint they have is finding good tenants. Yes there are many good tenants out there, they just seem to all be renting a place already. For the sake of simplicity in this post, I will refer to good renters as tenants and bad renters as...well, just plain renters. Tenants pay the rent on time, clean up after themselves and treat their rented dwelling as their home. Renters pay when they have the money, clean when the landlord is coming and treat their dwelling like a rented automobile ( Don't act like you've never bagged on a rental car before, everyone does it!).

Tenants do exist but they are indeed a rare commodity. Even if you do find a good renter it's only a matter of time before they move out again. You could find yourself without a tenant during slow housing markets and have an empty property and no income. Finding a good tenant is only one part of the rental property experience.

The Bad

Landlords supply shelter, and the tenants pay a sum of money in compensation, but what happens if they have a renter and they don't pay? Or what happens if a renter breaches the tenancy agreement by damaging property or performing illegal activities? The landlord has to give written notices which the renter has the right to counter with their own written notices and then both parties must have the courts involved. Sounds like a very long and expensive process to me.

With property ownership comes maintenance, upkeep, insurance, property taxes, legal counsel and liability. You could pay a property management company to look after your rental property but it does take a big chunk out of your income. There is a lot of work to rental property and whoever calls it "passive income" has never had to get a furnace changed on a Sunday night on the coldest day of the year with tenants that have a baby...yikes! There may be a lot of negative points to renting property, but there are some good ones too.

The Good

If a landlord does find an excellent tenant who pays the rent on time, and takes care of the place, then having a rental property is a goldmine. The rent covers all the expenses and either pays the mortgage for the property or might just be money in the bank. If a landlord has more than one rental property, they might have enough rental income coming in to be self sufficient and not have to work. Their days could be spent golfing or perhaps take part in that mixed martial arts class they've always wanted to try.

Once you have a rental property, there are some very nice tax breaks that go with it. Any insurance, property tax, condo fees or utilities are tax deductible. Cha-ching. I also found out that any upkeep maintenance and labor performed by a contractor are tax deductible as well. Cha-ching. And unlike in the U.S, interest from a mortgage is not tax deductible in Canada...unless it's a rental property! CHA-CHING! Rental income is taxed at your current income level, but with all the tax breaks you get, you'll be getting a huge refund from the government.

As time goes by, the value of a rental property will also be increasing depending on the housing market of course. Unless you buy property in a swamp or close to a nuclear reactor the value will always go up. As the equity in your property goes up, the more credit you will have to buy more rental properties and thus slowly build up a rental empire and become a true lord of the land.

Will I ever be a landlord? Maybe, but the ratio of tenants to renters is a scary thought. What would you do in my situation?

Friday Dividend List Edition

2011-01-28T19:38:00.001-07:00

Well it's Friday and another roller coaster of a trading week has passed. Any gains have been neutralized by violence that erupted half way around the world. Saputo on the other hand is the only company I have seen who recalls products and their stock price keeps moving up like a freight train. I have my eye on BMO as it is inching it's way closer to it's 52 week low and Royal Bank seems to be the underdog of the big 5 banks in 2010. It's been a proven strategy to buy the underdogs of the banks each year because they have no place to go but up.

I apologize for the lack of updates, but since I started working 6 days a week my free time is very limited. I had to re-vamp a few posts I had planned to publish, but I should have one ready by the end of the weekend.
5:30 AM sure comes quickly on the weekends.... Have a good one!

CNR Keeps On Chugging

2011-01-25T19:18:00.002-07:00

I found out today that CN's Board of Directors has approved a 20 per cent increase in the Company's quarterly cash dividend. "A quarterly dividend of thirty-two and one-half cents (C$0.325) per common share will be paid on March 31, 2011, to shareholders of record at the close of business on March 10, 2011."

CN has increased its cash dividend for 15 consecutive years since its initial public offering back in 1995. Although it would be a great stock to own, CNR is close to it's 52 week high and even with a20% increase it's yielding close to 1.91%. CN is a solid company and if there's another dip coming, I would love to pick up some shares closer to $50.

Do any of you own CNR?

Dividend List Jan 21, 2011

2011-01-21T23:17:00.002-07:00

Here is the new dividend list as promised!

The list has changed a bit since the last update so here are the details:

Stocks listed with a blue highlight have had dividend increases since January 2010
Any yields over 4% are highlighted in green
I've added 52 week highs and lows to show opportune times to buy
List will be updated every Friday

I know many of you are wondering how I arrived at my choices for this list. I've chosen 23 stocks that I feel are good dividend growth stocks that have a history of dividend increases. Yes, majority of the banks have yet to increase dividends since 2008-2009 , but investing in Canadian banks is always a sure bet. I know all the Tim Horton zombies are wondering why it's not there and I chose not to include it until it has a bit of dividend growth history. I left out a few good stocks like TransCanada, Telus and Manulife because of the mortal sin they have committed, "Dividendem Slashticus". Perhaps after a few more years of dividend increases and a few rosaries they will be added. I am still skeptical of converted income trusts as their dividends are very unstable. With time and a history of dividend increases, some new corporations might be added.

Hope everyone has a good weekend!

Reflection and 2010 Dividend Report

2011-01-18T21:58:00.000-07:00

Well my journey of dividend investing was off to a good start in 2010. I made some mistakes and strayed from my strategy, but I learned my lesson and recovered fairly well for a novice investor. I now have a concrete strategy and I am determined to stick with it.

I am very passionate about dividend investing and I created this blog to share my knowledge with family and friends so that they could see how easy and effective self investing can be. The Loonie Bin has been a great medium for sharing my passion for dividend investing with others and I am very happy with how it has turned out. I am not a professional writer nor am I an accredited adviser. There are thousands upon thousands of financial blogs on the Internet and I have no intention of trying to compete with any of them. I will never have annoying ads or linked words because it's annoying and it makes finding the information in a blog very difficult. I have a small following and I'm very content with having a small following. The only payment I receive from this blog is the satisfaction of helping others learn about dividend investing. With that being said, I have deviated from my initial approach of adding humor to my posts to set me apart from the thousands and thousands of other investing blogs and in future posts I hope to remedy this. Yes, there are way better blogs out there, but somehow you ended up here. Lucky you!

Anyways, on to the good stuff.

After transferring and selling my existing mutual funds in the first quarter of 2010, I purchased quite a few shares of dividend paying companies from across the board. My total dividends from the second quarter worked out to be $2500 per year. After pooling the dividends with contributions through the rest of the year, my dividends total for Jan 2011 is now $3038. I am very happy with the progress of my dividend income and can't wait to see what 2011 will bring.

I will be posting my updated stock list this Friday with a few more companies and some added features that should help take the guess work out of choosing the right companies to invest in.

To my dozens and dozens of readers: What are your total dividends going into 2011?

Shaw Dividend Increase

2011-01-13T16:46:00.001-07:00

CALGARY, ALBERTA--(Marketwire - Jan. 13, 2011) - Shaw Communications Inc. ("Shaw") (TSX:SJR.B) (NYSE:SJR) announced today that its Board of Directors has increased the equivalent annual dividend rate to $0.92 on Shaw's Class B Non-Voting Participating Shares and $0.9175 on Shaw's Class A Participating Shares. This represents an increase of 5% or $0.04 per share. Shaw's dividends are declared and paid on a monthly basis and this increase will commence March 30, 2011.

After a cold, miserable day it's nice to come home to some great news. After great debate whether Shaw would have the capital to increase their dividend after the purchase of Canwest AND their attempt to enter into the cell phone market, Shaw came shining through to patient investors. I am a Shaw Customer and subscribe to all three services of TV, Internet and Telephone.

I purchased SJR.B last year at $20.04 per share and my yield has increased from 4.39% to 4.57%. Not a huge leap, but a 5% dividend increase is healthy sign Shaw is on the ball and it's dividend growth history is on track. To those of you who own Shaw, here's to being one dividend increase closer to financial freedom. Cheers!

It's TFSA time!

2011-01-06T23:16:00.000-07:00

I remember when tax free savings accounts were announced a few years ago. I thought to myself that it would be a great way to save money and not pay any tax on the interest I earned. Like most Canadians, I was oblivious the true potential that a TFSA could offer a smart investor. I remember I was offered an interest rate of 2.5% and within 6 months that rate dropped to below 1%.

