Barrie's Biggest Penny Pincher

Learning About Credit

2010-11-29T20:51:00.000-05:00

Your credit score is a very important thing in life, it can make or break you financially because it is linked to almost every financial decision you will make. It will give you the chance to get a loan for your first car, secure a decent rate for your mortgage, help you to save money at a larger interest rate for your children or grandchildren. Basically a good credit score can make your life and everything you decide to invest in a breeze and a bad credit score can severely hinder you from your dreams of a car, a house without rent, and the ability to plan for a financially sound future for your children or grandchildren.

So how do you get it, how do you lose it, and how the heck do you find out where you stand in this invisible financial rating scale.

The three credit reporting agencies in Canada are Equifax, Trans-Union, and Experian. These companies monitor your financial history when it comes to loans and debt. There are literally hundreds of different websites that will give you your credit score from all firms. One thing to make sure of is that all scores are present when you check it because one bad score can make a huge difference.

The way that you gain credit is by paying your loans and bills on time, repeatedly. This will show that you are financially stable and are able to support the debt and you accumulate. The way that you lose credit is by doing the exact opposite. Not paying your bills on time or at all will ruin your credit score rather quickly, the one thing to remember here is that although you can rebuild your credit score it takes much longer to rebuild than it does to lose.

Staying out of Debt

2010-11-28T20:16:00.000-05:00

Debt can be a very sneaky thing with interest rates being as high as they are today. If you are in debt with your credit cards, or behind on your mortgage payments there are a couple of different ways to either give you some breathing room or making your total payments lower. First off you should always invest in insuring your credit cards, this is important because you never know when you wont be able to make a payment. With this insurance you can miss one or two payments on your credit card while you get back on your feet. Another easy step in making sure you stay in the black is organizing your credit card payments in a strategic way throughout the month. make sure that all of your bills come due on days when you will have the money to pay them (pay days). If you believe that you are going to miss an upcoming payment pay-day loans are a great way to get the cash you need. These are available at places like money-mart, they give you money based on your paycheck amount and front you the money until your next pay day. You can also defer your mortgage payments, most institutions will not tell you about this but each year a customer is allowed up to two mortgage deferrals. A deferred payment is a payment that is pushed back a month and is then put onto the end of your mortgage or loan. This is a great technique because it saves you a full months mortgage payment and judging on your mortgage you may not have to pay this amount back for 20 years. These are all preventative measures for card and mortgage holders in order to cover the payment until a later date. These options are very important because debt can raise very quickly due to compounded interest rates.

Hiring Financial Help

2010-11-28T09:01:00.003-05:00

1. Anyone can call himself a planner.
To avoid amateurs, hire a planner who's earned special credentials (such as a Certified Financial Planner or Personal Financial Specialist designation) by meeting training standards or having a certain level of experience.

2. Planning is more than investing.
Not all planners offer comprehensive services. Some just give investment advice or focus on one aspect of planning, such as insurance or taxes.

3. Expand your choices.
When hiring a planner, interview at least three pros to find the one who can deliver the services you need and who's compatible with your style.

4. Personal references are a good place to start - but not the last stop.

A reference from a friend or family member is a great way to search for a financial planner. But make sure you've got similar needs as the person who's giving the referral. Go to groups like the Certified Financial Planner Board of Standards and the Financial Planning Association for additional references.

5. Understand how your planner is getting paid.
The three most common set-ups are: Fee-only, fee-based, and commission-based. Fee-only planners don't get commissions for the products they sell - fees are for the advice they give. Fee-based planners may receive commission on some products they sell, but most of their money comes from a fee you pay them. Commission-based planners are paid by the companies whose products they sell.

6. Check credentials.
Check to see if a planner's record is tarnished by disciplinary problems or complaints. Groups that award credentials or state agencies keep tabs on planners and can provide help.

7. Get references.
Ask a planner for two or more of his clients - then follow up and call to find out how a planner performs in specific circumstances, such as during a financial crisis.

8. Express yourself.
The quality of a planner's advice is correlated to how well he or she knows you. Make sure a planner asks questions about your finances, goals, risk tolerance and philosophy. If they don't ask, they probably aren't paying adequate attention.

9. Know what they're selling.
Find out what financial products a planner sells and how much he or his firm earns for making a sale. Be wary of planners who push one product - say, one family of mutual funds or one kind of insurance - as they may not give you the unbiased or comprehensive advice you need.

10. Know yourself.
The best planner will take his cues from you. Before you hire someone, identify the financial goals you want to meet, your assets and liabilities, your risk tolerance, and investment style. Are you self-directed or do you want specialized help?

Things To Do Before Buying A House

2010-11-26T09:45:00.000-05:00

1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.

2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.

3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.

4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.

5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.

6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.

7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.

8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.

9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to 10 percent lower than what the seller is asking.

10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.

Guaranteed Investment Certificates (GIC's)

2010-11-23T20:14:00.001-05:00

Gauranteed Investment Certificates work in somewhat the same way as bonds, you buy the certificate from a bank and you recieve payments of interest off of your intitial investment. These can be given out as the investor chooses from either once a year to multiple times a year. Also as the name implies your initial investment is gaurenteed from the bank so there is really no risk involved other than the bank going under which is very unlikely with a stable economy. Another similarity to bond is that most GIC's have a fixed period of time for the investment to mature or for you to get your money back. There are GIC's that allow investors to collect their money as needed but they are also accompanied by lower interest rates. Investment times for these can range from less than a year up to ten years. Interest rates on these investments can range from around 1 percent in the first year up to roughly four percent by the fifth year.

This is just a quick summary of what GIC's are, for more information or if you want to buy one of these investments you can contact any large bank, or if you have any questions please leave a comment and I will get back to you ASAP.

10 Ways to Protect Your Credit Cards

2010-11-23T20:10:00.002-05:00

You may think these ten rules are unnecessary. But if you ignore them, you make it easy for the wrong people to use your cards

Never leave your cards unattended at work. There are more credit card thefts in the workplace than in any other single location.

If your credit card is programmed to access an Automated Banking Machine (ABM), protect your Personal Identification Number (PIN) or security code. Don't write it down, memorize it.

Don't leave your credit cars in your vehicle. A very high proportion of credit cards are stolen from motor vehicles.

Always check your card when returned to you after a purchase. Make sure it is your card.

When traveling, carry your cards with you or make sure they are in a secure location.

Report lost or stolen cards immediately. Most fraudulent use of cards takes place within days of their being lost or stolen.

Sign the back of a new card as soon you get it. Destroy unwanted cards so no one else can use them.

Make a list of all your cards and their numbers. This key information is helpful when reporting lost or stolen cards.

Always check your monthly statement. Make sure the charges are yours. Report them to your card company if the entry is not yours.

Never give your card number over the phone unless you are dealing with a reputable company. The only time you should give it is when you have called to place an order.

Saving Money on Mortgage Rates

2010-11-23T16:50:00.000-05:00

Mortgage rates fell this last month, which is great news for homeowners like me. My mortgage is up for renewal next year. With any luck, this will be the last mortgage contract that I'll need to sign before my three-bedroom detached house in Barrie is paid off in full. The bank says that I can reach that goal in five years.

Since I have a large amount of equity in my home and a good credit score, I’ll be negotiating for the best possible interest rate. Here are three tips on how ordinary folks like me can do that:
Tip 1: Get a copy of your credit report and credit score. The two major credit bureaus are TransUnion and Equifax Canada. Both provide free and fee-based credit reports for consumers.
You usually have to pay for your credit score information, although I recently got both my credit report and credit score for free from the bank that issued one of my credit cards. Ask your bank if they offer any such no obligation deals.
Check for any inaccuracies on your credit report since those could hurt your credit score. Your credit score is key to getting the best possible rate, experts say. The higher your score, the less risk you represent to the bank.
Tip 2: Compare rates. You can compare posted rates at thestar.com
If you are too busy to shop the market, consider having a mortgage broker do that for you. “A mortgage broker has access to virtually every single product based on your profile,” said Ranjit Dhaliwal, a mortgage broker with Mortgage Intelligence Inc.
In addition to great rates, mortgage brokers can provide advice on the contract’s terms and exit clauses. It is important to note, however, that some banks do not participate in the broker network. Among them are Bank of Montreal and Royal Bank of Canada.
If you shop the market yourself, it is important to remember that too many hard inquiries against your credit profile in a short period of time can actually hurt your credit score, Dhaliwal said. That can be a problem for individuals who may have borderline credit scores. A mortgage broker, in contrast, only needs to do one credit check to shop the market.
Tip 3: Understand how mortgage rates are priced in order to get a discount off the posted rate. While variable-rate mortgages are largely influenced by the banks’ prime rates, fixed-rate mortgages are linked to the bond market.
Banks generally try to match maturities when they finance mortgages with bonds. For instance, five-year mortgages are usually paired with five-year government bonds. You can look up interest rates on Government of Canada bonds on the Bank of Canada website.
The spread between those bond yields and what the banks charge consumers is usually between 75 and 125 basis points. (One basis point equals 0.01 per cent).