Now that I have become "Financially Aware", I invest my money in dividend paying stocks with a tax free trading account. By investing in stocks with proven dividend growth, my return will grow each year with each dividend increase. Last year my return was 3.5% and after a dividend increase last month, my return is now 4%.

On January 3rd I called my online broker and told them to transfer $5000 worth of BCE stock from my cash account to my tax free trading account. The amount of dividends that accumulated in my TFSA last year was $340. With my new contribution for 2011 my dividend total will be $575. It doesn't matter how much the value of the stock goes down, I will still make $575 in dividend income.

I could take that money out at any time, but instead I'm going to re-invest it to buy more shares which will in turn pay me even more dividends. By contributing the maximum amount each year and re-investing the dividends, I will be able to turn a small amount of money into a nice chuck of retirement change thanks to the power of compounding; transforming my TFSA into a compounding dividend machine. If I need money for any reason I can withdraw the dividend income tax free, and not have to touch the principle investment. The longer I leave the dividends to be re-invested, the more money will be available the following year. In 20 years, I will have a growing tax-free income to possibly help pay for a child's education or allow me an early retirement. The possibilities are endless.

I know not everyone can afford to make the maximum contribution of $5000 each year, but it's a good idea to save as much as possible to utilize the potential of this amazing investing opportunity.

Time To Get Financially Fit

2011-01-03T21:49:00.002-07:00

A new year is upon us and while everyone makes New Year's resolutions to start exercising or stop smoking, no one seems to worry about their financial fitness. Becoming financially fit doesn't take a lot of work like most people think and with the advent of computers and the Internet it's even easier. Most banks have automatic withdrawals so people with absolutely no sense of financial control can save for a rainy day.

I'm amazed how so many people are apathetic when it comes to their finances. For the most part, I blame easy access to credit. Don't have enough money to make it through the month? Just charge it! People seem to think credit is the answer to everything, and the worst part is they don't seem to mind paying 19-30% in interest charges either. As long as they pay the $20 minimum on their $2000 balance, the creditors are kept happy and card holder is content paying up to four times the original purchase in interest. To me, that is ludicrous but sadly it's becoming common practice.

What's even worse is the attitude we have towards retirement. Why save my money for tomorrow when I can spend it today? Inflation increases on average 4% each year, and the amount it takes to retire comfortably is growing at an alarming rate. Just wait till the baby boomers start retiring in the next few years and how the lapse in the amount of taxpayers and the increase of health care demands are going to have a major impact on the economy.

So how does one become financially fit? I've created a list of just a few steps people can take to whip their finances into shape.

Step # 1: Choose To Change

Like any regiment, you must have the determination to succeed or you will never change your ways. Becoming financially aware is a life changing ordeal. I wish I had a crystal ball to show people that in 30 years it's going to take over a million dollars to retire comfortably and scare them into shape; but I don't and they are going to find out the hard way.

Step #2: Pay Off Consumer Debt

Pay off your credit cards! You're only hurting yourself with criminal interest charges. If you pay off your balance each month, you can use your credit card as an interest free loan for 6 weeks and really stick it to the man when you use their money and not pay them any interest.

Step #3: Live Within Your Means

Stop spending more then you make! Make a budget, pay off your bills, proceed to step #4 and then allocate any extra money on the frivolous things in life. "If you live by the label, you die by the receipt!™"

Step #4: Save Your Money

There's nothing more reassuring then seeing a positive balance in your account after the bills are paid. There is a definite high that one feels and I for one have felt it, and after getting married my wife said she started to feel it as well. Having a safety net protecting you from life's worries will not only cut down on one's stress level, but I guarantee it will help you get a better nights sleep.

Step #5 Retirement Happens

Have a plan for the future. I hate working and I know I'm not alone. Pensions are a rare commodity these days and if your retirement plan only consists of relying on CCP, you are going to be homeless and hungry.

The company I work for has an RRSP matching program where they match up to $1.50 an hour in RRSP contributions after 3 months of employment. I started as soon as I could and have been doing so for over the last 10 years. I've talked to many co-workers who have been with the company for years and haven't started contributing because they say they can't afford to do it. One co-worker said he had worked for the company for 4 years and never even considered signing up for the RRSP matching program. I did a reasonable calculation of how much money a person would have in retirement savings after 4 years of contributing to the plan.

40 hours a week x 52 weeks per year = 2080 hours
1 Week of Holidays = 40 hours

11 Stat Holidays = 88 hours

Misc time off = 52 hours
Total amount of workable hours = 1900 hours x $1.50 = $2850
Employer Contribution = $2850
Total Amount of RRSP Contribution in one year: $2850+ $2850 = $5700
Total Amount of RRSP Contributions after 4 years = 4 x $5700 = $22,800

I wish I had a video to show how far his jaw dropped after I told him he missed out on over $20,000. That's not even considering how much more he could have had if it was properly invested!

If your employer has any kind of contribution matching program you'd be a fool not to enroll in it. Your return is a guaranteed 100% without even investing the money!

Becoming financially fit is a state of mind. If you're happy paying thousands of dollars in interest, then you best not make any attempt at it. Most of my readers are already financially fit, so I hope they can pass on their knowledge and help others become "Financially Aware".

Here's to a happy and financially healthy new year!

Fortis: My Ticket To Financial Freedom

2010-12-15T20:33:00.001-07:00

I'm very excited to announce another dividend increase this month. This time from Fortis.

"The 3.6 per cent increase in the quarterly common share dividend to $0.29 from $0.28 extends the Corporation's record of annual common share dividend payment increases to 38 consecutive years, the longest record of any public corporation in Canada." (Marketwire - Dec. 14, 2010)

At first glance 3.6 per cent might not seem like much, but it's enough to keep up with inflation which gives my retirement nest egg the buying power it's going to need in the future. My investments in dividend paying companies with proven dividend growth is like a gift that keeps on giving all year long. I can't wait to see what 2011 will bring with the income fund conversions and the big bank rumors of increasing dividends.

When Is A Good Time To Buy Stocks

2010-12-12T11:57:00.000-07:00

There was a question posted by a reader that I thought would make an excellent topic this week. When investing in a dividend paying company, should you wait for the stock price to dip to a target price or should you just buy in at any time?

I've read a lot of articles and stories on people who have been investing for over 40 years and and never cared about what the price was at. They just kept re-investing their dividends and purchased more shares when they had the capital in the companies they thought were performing well and have been very successful with this strategy.

Once you have enough dividends rolling in to purchase full shares, you can set up a dividend re-investment plan or DRIP to have your dividends buy more shares automatically. Using DRIPs allows you to purchase shares without paying a transaction fee and at a slight discount, depending on the company you invest in. This compounding will allow your investment to grow with the least amount of maintenance. The downfall of DRIPs are that you are forced to buy shares automatically at the current market price. Also, DRIPs take a longer amount of time to be more effective. It really depends on each individual investor to research if DRIPs are right for them.

I've also read many news articles and investment strategies of investors who carefully monitor the market and save their dividends and investment capital to buy when stocks are attractively priced with excellent yields for maximum return on their investment.

Trying to time the market is one of the hardest things an investor can accomplish. Unless you are an advanced day trader with professional software that can monitor the best time to buy, it's going to be very difficult to hit the buy button at the most opportune time. One thing you can count on is market corrections to lower stock prices. Depending on how drastic the correction is, you could see your target buy price for a favored stock pop up before you know it. I remember when I wanted to buy Fortis and the stock price was hovering over $28.00 with a 3.8% yield and I thought the price would never drop to get a yield of 4%. A few weeks later it dropped to $27.50 and I bought thinking I snagged a good deal. The next day it dropped even lower and I could have had a higher yield. FTS slowly recovered and a few months later there was a huge drop in the stock market; the one where someone sold a whole bunch of stock and caused the market to plunge in minutes. I know people who picked up Fortis for like $25-$26! You never know when a super buy is going to reveal itself, so the only thing you can do is have funds waiting to make this strategy work.