The truth about credit cards

2010-11-20T16:37:00.000-05:00

Low-interest cards
These are the best bets for people who are not able to pay off their monthly balance and have to carry it forward, according to Keeley and Woolsey.
You won't be collecting travel miles or other rewards, but you'll be paying a lot less interest.
“If you can't pay off your balance each month, a reward card is not right for you. Get a low-interest card instead,”. “You want to avoid having a lot of high-interest debt.”
The annual fee is usually minimal, because there is a lot of competition between banks and other issuers. Annual interest rates can be as low as 6 per cent (or as high as 10 to 12 per cent) and are guaranteed for a period (usually three years) as long as you pay your bills on time.

Reward cards
Caution, reward cards are not recommended for people who can't pay off their credit card balances in full each month, because of the substantially higher interest rates (typically just under 20 per cent).
You'll also be paying an annual fee, from $120 to $180.
“For the average consumer, they are not a good choice. They are good if someone is traveling a lot,”
Even so, they outnumber low-interest cards two-to-one.
“A lot of cards have a reward component, whether it's cash back, points or air miles,”
“But by the time you redeem the free airline ticket or merchandise, it may not be to your advantage because you are paying higher interest rates. Merchants also pay more to accept rewards cards, and they pass their higher costs on to their customers.”
Consumers have to decide what kind of rewards are best for them, “Is it discounts on everyday living items like gas or groceries or aspirational goals like a vacation or a new TV or a cheque for $100?”
If you travel a lot, a travel rewards card might be for you: certain airline cards provide substantial sign-up bonuses and often have partnerships with car rental agencies and hotels.
You have to use reward cards wisely, “Reward cards tend to make people spend more and cause them to shift away from paying by cash or cheque,” he explains. “They tend to spend more in general and justify it because they are earning points or another reward.”
“If you have to carry a balance on a card, reward cards aren't right for you.”

Cash-back cards
These cards are a type of reward card, where you receive a percentage of cash back for what you spend on purchases.
Typically, it's one per cent, although some cards offer teaser rates, like 5 per cent for a limited time.
If you use your card to buy things like gas and groceries, it may not be a bad idea “as it's really a way to increase your bottom line.”
The downside is that like other types of reward cards, there is a higher interest rate attached (about 20 per cent).

Secured or instant approval cards
These function like a regular credit card, but are collateralized and require a security deposit. If you don't pay your monthly bill, your cash deposit can be seized.
These typically are for people who can't get approval for other types of credit cards or have a limited credit history in Canada.
“Depends on how the banks rate each individual, some security deposits could be $75 or $300 or more,”.
“These are a good option for someone who wants to build or repair their credit history,”. “This can potentially be the only avenue for them and are a better option certainly than a prepaid card (see below).”
The credit limit will generally be low but these cards offer an opportunity to use a credit card responsibly which may help strengthen your credit history.

Charge cards
These cards are not technically credit cards, though consumers may perceive them as such. The most widely recognized charge card is American Express, which has no pre-set spending limit and offers complimentary insurance program, travel benefits, a loyalty program and hotel and airline discounts.
There is an annual fee attached and the catch is you must pay off your balance in full each month.

Pre-paid cards
These aren't credit cards per se, but operate in a similar fashion and are quite prevalent.
“They make sense for teens or post-secondary students, or immigrants who are working,” he notes. “You can load cash onto the card and use it anywhere you might use a Visa or MasterCard, you can buy items online or send cards to relatives in other countries. Or you can load up your child's card if they are attending school out of town. ”
The cardholder can't spend more than the amount loaded onto the card and it's not a borrowing vehicle, so it won't build a credit history.
“It's safer than carrying cash,” he adds. “It's like a portable chequing account but it's fairly fee intensive ($5 to $10 per month or fees are charged per transaction) because there is no interest charged.”

Are your Credit cards going crazy?

2010-11-19T20:07:00.001-05:00

Credit cards easily get out of control. You simply don't realize how much you are charging and how little you are paying. Before you can even think about paying your card off entirely, you have to simply regain control of your credit card debt.
Here are five simple steps that will help you regain control, and eventually pay off your debt. Follow them step-by-step and you will find that they aren't overwhelming or too difficult. In fact, they don't take much time at all.
1. Pay more.
You shouldn't carry a balance on your credit card from month to month, but you probably are anyway. If you are only paying the minimum payment, you are slowly killing yourself. This will stretch your payments out for decades. Yes, decades. You need to start putting extra money to each credit card payment. Even if it is only $15, you are saving time and money.
2. Make a phone call.
Take the time to call your credit card companies and request a lower interest rate. It isn't hard to do. You simply request a better interest rate. If you are a good customer who makes his or her payments on time, you will probably be successful. Tell them that you want the lowest rate possible. You can even say that you have received an offer to transfer your balance to another card at a better interest rate. You want to give them a chance to compete. If they won't lower your rate, consider switching to a card with a lower rate.
3. Say goodbye.
Send your cards on a little vacation. If you have debt and you can't pay it completely off, you need to stop using your credit card for now. Put it somewhere that you won't be able to easily access. This removes the temptation to simply charge this one thing. I suggest a safe deposit box at the bank. This usually always works. If you have a true emergency, you can get it. But it often isn't worth the hassle to get it to just buy a new sweater.
4. Look for money.
Now is the time to start paying that debt off with what you already have. If you have an 18% credit card and money in the bank earning 5%, you are losing 13% each month. Take your savings and pay off your credit card. This will save you interest and a lot of worry. Then work on building back up your savings by having the amount you paid in credit card debt automatically deposited into your savings each month.
5. Vow to change.
Now that you have seen the stress and problems that credit cards bring, you can make a commitment to change. Credit cards aren't the problem, they just contribute. The problem is the way you spend. You need to realize that you cannot continue to shop the way you do. You have to change your spending habits so that you aren't tempted to use your card. It is hard. People slip back into it easily. But you need to find a way to remind yourself that it isn't worth it. Regain control of your credit and turn it around.

Bonds vs. Stocks

2010-11-18T09:58:00.000-05:00

The 1990s enjoyed the biggest bull market in U.S. history. During the decade the Dow more than quadrupled.

While stocks, as represented by the S&P 500, have not always performed so extraordinarily -- compounding at a dazzling 15.3% annual rate for that time period -- they have usually been the best performing asset class over time.

Since 1926, stocks have returned an annual average of 9.8% through 2010 -- and that included the most recent horrendous bear market. Over the same period, government bonds returned 5.4%. (This according to the folks at Ibbotson Associates in Chicago.) In other words, if you're investing for the long-term, stocks are the place to be.

But if you're looking to invest money you may need in a year or two, the stock market can be downright dangerous. Look no further than the Dow's 777-point drop on Sept. 29, 2008. Or the 554-point drop on Oct. 27, 1997, and the 508-point drop on Oct. 19, 1987 -- a harrowing 22.6% loss -- to see what a difference a day can make.

Then there are those bloody bear markets, like 1973-74, when the Dow fell 45%. In 2008, the total stock market lost 37%.

To cite a severe example, if you had bought the stocks in the Dow Jones industrial average at their peak in early 1966, you wouldn't have made any significant profit until mid-1983 -- more than 17 years later.

Even that was better than if you'd bought in the pre-crash peak of 1929. After that, it took until 1954 for the market to regain all it lost in the Depression. As for the market woes of the early 2000s, it would take more than five years using an historical average rate of return, for the Dow to return to its glory-day levels from its October 2002 low.

Bonds, of course, are another story. While they won't give your portfolio the kind of kick that stocks will, nor are they likely to give it the same kind of thrashing. In 1994, the worst single year for bonds in recent history, intermediate-term government bonds (that is, Treasury securities with maturities of 7 to 10 years) fell just 1.8%. In the good year that immediately followed, they bounced back an impressive 14.4%. From 2000 through 2002, bonds outperformed stocks every year -- a historic "three-peat" that hadn't been seen in the modern investment era that began in 1929.