I prefer to buy shares when the price is right for the time being until my portfolio is established. Buying larger batches of shares at bargain prices means less work down the road as you sit and watch your yield grow with each dividend increase and stock split. Some might argue that you don't see as much compounding growth with this strategy, but I disagree because each share is bought more efficiently with a lower amount of capital which makes up for the discount that DRIPs allow. I'm not really at the stage where DRIPs would be efficient anyways, but if you are at the point where you can DRIP more than 50 shares with each dividend payment, you probably don't need to read this blog! I always look at a stock's 52 week High and Low to gauge if a stock is at a decent price or not. I tend to buy when it's closer to the low, and when it's closer to the high side I tend to hold off and wait for a better opportunity.

Like anything in life, there are consequences to everything you choose. Buying stocks when the price is right can have you waiting for a while, missing out on a few dividend payments or missing out on a slight gain with a stock split, forcing you to buy shares at a slightly higher price than if you had purchased them prior, for example:

Let's say there was a solid blue chip company that raised it's dividends each year called Super Amazing Inc. The stock is listed as SAX, and priced at $70 per share. Investor A knows the company is solid, and has dividend increases each year so he invested $7000 to buy 100 shares of SAX. Investor B knows that Super Amazing Inc. is a solid company as well but thinks the price is too high for the yield it pays in dividends. The stock slowly increased to $80, then $85 and was hovering between $83- $85 for six months. The board of directors decided to split the stock to $45 per share and investor B decides to buy 200 shares of SAX since it's priced so low. Investor A still has a better yield because he now has 200 shares from the split as if he purchased them for $35 rather than investor B who bought 200 shares at $45.

Whether you wait for the right price or you buy whenever the funds are available, the most important thing to keep in mind is that you invest your money in a solid, dependable company with a proven dividend growth history. As long as you keep investing in the right companies, your investments will always be profitable.
There really is no right answer as each investment strategy is proven to work; it really just depends on the individual investor's mindset and how long your time line is before retirement.

BCE Does It Again!

2010-12-10T16:41:00.000-07:00

Just a quick snippet before I head out to my Christmas party tonight. Look for my next post on when to buy later tomorrow.

BCE announced another dividend increase for 2011. "The BCE annual common share dividend will increase by 7.7% to $1.97 per share, effective with BCE's Q1 2011 dividend payable on April 15, 2011 to shareholders of record at the close of business on March 15, 2011"

That's great news to start the weekend off. I just wish I had bought more shares when I bought in earlier this year. My purchase price was 27.84 and my yield was 6.25% and my current yield on my investment with the new dividend is now 7.07%! I can't wait to see what 2011 has in store for dividend increases. Slowly but surely my investment strategy is paying off. I just wish I knew about dividend investing 10 years ago!

Enbridge, My Golden Boy

2010-12-03T18:47:00.000-07:00

"Enbridge Inc. today announced that its Board of Directors has declared a quarterly dividend of $0.49 per common share payable on March 1, 2011 to shareholders of record on February 15, 2011. The dividend reflects a 15% increase from the Company's prior quarterly rate of $0.425 per share"- CALGARY, ALBERTA--(Marketwire - 12/01/10)

What a birthday present I got this week! I remember back when I first bought Enbridge stock last year. I had no idea what I was doing and after talking with my brother on how well ENB was doing I decided to buy in. The day after I bought the shares, the stock dropped .50 cents and I almost had a bird. Like most people, my first reaction was to sell, sell, sell and cut my loses before it was too late but I kept a cool head and persevered. I've learned so much since my awkward start and now that I've found a great strategy to follow, self investing has become second nature. Part of me likes seeing green numbers when I check my portfolio, but part of me also likes seeing red numbers so that in the near future I can buy more shares when the price is right.

So what's the big deal about a 6.5 cent increase you say? I bought my Enbridge shares when they were $48.53 and paid a dividend of $1.70 per share. My yield on my investment was:

1.70 / 48.53 = 3.5%

That might not seem like very much of a return, but look at my yield jump up with the new dividend:

1.96 / 48.53 = 4.038%

My new yield is just over 4% on the same stocks I purchased last year. And the best part is I didn't have to lift a finger to get the increase. The only thing I have to do is look forward to my new dividends being paid into my trading account next year. If your still thinking to yourself, "Big whoop.." just imagine if my return increased .5% each year. After ten years, my return would be over 9%. That's an almost guaranteed 9% return in year 11 of my investment. That's huge considering most investments fluctuate with the market and can never be consistent. Slowly but surely my portfolio will grow through small dividend increases every year and my goal of an earlier retirement will become a reality. Until that day comes, I'll welcome any dividend increase with open arms.

To my dozens and dozens of readers:

Do you own Enbridge stocks? Are you excited like me hearing the great news?

Divdend List and Thoughts On The Future

2010-11-28T15:22:00.000-07:00

Taking a look at the current list, there are still many good companies offering a yield over 4% as noted in the green highlights. I get a lot of people asking me which company they should buy first. That's not an easy question to answer because it's dependent on the person. I can only recommend looking at my list, then researching each company yourself for your own due diligence. Find out what their cash flow is like, look at their dividend growth history and buy when the price is right. I usually look for a yield of at least 4%. Anything lower then that will take too long to grow to a decent percentage in the future, but there are some that say I am wrong and that solid companies can be bought at any price. That's why it's important for individual investors to find out what works for you and your level of risk for investing.

Not every company will be around forever. Who knows, when 2012 rolls around and human beings are able to communicate through telepathy, will the telecom companies still be around? I highly doubt it, although my guess is that tinfoil hat stocks will go through the roof. No investment strategy is perfect and I guarantee you will have to evolve your investment strategy to evolve with the ever changing world around us. My advice is to look at the Canadian banks. There are rumors that they are increasing dividends next year and I'm looking to pick a few more up before they do. Insurance companies always seem to make money, as well as utility companies. Everyone needs to eat, so grocery stores should always see profits well.

My next post this week will expand more on this topic of investing for the future. I have more time to focus on my blog now that my condo is listed and we have most of the packing done. Hope my readers will forgive me for my lack of updates. Enjoy the rest of the weekend.

Renting Versus Home Ownership Part Two

2010-11-20T16:42:00.000-07:00

Part Two

In my last post I reviewed the pros and cons of renting a dwelling. Although you may have bad neighbors or a lazy landlord, the amount of money saved by only paying rent with no maintenance and no expensive mortgage could offset the bad with more money left for personal spending or investing for early retirement.

Home ownership on the other hand might seem to be the ideal choice to the majority, but it too has negative points that might not be apparent until they sneak up on a would-be home owner. In my opinion the number one problem with home ownership is that 99% of new home owners don't have enough money to buy a home. The only way to afford a house, especially in this day and age, is to get a mortgage from a lender. Depending on mortgage rate and amortization, you could pay two to three times the amount of what you paid for your home in the first place. Bi-weekly payments and putting down extra money will help a lot with the added interest, but it's still alarming what you end up paying in the end. Having a mortgage means you can't just up and move. You have to sell your house first, and possibly pay a fee for breaking your mortgage. If interest rates rise up quickly, you can have a nasty surprise when you go to renew your mortgage; just ask any homeowner from the 80's what that's like. Along with hefty mortgage payments, there is the lovely bonus of paying property taxes, sewer, water, heating bills, electricity and an ugly word called maintenance. Now depending on where a person is renting, they may never see utility bills because they are included in the rent but I can guarantee the rent is adjusted to cover the costs to the landlord.

Maintaining a house is a lot of work, and over the years wear and tear can end up costing a lot of money unless problems are fixed as they happen. An ignored leaky roof can end up costing thousands of dollars in unseen damage rather than spending a few hundred to have it fixed by a professional when it's first noticed. That's why it's important to have a separate saving account and sock away $100 to $300 each month depending on how old your house is to pay for ongoing maintenance. Houses not only cost money to maintain, but also time. Grass needs to be mowed in the summer, snow shoveled in the winter. Rich people pay others to do that work, but what's the fun in that? There's nothing like drinking a cold beer on your freshly cut lawn in the summer time. Shoveling snow in the winter on the other hand just plain sucks, period.

The perks of home ownership vary depending on who you ask, but for me I've always aspired to have a house to call my own. Having a mortgage is a major drag, but I imagine once my house is paid off there will be a great feeling of freedom that no renter could ever imagine. With each mortgage payment a home owner builds equity in their property which can be unlocked with a home equity line of credit (HELOC). Using your house as a secure asset, you can get a lower interest line of credit that can be used instead of applying for personal loans. If you have credit card debt, you can pay 3-5% instead of paying 19% on the balance. If you were looking to buy a new car, you could cut a cheque from your line of credit and possibly pay the cash price instead of the bloated finance price. You can also renovate your home using your line of credit and increase your home's value if you decide to sell.