Ways of Dealing With Debt

2010-11-16T20:27:00.000-05:00

If you have already missed payments on your car, mortgage or car loan it can seem like there is no way of getting away from it, below I will explain a couple of different options you have in this situation.

First a foremost ask friends and family for a loan, this is the best possible way to pay off your bills without paying ridiculous amounts of interest. It's amazing how stubborn or proud people can be in this situation, the fact is that allowing these debts to continue to go past due and accumulate will make the situation worse and ultimately effect your credit score which can limit you in an endless amount of ways.

Second if you are a member of a church or you are aboriginal and belong to a band you can apply for loans from these institutions and organization. These are the second best way of coming accross money to pay off your debts. These loans can have very little to know interest on them and very long payback periods.

Third is a regular bank loan, this only works if this is one of your first times in this situation because your credit score will still be high enough to support your loan. This ultimately helps because it transferes your debt from a high interest credit card to a low interest bank loan. With this you can effectively move your debt from a 19 - 29% credit card to a 4-8% bank loan saving you large amount of money in the long run.

Fourth is a consolidation loan, this is when you put all of your debts into a single bank loan, this means your mortgage, credit cards, and car loan will all be in the same account with a lower interest rate. This also can lowere your total monthly payments on these three loans by a substantial amount while also lowering the amount of interest accumulated on them throughout the month.

Fith is credit counselling services. Many organizations providing this services do so for free, they can help to exhaust many different options for you and also help to reduce your debt significantly, also in some cases they can put a freeze on your accounts, stopping them from accumulating any more interest and allowing you to pay down the remaining debt in installments. The problem with this option is that it is basically like going bankrupt exept you still have to pay off your debt.

Sixth is going bankrupt, this is a very serious option with big implications. This can be done through a lawyer or a trustee. Basically what happends is that all of your debts are cleared however all of your income is then monitored by the government and the trustee in order to ensure that all income is used to pay any possible new debt. This also basically destroys your credit score because it shows you are unable to pay the debt you have accumulated. Your accounts are then frozen in this state for up to seven years.

The good new with your credit score is that it can always be rebuilt, as long as you become financially smart with your spending and pay off any new debt ON TIME!!

Income Properties

2010-11-10T23:30:00.000-05:00

One great way of investing your money is to invest into property. This can have a great return over a long period of time but can also give you returns in the short term. Investing in housing around colleges and universities is a great way to make an extra income on the side without very much work. Rent from students especially in a larger house that can fit more than four people can easily cover your mortgage payment every month and give you some extra money to cover any expenses associated with the house. In Ontario rent for a average house can cost anywhere from $300 per month to upwards of $800 in urban areas such as Toronto. If we look at an average of $550 per month across the province in a four person house you can receive $2,200 in rent each month. Other Property investments can be in more rural areas can be a great investment if you have the time and the money to buy and pay the mortgage. With the large expansion of the GTA (Greater Toronto Area) any underdeveloped areas around there can still be bought with a relatively small investment and can be sold down the road to make a large profit.

Basics for Investing

2010-11-09T21:49:00.000-05:00

1. Over the long term, stocks have historically outperformed all other investments.

From 1926 to 2010, the S&P 500 returned an average annual 9.8% gain. The next best performing asset class is bonds. Long-term U.S. Treasurys returned, on average, 5.4% over the same period.

2. Over the short term, stocks can be hazardous to your financial health.
On Dec. 12, 1914, stocks experienced the worst one-day drop in stock market history -- 24.4% . Oct. 19, 1987, the stock market lost 22.6%. More recently, the shocks have been prolonged and painful: If you had invested in a Nasdaq index fund around the time of the market's peak in March 2000 you would have lost three-fourths of your money over the next three years. And in 2009, stocks overall lost a whopping 37%.

3. Risky investments generally pay more than safe ones (except when they fail).
Investors demand a higher rate of return for taking greater risks. That's one reason that stocks, which are perceived as riskier than bonds, tend to return more. It also explains why long-term bonds pay more than short-term bonds. The longer investors have to wait for their final payoff on the bond, the greater the chance that something will intervene to erode the investment's value.