My personal favorite is using a Heloc as an investing tool. In Canada if you borrow money to invest, you can claim the interest you pay at tax time as long as you keep track of the loan with your statements. You could spend $10,000 on a dividend stock, claim the interest you pay and use your return AND the dividends to pay pay back your loan. Eventually your loan will be paid off and your investment will keep paying you dividends that could pay down your mortgage or any other expenses. This type of investing does have its risk and I don't advise anyone to try it (if you default you lose your home), but it shows that you can use the equity in your house to invest just as much as a renter can.

Home ownership allows more than non-monetary benefits. You have the freedom to paint and renovate whatever and whenever you want without the landlord's approval. Renovating helps increase the value of your investment while you create a kitchen you love or build a garage that will be envied by your neighbors. As a home owner you can buy nice, upgraded appliances for your house which sure beats using the avocado green coil top stove and funky banana yellow fridge that some landlords include for renters to use. A home allows you to have a yard for gardens, kids or pets instead of being stuck in an apartment with only a balcony. I'm sure there are many other positives to home ownership that depend on the person, but you get the idea.

There are many pros and cons for renting and home ownership but I keep hearing renters say they pay less money overall. Renters may think they pay less money in the end, but if you consider how long you will have to pay rent for a dwelling it might not seem like such a sweet deal. If a couple who are both 25 buy a house, and they pay it off in 25 years, when they are 50 they will be mortgage free and have lots of disposable income until they move into an old folks home at age 85. If that same couple rented instead, they would have to pay rent for 60 years! As an example, imagine paying $1200 a month for an apartment:

$1200 x 12 months = $14400 x 60 years = $864,000

That's not even including rent increases during that time period, because if the rent increased 2% each year, you would end up paying over $1.6 million in that 60 year period. If you think that's out to lunch, inflation averages 4% a year and if the landlords bills increase that much, you better believe your rent will too.

If you bought a house for $400,000 with a $25,000 down payment and a rate of 5% over 25 years, you would end up paying $674,972.56 for the house and all the interest (That's a ridiculous amount of money to pay in interest but for this example I didn't put any extra money down on the principle which isn't very smart and you should aim for a 20% down payment). Property Taxes go hand in hand with home ownership so if you paid $2500 a year for 60 year with an increase of 4% a year, you would pay an additional $594,976.71. I must also include upkeep which I will put at $300 a month average over 60 years and will work out to be $216,000 which includes lawn care, new shingles, siding, and minor home improvements. The rough grand total for owning a home would be:

$674,972.56

+$594,976.71

+$216,000

--------------

$1,485,949.27

In this rough example, it seems that renting would probably cost the same as home ownership over time depending on the rental market. The only thing that's guaranteed for both renter and owner is the cost of living increasing. In my opinion, the renter would end up with a rich landlord, and the homeowner's family would end up with a fat inheritance. I would easily imagine that $400,000 house over the course of 60 years would be worth close to a million dollars. In the end it all comes down to what works for you and your lifestyle but for me, I'll take the equity any day.

Have a good weekend!

Renting Versus Home Ownership

2010-11-14T21:58:00.000-07:00

Ever since I was a kid I wanted to own a home. I'm not sure if it was planted in my head from watching too much TV, but I always imagined myself with a wife and two kids posing in front of my house with everyone smiling and not a having a care in the world. Owning a house is a huge responsibility, and even though it's perceived to be a generic goal in life, it's not for everyone.

So what's better, renting or owning your own home? There are plenty of people who just want to pay rent for their entire life, not having to worry about wear and tear, repairing foundations or fixing hot water heaters. On the other hand, a majority of people want the satisfaction that home ownership gives you, as well as the ability to build equity with each mortgage payment and the eventual freedom of not having a mortgage. The debate over renting versus home ownership for me has always been one sided, but after reading a few articles on the subject and talking to some people, renting does have its perks.

There has always been a stigma associated with renting in that the money you spend on rent is money that you throw out the window. The fact is that it wasn't totally wasted as it protected you and your belongings from the elements, thieves and possible wild animal attacks which vary with your location. Just because rent usually pays the mortgage for your landlord, it still pays for one of your basic needs. Once you pay the rent, the only other financial concerns you have to worry about are utilities, personal spending, food and insurance which is optional but is highly recommended. As a renter you don't have to worry about any upkeep or maintenance that a homeowner has to deal with and budget for. The money you save on maintenance can be invested for an earlier retirement or allow for more luxurious personal spending. Renting allows you the freedom to uproot with a month's notice and you can move across the street, across the city, or across the country, with less hassle then if you had to sell your home first. I know a lot of people who like not being tied down with a mortgage and feel renting gives them more freedom to work abroad and rent wherever they land a job.

That being said, I have rented in the past and from personal experience I can tell you renting can have its downfalls. Having neighbors is a fact of life whether you rent or are a home owner but if you rent an apartment or townhouse, you are guaranteed to have more of them. One might think renting a more expensive dwelling will allow more like minded neighbors, but that is a common misconception. For example, a rent payment of $2500 a month might be expensive for one person to pay, but that same rent split between four people is a "steal of a deal". So now you live next door to party central because four friends are "moving on up" and need to celebrate...every night! If you do decide to rent, make sure you find a good landlord. Just because they have to maintain their property doesn't mean they will do it in a timely manner. You could be waiting a week to get a new stove or hot water heater and have no choice but to wait. Another problem with renting is you could eventually find the perfect place to rent, live there for years and then without warning the landlord could ask you to move out because they are selling the property and the new owners want their kids to live there. That and the rent can increase once your lease is up, which can wreak havoc on your budget.

Although a diehard renter could argue any negative point with a positive, it all boils down to personal choice. Not everyone can afford a mortgage and have no choice but to rent. Some people like myself have no choice but to own a home so my wife will be happy; happy wife, happy life. Make sure you catch my next post where I list the pros and cons of home ownership.

Time To Pick Up American Stocks?

2010-11-05T00:58:00.000-06:00

If you've been following my blog, you might have noticed I like investing in Canadian stocks. By investing in home grown stocks it not only strengthens our economy, but we get a great tax break on the dividends as well. The only problem with Canadian stocks is that our markets lack strong companies in certain sectors like consumer goods, pharmaceuticals, and technology. Having a balanced portfolio can help lighten the blow when market uncertainty hits and having a diverse selection of dividend paying companies will balance your passive income just in case a certain sector might be hit hard for a few quarters and dividend increases are postponed.

So why U.S. stocks all of a sudden? Well in case you haven't noticed, as I'm writing this, the loonie is sitting at 99.73 cents and it looks very likely that it will go beyond parity allowing more bang for our Canadian buck. If you buy US stocks and we go below parity like majority of the time, the dividends paid in US dollars will be paid at a premium and your yield increases from the currency exchange AND dividend increases. The only catch is you have to hold the shares in a registered account like an RRSP trading account, otherwise you will have to pay a withholding tax on the dividends paid to you. You may also have to do a wash trade when buying U.S. stocks , depending on which discount brokerage you use. A wash trade allows you to avoid paying currency conversion fees by calling the brokerage the day you place the trade, and they will convert your Canadian money from your account to a U.S. money market fund, then they will sell your U.S. market fund to buy your U.S. shares. It might seem like a lot of work, but it's better than paying those fees. RBC has no currency fees in their RRSP trading accounts, and hopefully TD gets the head out of their ... and does the same.

I really like the consumer goods sector. We as consumers are brainwashed to buy, buy, buy and that allows companies to grow, grow, grow. People always need to eat, majority of us like to keep clean and clean our homes, and we all like to buy new clothes and gadgets. When I'm investing, I want to keep my money in companies that will be around when I retire and hopefully when my future children retire. By investing in companies that make food, cleaning products and personal care products, I know they will be in business for many years and that there will always be a need for their products. When some of these companies have increased their dividends for decades, It's a no brainer to hit the buy button when they are reasonably priced.
I own shares in KMB and would like to expand into more dividend aristocrats like JNJ, MCD and many other great consumer companies from the states.

Pharmaceuticals on the other hand can be a little tricky. Patents for drugs in the US last 20 years minus the clinical trials, so once the patent expires, it's free game for generic drug manufactures which drives down the price, thus driving down the profits. Lawsuits can also hurt profits for pharmaceutical companies as well. If someone pops a pill and there was no warning on the label to unplug the toaster before using it as a water flotation device, then hello settlement! I own shares from one Pharma company from the states, and it will be the only one for a long time.

Technology stocks can be hit or miss. Today's Apple can become tomorrow's Beta Max, although that's highly unlikely. A lot of big name technology stocks usually don't pay a dividend. They like to keep reinvesting the profits, and buy back shares to increase stock price to keep investors happy. Most tech products are cyclical meaning their product demand can change month to month. An earthquake in Japan can drive the price up on computer memory one month, and a memory factory opening up in India drives it back down two months later. I don't own any tech stocks, but once some of the bigger companies start paying dividends, I'll be on them like a fat kid on a Smarty (or M&M for my U.S. readers!)

Do any of you own US stocks? Do you see this as a good time to start... stocking up on them?

Financial Tales Of Terror!

2010-10-30T16:21:00.002-06:00

In this edition of The Loonie Bin, I thought some tales of terror from a financial perspective would set the mood for Halloween. So turn off the lights, and make sure you are not alone

Read on if you DARE!

The Tale Of The Credit Card Princess

Alison liked to shop whenever she had the chance. She worked in a department store and didn't make very much money. Every weekend she would go clubbing with her friends, and she loved being the center of attention. When you crave the limelight like she did, it costs a lot of money to keep up with trends and fashion. Alison spent a lot of money on clothing, hair styles, spa treatments and makeup; a total of 75% of her income! So how could she afford to pay for all this things, plus the basic needs of food and a roof over head? Credit Cards! *cue Thunder and lightning*

Alison owes $2465 on her credit card and is happy paying the minimum $50 each month. She thinks she is getting a sweet deal by buying what she wants, and only paying a small amount of her 19.5% interest. But what she doesn't realize is that it will take her 21 years to pay off $2465 and will end up costing her an additional $9938 in interest! Now the people who own the credit card company could afford to buy nice clothes and new shoes, thanks to Alison...

Did that frighten you? I know it scared me. This next tale is even more frightening. I call it:

The Tale Of The House Of Interest

There once was a young couple named Dan and Kim who dreamed of owning a home together since they met 6 years ago. They both had expensive taste yet they both had modest incomes. All of their friends lived in expensive neighborhoods and they too wanted to live in a nice area as well. They wanted a big house to impress their friends so they looked at places that were way too big and that they could never afford. One Saturday they were driving around and they found the perfect house for sale. They never saved much for a down payment, but they really wanted that house and would do anything to get it. They called the bank to set up a mortgage but with their lack of a down payment, they would have to get a 35 year mortgage and have CMHC insure their mortgage! *Thunder and lightning*

Dan and Kim thought they had found their dream home, but what they had found was a house of fees and interest. They though that they were paying $350,000 for their home, but in reality they are paying much, much more. Since they didn't have over 20% for a down payment, they had to pay a large fee to insure their mortgage to the tune of $10,000; And that's just the beginning! Since they can only afford to pay the base monthly mortgage payment, they will be forced to take 35 years to pay off the entire mortgage. They had a mortgage rate of 5% on a fixed 5 year term and paid their mortgage monthly. After their first 5 years of paying the mortgage, they would have paid $84,000 in interest alone. Over the course of 35 years, they will pay over $380,000 in interest and that is only with an average interest rate of 5%, just think if interest rates hit 10 or 15% like they have in the past. I sure hope they like eating Kraft dinner...

Oh my that was a terrifying story! All that money being flushed down the toilet to impress a few friends....it sends chills down my spine. I don't know If I can continue... alright, maybe one more story of investment horror. I call this one:

The Tale of the Disappearing Nest Egg

It was a dark and stormy night. After a long day at work, Kevin sat down and begin reading his mail. He sorted through piles of bills and leaflets ; 5% off Ming's authentic Chinese cuisine and steak house, laser hair removal, and his investment statements. Kevin carefully opened up the envelope from his investment advisor and saw how much money he made these last few months. The stock market was down this last quarter and he knew that his return would be lower then normal and it was. He was actually making a return of -3% from his mutual fund investment. *Thunder and lightning...... I SAID thunder and Lightning.......oh forget it*

Kevin remembered back when he began working and moved out on his own. He thought about his future and that he should start saving for his retirement. He decided to invest $100 every month in mutual funds and every month he saw his nest egg start to slowly grow. He knew that nothing in life was free, and that he paid a certain percentage to have someone manage his mutual fund investment. Eventually Kevin began working for a company that matched his mutual fund contribution and so he was automatically making 50% on his contribution. This made Kevin very happy and it allowed him to focus on his life and not have to worry about investing. Little did he know, that something dark and very scary was lurking under the surface of his investment portfolio...

After many years of having fun and eventually settling down, Kevin began thinking about his future again since he was responsible for himself, and his new bride. He starting paying more attention to what he invested in, and where his money was going. After looking at how much money he had, and how much money he invested over the years, he thought there should have been more money in his portfolio. What Kevin learned next was so shocking it made his stomach turn. His mutual fund charged him a MER of 2.65% each year. Having an investment of $65,000, that meant that each year his fund manager was charging him $1722, no matter how well his mutual funds did. His current return of -3% was less then his managers expense ratio. His nest egg would never keep up to inflation and over the years the only thing that increased was Kevin's blood pressure.

Kevin had to cut corners in his retirement and he and his wife were forced to live in a sketchy retirement home where the food was bland and they had to eat frozen vegetable medley every night. The arts and crafts program was a borderline sweat shop and all his crafts were shipped to foreign countries. When they wanted tea, they had to use tea bags over and over and any attempts at escape were met with a week with no shuffle board privileges. They lived horribly ever after.

Ohhh so very scary. Did I scare you with these terrifying tales of financial horror? No!? Well maybe next year, until then have a Happy Halloween and good bye...for now.

Nonsense Investing

2010-10-27T21:20:00.000-06:00

If you've been following the markets the last few days, you might have noticed the slight slide in the markets. My Own Advisor must be getting excited, because I know I am. If you own mutual funds, there's a good chance your "Units" are worth a little less then at the beginning of October. And if your units are worth less, then your return on your investment has gone down as well. A mutual fund supplier or "pusher" would tell you this is a great time to buy more units while the markets are down. After reading a mutual fund investors strategy in the Globe and Mail's Me and My Money article from two weeks ago, I had to read it twice before I believed it.

To quote the article, " Mr. Flynn, who lives in Peterborough, Ont., sticks to very conservative mutual funds. He counts it as a bit of a victory that he’s down between 11 and 15 per cent since 2009. “I’d have to say that’s not that bad. Lots of folks I’m talking to are down 25 per cent.”

He is happy that he's making -13%. In case your reading this post on an Iphone, that's a negative 13%, and he's happy because his friends are doing worse. That's like installing a $10,000 car stereo in a $1000 Dodge Neon; It makes no sense!

I'm making over 5% now with my dividend investment. Notice I said making because I know exactly what my return will be this year. My portfolio could drop 25% and I'd still make over 5% from the dividend income. In fact I would be very eager to buy more common shares if my portfolio dropped that much and I would make even more then a 5% return. If a mutual fund investor's portfolio dropped 25%, panic would ensue but they will feel better knowing their friends did even worse. We need to stop the madness of nonsense investing. I can see the commercial now...

For just two minutes of your time, you too can change the life of a mutual fund investor. Explain to them the theory of dividend investing, and that a negative return is not ok. Save the retirement savings of someone you care about, today.

Do you know someone afflicted with mutual fund investitus?

Investing Hodge Podge

2010-10-24T22:09:00.000-06:00

Hodge Podge: a confused or disorderly mass or collection of things.

I was very excited to find out this weekend that on November 4th, TD Waterhouse is allowing $9.99 trades for individuals with $50,000 in household assets. This means more money working for me and you, over the long term. It is also proof that the big banks are starting to wake up and make their services more competitive which could lead to even cheaper fees in the future. Nothing like healthy competition!

Speaking of competition, I eagerly await the results of the votes from CREA members on Monday whether individuals wishing to sell their homes can list using the ever popular MLS website without selling their house exclusively through an agent. This will allow many new levels of service to customers who might want to sell on their own house and still have the exposure that an MLS listing would offer. I will be putting my condo on the market soon and would rather list my dwelling at a competitive price to sell it quickly, rather then bump up the price to compensate for an outrageous realtor fee. Comfree must also be eagerly awaiting the results more then I am.

And now for the updated dividend list. Emera is back in the green at 4.26% with it's recent dividend increase and SHAW is very close at 3.98% with it's surprising loss on Friday.

Hope everyone had a good weekend!

Early Retirement

2010-10-21T00:04:00.000-06:00

For as long as I can remember, I've always had this picture in my mind of working merrily till I'm 65. I thought being retired would be boring so I would try and keep working for as long as possible. That and the thought of having coffee at the local coffee shop day after day would drive me nuts. I've been working steadily since I was fourteen and recently I've realized something; I had it all wrong.

My family thinks I have become obsessed with money since I've started investing on my own, but I think subconsciously I'm looking for a way to speed up the process of getting out of the rat race. I'm tired of being artificially woken up every morning at 5:30am with an annoying buzzer just to get to a job where I'm just a number and at any given moment I could be laid off. "Why don't you change your job?" is the obvious response, but it's not that simple. Due to living in one of the most expensive countries in the world, I have become dependent on the amount of money I make each year; especially for only going to a secondary school for a total of nine months. If I were to quit work, and go to school for 4 years, I would end up making half of what I currently make plus I would be in more debt with student loans; if I even qualify for them.

If I were to find a career I'd love doing each day, the novelty would wear off and eventually it would become a job once more. My only escape would to retire as early as possible, but I would need to save an absurd amount of my net income each month. If I were to eat beans and lentils, trade my car for a bicycle, and go on staycations at West Edmonton Mall, I might be able to pull off early retirement. I might also end up being divorced! My wife on the other hand likes to plan expensive vacations, would rather starve then eat luncheon meat, and has consistently brought up the subject of hiring a maid for our new house. She even refers to this fictitious maid as Rosa. I've talked her out of getting a maid, but it seems almost every night she ambushes me with some new vacation plan and how it will only costs $6000 dollars.

My only chance now at retiring early would be quitting my job and becoming a stay at home dad. I figure I could do a little day trading in the morning right before Regis and Kelly and I'll have all the household chores done in time to catch Days of our Lives. Then each night I would have a gourmet meal ready for my wife when she walked in the door. It's nice how plans always work out in your head, isn't it? I guess I'll stick to dividend investing and think about the dividends piling up while I'm slaving away.

To my dozens and dozens of readers: When do you plan on retiring?

Emera, I Forgive You

2010-10-16T19:10:00.000-06:00

I had to fly to Nova Scotia in early September for a family emergency. I was lucky to have witnessed my first hurricane while I was there and learned how much I take electricity for granted. When the power first went out, I wasn't very worried. When we learned the water pump wasn't working, then the panic set in. I'll never forget fighting gale force winds to collect some lake water in an antique jug just to flush the toilet. It took two days to get the power back on because we were in such a remote location, but eventually Emera fixed the problem. While there was no power, I might have thought poorly of Emera a few times but I got over it.

Later that month, the board of directors of Emera increased the dividend by a whopping 15% and now all is forgiven!

"We have committed to grow our common dividend as our earnings increase," said Chris Huskilson, President and Chief Executive Officer of Emera Inc. "This 17 cent annual increase in our common dividend reflects the continuing success of our strategy. We know our dividend is important to our shareholders, and we are pleased to be able to provide for this 15% increase."

Emera was paying a dividend of $1.112 per share, but after the increase, the dividend will be $1.30 per share. This is exactly what I am after in my dividend growth strategy. If the dividends keep growing every year, then my return on my investment will rise accordingly. I bought Emera back in February at $23.90 per share and my yield was 4.65% , and now after the dividend increase the shares are up to $30.35 and my yield is now is 5.44%. My total return on my Emera investment right now is 27% which is pretty darn good, but since markets always fluctuate, I don't really focus on that figure.When was the last time you saw a mutual fund promise to pay you an increasing return each year? I'll be ready to buy more shares of Emera after the market corrects, that's for sure!

Just imagine if all of the stocks I own increase their dividend each year; I'll be one happy camper who can retire early. Until then, I'll be thinking about my retirement one dividend at a time. Have a great weekend.

Dividend Update

2010-10-12T17:14:00.000-06:00

Tuesday was another positive day for trading on the S&P/TSX. It's up 40.05 points and is sitting at 12575.64. Not a huge increase, but my portfolio was green across the board except for Enbridge.
Here is the updated dividend list with TransCanada added due to popular demand.

Stock prices are rising which means our beloved yields are slowly decreasing below 4%. It's not the best time to be buying, but there are a few good buys still out there like Bell, TransAlta and SunLife (Bell would be my first choice. It is an excellent company and would be a great start or addition to any portfolio). I might be adding a few hundred shares of SLF to my portfolio in the next few weeks depending on my dividend payments. I'll keep you posted.

I will also be updating the information pages from the menu near the top of this blog with some much needed graphics and examples. Hope everyone had a good Thanksgiving/Columbus Day. Until next time, here's to early retirement!

Long Weekend? Up Goes The Price Of Gas!

2010-10-07T17:05:00.000-06:00

"Attention fuel consumers, unfortunately we are all out of the
Disney collector cups. Have a nice day!"

Have you ever noticed that the Wednesday before every long weekend, gasoline prices always seem to increase? Well here in Alberta it happens all the time and this time it wasn't a penny or two; it was a seven cent increase in one day. Oil companies say that summer time sees an increase in fuel consumption on long weekends, so gasoline prices are adjusted accordingly. Well this is Fall, it's getting colder and we are clearly out of summer vacation mode, yet the price still increased.

I read on a Petro-Canada website that "Consumers may pay closer attention to gasoline prices when they fill up before or during a long weekend trip, however industry data shows no such pre-long weekend price increase trend." (Shell has the same information on their website, almost word for word) . I think whoever wrote that has a company gas card and never bothers to look at the prices at the pump when they fill up. Anyone that doesn't have a oil company logo on their pay stub will tell you that this is a load of *rap! Out of the fifteen years I've been driving, I've only seen prices not go up on a long weekend once. Perhaps the guy who changes the price on the sign at one gas station called in hungover, and the other stations just matched them; who knows.

What I do know is that it's wrong to increase the price; it's borderline profiteering. Everyone uses gasoline in one way or another and the oil companies know that. There is very little we can do to stop these insane increases every long weekend. No amount of protesting, or boycotting will ever amount to any changes. If you boycott one gas station, only the people employed by that station will suffer. All we can do is pay the piper and get our precious gasoline. You might as well sign up for points cards and get something overly priced for "free?". It could be worse; we could be fighting off bandits for "juice" in the wastelands and having Mel Gibson as our only source of hope for the future...yeesh.

Readers:
Do gas prices increase on long weekends in your neck of the woods?

Historical Patterns

2010-10-04T00:22:00.001-06:00

I was hoping September would bring some good buying opportunities, but alas I learned my lesson about following historical patterns. John Heinzl from the Globe and Mail had an interesting video on the subject. Here's the Link.

Emotions run wild.
Human beings are the most unpredictable creatures on the planet. We change our minds so often, it's no surprise that we effect so many things on so many levels. If the stock markets were controlled by robots, then I'm sure we would be able to predict where the markets were headed and when the most opportune time to buy and sell would be. When the markets were up, stocks would be sold. When markets are down, stocks would be bought. Transactions would occur with mind blowing accuracy and profits would be made with 100% efficiency. But when human beings are thrown in the mix, emotions and gut feelings throw everyone for a loop. When stock prices drop, people scream "Sell! Sell!" to minimize their losses and end up selling at a loss.. When they see a stock taking off, they scream "Buy! Buy!" only to see it lower the following day and miss out on a bigger profit.

Life is evolving, and so is investing. If you were to show an investor from the 1920's an Ipad and purchased stocks with a few clicks from a magic "Internet", I'm pretty sure they would collapse right in front of you into their pile of ticker tape. Investing used to be only for the wealthy who could afford the expensive broker fees, but now it's cheaper and easier then ever before thanks to online discount brokerages. With more unpredictable humans investing over the decades, how can any trends remain the same? As technology evolves, and society adapts to these new changes, investment analysts have their work work cut out for them.

I've heard a lot theories like "Sell in May and go away" and "Stocks always go down on Fridays", but it's all a bunch of hogwash. If you follow whacked out theories, you might end up getting burned and take a hit on your return. That's why I like dividend investing so much. Tried and true with no gimmicks, and no confusing philosophies. By quality Stocks at low prices, hold till the dividend is cut. Although I was looking forward to some lower priced stock to buy, I'll just keep counting my dividends and wait patiently for the right time.

Here's the updated list for the beginning of October. This is just a rough list of some key Canadian dividend stocks to get your portfolio started. Stocks with green yields are above a 4% threshold. Enjoy.

Have a good Monday, if that's possible.

The Added Costs Of A New House

2010-10-01T00:28:00.000-06:00

Back in March my wife and I signed the papers for our new house. We were told that our house would be ready in March of 2011. That gave us plenty of time to come up with decent down payment. A month later we were told it would be ready this October. From that moment, I decided to curb my spending and go on a saving spree. No more bought lunches. No more beers with the boys after work. No new Iphone or Ipad. If there was anything I wanted and didn't need, I would just think of our new house and how big our mortgage will be, and my desire to spend money would be eliminated.

We were told this week that our tentative possession date this December/January. What a gong show! I wish the builder would make up their mind, because it feels like we're on a yo-yo. At least we have a better idea of when it will be ready, and it allows me to save up more money over the next few months. Part of me wants to put all my saved money on the mortgage, so we pay less interest over time. But part of me knows moving into a bigger house has a lot of added costs involved with furnishings and appliances.

When building a house through a builder, I've learned to not accept any appliances that they include in the price of the home. They are the bottom of the barrel and are very basic pieces that they get a deal on by buying in bulk. Our home was fully upgraded compared to what other builders offered for the price, but the only appliances they included were the dishwasher and microwave. After seeing them at the supplier, we decided to upgrade because they were both entry level appliances. You get what you pay for these days and we wanted nice appliances for our nice house. Besides, I'd rather spend an extra $500-$600 on something that's going to last 10 years longer then it's cheaper counterpart.

We will have two living rooms to furnish, and my wife doesn't want my navy blue palliser leather couch and love seat to stick out like sore thumbs in the new sitting area, so we will have to buy a new couch and love seat that matches our color choices. We never upgraded our other living room furniture because we knew living in our condo would be temporary(plus they would get in the way of many Wii events we held), so now we have to buy end tables and a coffee table to match the new color choices.

The new master bedroom is huge, and a queen sized bed would not fill it up enough and would leave large areas of useless space, so we decided to splurge and get a king size bed. Our Ikea nightstands are going to be used in the spare bedrooms so we will need new ones as well. New dressers to match the new nightstands and head board are a must, so the old ones will be used in the spare rooms as well. I asked sales person about purchasing extra lumpy beds for the spare rooms to ensure short visits, but it was only met with a smack from my wife.

Then there is the yard. We have one year to sod the front yard and plant one tree. We got off pretty easy as some neighborhoods require multiple hedges and bushes as well. Since we built on a pie lot we have a smaller front yard, so to sod my front lawn, it will only require a few midnight visits to my new neighbors freshly sodded lawn. I'm sure they won't notice... We will also have to build a fence, but hopefully my new neighbors are not cheap bastards and will split the cost AND help me build it. All I need is someone with a pulse to hold the level and help me with the power auger.

We used the builders lawyer so we avoided any legal fees which is a bonus, and the bank is more then happy to lend us the money knowing we will pay an extra $100,000 for the mortgage. I'll be paying myself with each dividend cheque, so it won't hurt as bad. I'm sure there's going to be a lot of small costs for things needed like area rugs, window coverings, new towels and linens; but that's a given.

We don't have to buy all new furniture and upgraded appliances, but we both have good jobs and for the last three years we lived like semi bachelors so we could buy nice things for our new house. And for my wife living with me through my saving spree and all my money saving exploits this year, I think she deserves it.

Have a good weekend, everyone.

Please Stand By

2010-09-28T21:58:00.000-06:00

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?

2010-09-23T23:10:00.000-06:00

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

2010-09-19T18:19:00.000-06:00

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

2010-09-14T22:53:00.000-06:00

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

2010-09-08T09:40:00.004-06:00

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!

Dividend Investing 101: What To Look For In A Dividend Stock

2010-08-31T23:25:00.000-06:00

My last post talked about dividend growth and how it plays a crucial part to any dividend investing strategy and allows you to turn a moderate return into an early retirement pay cheque. Since I've started this blog, a lot of people ask me what I look for when purchasing dividend stocks. It's not an easy process because a lot of things can happen that influence the stock market and a shiny blue chip company can lose it's luster with a cut of a dividend ( Yes, I mean you Manulife). There's so many details and facts to consider, but I've come up with a list of 6 rules to follow when you looking to buy quality, blue chip dividend stocks.

Strong Cash Flow
Low Dividend Payout Ratio
A Yield of 4%
Low debt
Dividend Growth History
A P/E of around 15 or lower

Strong Cash Flow

Companies are in business to do one thing, make money. If a company doesn't make as much or more then it did the year before, then it's doing something wrong. They say cash is king, and they are in fact correct. Good companies pay their dividends from their cash flow. Bad Companies pay dividends from credit. When looking up a stock to purchase, look at its current and prior years cash flow. If it's steadily decreasing each year with no increases or is consistently in the red, stay clear of it. Cash flow is the first thing I check when looking for dividend stocks. It's very important.

Low Dividend Payout Ratio

A companies dividend payout ratio tells you if the company is making enough money to maintain its current dividend. The ratio should be between 0-70% , anything higher is not healthy. If a company has a big fat dividend and low earnings per share, then they either have to make more money or God forbid, cut their dividend. The lower the ratio, the easier it is to maintain future dividend increases, which is the heart and soul of a dividend growth strategy. To find the ratio, divide the total dividend by the earnings per share (EPS).

Dividend/EPS= Dividend Payout Ratio

For example, if we look at BCE's current EPS and dividend from The Globe and Mail Investor Section , it has an EPS of 2.75 and the current dividend is $1.83.

66.5% is below the 70% level and is an easily maintained ratio. BCE is making enough profit to comfortably pay it's dividend.

A Yield of 4%

When I look at excellent companies to invest in, the yield is always one of the first things I see; not by choice but because it's always automatically calculated and thrown in the open for everyone to see. A high yield at first glance may seem like a good thing, but in actuality, it means a stock's price is decreasing. When a stock price is decreasing the amount of money a company makes on the share is also decreasing which means the dividend it is paying out cannot be maintained. The company either has to make a lot more money, or cut it's dividend. Buying a stock just because it has a high yield will start out well, but when that dividend gets cut it's like throwing a wrench in your dividend growth machine. A low yield on the other hand may have a safe dividend, but why take a risk on an investment when you can make the same return with zero risk involved by using a GIC or high interest savings account. In addition, any profit you make at a low percentage is negated by inflation.

My general rule is to never buy anything with a yield below 4%. If a company is solid, and has decades behind them with proven dividend growth, I will buy at 3.5%. You want to make at least 10% on an investment as soon as you can, and by starting at a lower percent return, it will take a lot longer to get there.

Low Debt

Debt is bad , no matter how much money you make. When a company needs to borrow money to operate, what happens when interest rates go up and sales slow down? The money they pay in dividends will most likely be used to cover the increased interest. Shazbot! When looking at a company's balance sheet, I make sure they have more then enough total assets to cover their total liabilities, otherwise I steer clear. When in doubt, always look at the cash flow, the more the better. If a company goes bankrupt, common shareholders are the last to be paid, and usually they are left hanging.

Dividend Growth History

We all love juicy yields. But if it never increases, eventually that yield of 5% will still read 5%, but the ever annoying, invisible force called inflation is a compounding fiend and will make short work of that 5% yield over time. That's why you want to invest in companies that grow their dividend every year to combat the evil inflation and your portfolio will live happily ever after. I'll use my golden boy stock as an example. Enbridge is a pipeline company that has paid a dividend for 57 years. The yearly average increase is 10%. That increase of 10% a year negates inflation, leaving some of that growth to increase the yield on your original investment. That extra growth is the heart and soul of a dividend growth machine. It will increase your portfolio a lot more then investing dividends alone. When a company increases its dividend, it shows that the board of directors are confident of the outlook of the well run company, which in turn increases the confidence of investors to buy more stock. When the stock price goes up,the value of your shares go up. It's like getting paid twice. Winner winner, chicken dinner!

So when I see a company cut it's dividend, it means that the company wasn't running at it's full potential. A dividend cut is devastating to dividend investor. Your yield decreases and the stock price plummets as everyone gets out while the getting is good. It also puts your investment back 1 to 2 years depending on how bad it is. I stay clear of a company that cut it's dividend. Manulife comes to mind and it will always be tainted to me. The only way I'll ever own Manulife, is if it increases its dividend for the next 5years. I don't care that it's been around forever and is one of Canada's most lucrative companies, cutting a dividend is a sin in my books.

A P/E Of Around 15 Or Lower

That brings me to P/E ratios. To find the price/earnings ratio, divide the price per share by the earning per share. For example, BCE's current price is $33.37. It's EPS is $2.75 as of Aug 31/2010.

So BCE has a P/E of 12.13. What does that mean? Obviously it's a ratio between earnings and share price, but it can be used to gauge the volatility and popularity of a stock. It will be argued that a P/E ratio can mean many things, and that it's an investor "assigned" value, so I won't dwell on it too much. I've read that any stock you wish to purchase should have a P/E of around 15. If it's above 15, it could be overpriced. If it's below 15, it could be undervalued and would be a good buy. Notice I said could be undervalued. It might be low for a good reason, as if the stock is losing value because of an oil spill or lawsuit. A stock with a low P/E also regarded as having low volatility, which is always good for the steady and conservative dividend investor.

A P/E ratio should never be used on it's own to pick a stock. It should be one of many calculations used to determine which dividend stock to purchase. I use it only for comparison between companies I have on my watch list.

I use these rules as a guideline, but there are many more factors to consider when choosing companies to invest in. The best way to learn is finding your own method. Everyone has different ideas on what makes good investments. Find what works for you and stick with it; or change it up if it's not working well for you.

I apologize for almost the same post as a few months ago, but I'm headed out on a rush trip to Nova Scotia for a family emergency. I planned on changing this post up a bit, but I had to rush through to update before I leave. It might be a week or more until I can update the loonie bin again. Have a good week everyone.

Me And My Money

2010-08-29T18:42:00.000-06:00

Just to let everyone know, I was featured in the Globe and Mails Me and My Money article on Saturday.

Me and My Money

I was glad to see a lot of people had the same strategy as me; and the negative comments were minimal. Hope you enjoy the read.

Dividend Investing 101: Dividend Growth

2010-08-26T23:27:00.000-06:00

In my last post I explained compound growth and how you can make more money from a smaller investment over a longer period of time. This next post covers dividend growth and how it's the heart and soul of a dividend investment strategy.

Everyone likes getting a pay raise. The satisfaction of being rewarded for your hard work and planning can be very exciting. Imagine getting thousands of little pay raises over years of investing and how it grows your dividend income exponentially. I remember a few days after buying BCE earlier this year and hearing they increased their dividend; it felt great getting a pay raise without doing any work. And now BCE has increased their dividend again. My yield on BCE increased 2% already this year, and I can't wait for my other stocks to do the same.

How do you know which companies to buy that increase their dividends on a regular basis? Well looking back at past dividend increases on company websites is your best bet. Other websites and blogs have made lists comprising of dividend paying companies that regularly increase their dividends over the last few years. I know the Canadian big banks haven't increased their dividends in a while, but there's a lot of speculation that they will early in 2011. I don't want speculation, I want them to show me the money! Once you find a company that you like and puts their money where their mouth is, you can feel a little more comfortable investing in them. Take Enbridge for example.

Enbridge has been paying a dividend for over 57 years and has a dividend growth average of 10% a year. To me, that seems pretty dependable and is why it's my favorite stock to own. I'll even use it in an example of what dividend growth can do to your investment.

If you were to buy 100 shares of Enbridge stock on the day of this post, you would pay $5235 and your dividend paid per year would be $170. Your yield on this investment would be (1.70/52.35) 3.24%. Not the best yield available out there, but what what happens when the dividend increases 10% a year:

Not a bad little investment. After 10 years of dividend growth it's paying you $440 a year. Try and find any mutual fund out there that pays a GUARANTEED 8.42% every year and keeps increasing! And to show you how it grows and compounds over time, here's the next 10 years:

With another 10 years of enjoying life and not even worrying about the stock market ups and downs, you would still be paid 21.85% on your initial investment. By now you investment would be paid for, plus it would have allowed you to purchase other stocks which have also increased their dividends over these last 20 years. Imagine the possibilities of what your portfolio could look like. Just think if you started early enough to get 30+ years of dividend growth, your returns would be insane!

Now not every dividend paying company increases their dividend by 10% every year. But even if it's only 6% its still keeping ahead of inflation and allowing your buying power to be maintained in the future. Having a comfortable retirement is what everyone wants, but most people think it's a lot of work to plan and maintain your own investments. This single investment took 1 min of time to complete with a discount TFSA trading account because there's no taxes involved and there's no upkeep whatsoever as long as you invest in solid, blue chip companies. If anything you would only sell a company if it cut it's dividend, like Manulife, which was all over the news unless you live under a rock.

I read the headlines at The Globe and Mail investor section and it keeps me up to date each day. If spending 5 minutes a day, exercising your brain is to much work, then you might as well stick to mutual funds and pay monkeys to invest for you.

Dividend Investing 101: The Power of Compounding

2010-08-23T23:29:00.000-06:00

In my last post I explained the basic principle of what a dividend is and how it plays a part in investing. This next post covers compounding or compound interest and how it plays a huge part in any dividend investment strategy.

I never really paid much attention to compounding interest before. I knew I was paid interest in my bank account every month, and the whopping 25 cents was added to my balance. It wasn't until I started researching to be a self investor that I truly learned the power of compounding. It's a highly efficient, money making machine that turns small amounts of money into a large pile of money over a period of time. When you invest in dividend paying stock, your dividend payments are like an interest payment from the bank, except it comes from the company you invested in. The money is deposited into your trading account and like interest, you can spend it OR you can re-invest the dividends to by more stock which in turn, will pay you more dividends in the future.

Let's say you bought 100 shares of BCE on Jan 29, 2010. The cost of one share would have been $27.71 and the dividend at the time was $1.62 a share, which would yield a return of 5.84%. So you would be paid $162 for an investment of $2771. If you were to re-invest the dividend and buy more shares (for simplicity sake, we will say the stock price stayed the same with no dividend increases) the following year, you would be able to buy 5 more full shares and your dividend payment would be $170. After 10 years it would look something like this:

You now have 165 shares and are being paid $267 a year. Stock prices never stay the same; they go up and they go down. For this example it made it easier to see the compounding growth without getting to complicated.

To get the maximum earning potential from compounding, the earlier you start, the better. By maximizing the amount of time you invest, you can make a larger return from a smaller investment. I found this example from Investopedia and it sums up my point very well.

Starting Early
Consider two individuals, we'll name them Pam and Sam. Both Pam and Sam are the same age. When Pam was 25 she invested $15,000 at an interest rate of 5.5%. For simplicity, let's assume the interest rate was compounded annually. By the time Pam reaches 50, she will have $57,200.89 ($15,000 x [1.055^25]) in her bank account.

Pam's friend, Sam, did not start investing until he reached age 35. At that time, he invested $15,000 at the same interest rate of 5.5% compounded annually. By the time Sam reaches age 50, he will have $33,487.15 ($15,000 x [1.055^15]) in his bank account.

What happened? Both Pam and Sam are 50 years old, but Pam has $23,713.74 ($57,200.89 - $33,487.15) more in her savings account than Sam, even though he invested the same amount of money! By giving her investment more time to grow, Pam earned a total of $42,200.89 in interest and Sam earned only $18,487.15.

So there you have it. Start saving for the future as soon as you can and let interest do all the work so that one day you won't have to. Making money from money, in a powerful yet simple income generating machine is a great step to financial freedom. Is your money working for you?