4. The biggest single determiner of stock prices is earnings.
Over the short term, stock prices fluctuate based on everything from interest rates to investor sentiment to the weather. But over the long term, what matters are earnings.

5. A bad year for bonds looks like a day at the beach for stocks.
In 1994, the worst year for bonds in recent history, intermediate-term Treasury securities fell just 1.8%, and the following year they bounced back 14.4%. By comparison, in the 1973-74 crash, the Dow Jones industrial average fell 44%. It didn't return to its old highs for more than three years or push significantly above the old highs for more than 10 years.

6. Rising interest rates are bad for bonds.
When interest rates go up, bond prices fall. Why? Because bond buyers won't pay as much for an existing bond with a fixed interest rate of, say, 5% because they know that the fixed interest on a new bond will pay more because rates in general have gone up.
Conversely, when interest rates fall, bond prices go up in lockstep fashion. And the effect is strongest on bonds with the longest term, or time, to maturity. That is, long-term bonds get hit harder than short-term bonds when rates climb, and gain the most when rates fall.

7. Inflation may be the biggest threat to your long-term investments.
While a stock market crash can knock the stuffing out of your stock investments, so far -- knock wood -- the market has always bounced back and eventually gone on to new heights. However, inflation, which has historically stripped 3.2% a year off the value of your money, rarely gives back what it takes away. That's why it's important to put your retirement investments where they'll earn the highest long-term returns.

8. U.S. Treasury bonds are as close to a sure thing as an investor can get.
The conventional wisdom is that the U.S. government is unlikely ever to default on its bonds - partly because the American economy has historically been fairly strong and partly because the government can always print more money to pay them off if need be. As a result, the interest rate of Treasurys is considered a risk-free rate, and the yield of every other kind of fixed-income investment is higher in proportion to how much riskier that investment is perceived to be. Of course, your return on Treasurys will suffer if interest rates rise, just like all other kinds of bonds.

9. A diversified portfolio is less risky than a portfolio that is concentrated in one or a few investments.
Diversifying -- that is, spreading your money among a number of different types of investments -- lessens your risk because even if some of your holdings go down, others may go up (or at least not go down as much). On the flip side, a diversified portfolio is unlikely to outperform the market by a big margin for exactly the same reason.

10. Index mutual funds often outperform actively managed funds.
In an index fund, the manager sets up his portfolio to mirror a market index -- such as Standard & Poor's 500-stock index -- rather than actively picking which stocks to purchase. It is surprising, but true, that index funds often beat the majority of competitors among actively managed funds. One reason: Few actively managed funds can consistently outperform the market by enough to cover the cost of their generally higher expenses.

Saving Money with Coupons

2010-11-06T23:45:00.000-04:00

The easiest way to save money is to save on everything, the best way to do that is to look in the paper for different deals in different places. This can be done with food and other items and will really ad up. Also buying in bulk helps to save a couple dollars as well. The title of this post is actually a link to a great coupon site that can help you save money every single day. I hope this is helpful to you all.

Personal Money Management

2010-10-28T23:20:00.000-04:00

This post is about my favourite investment book called The Wealthy Barber. This books talks about different investment and saving strategies that can really help the average person recognize their potential to create and keep wealth. I highly encourage any person to go out and buy this book it talks about pretty much everything that you would want to know and that you would want to do to become more successful and to get the most out of the money that you are already making.

For a summary of this book please click on the link below, I encourage you to read through it and also if you can go out and buy this book and read it a couple of times, it can help people from all walks of life.

Here is the link to the summary:

http://www.character-education.info/Money/books/the-wealthy-barber.htm

Investing in Treasury Bills

2010-10-28T23:00:00.000-04:00

Treasury bills are one of the most secure types of investments that you can buy. These are fully guaranteed by the Canadian government and offer attractive interest rates. These investments usually have a minimum price of $5000 and last from 3 months to one year. The money that is invested is locked in for this period of time and is reimbursed plus interest at the end of the term. These can be sold at any time but just like bonds they do require an investment of money that is not accessible until they are sold or until they end of the investment. These investments can be bought through any large financial institution and are a great recommendation for anyone who has the capital.

If you have any questions about T-Bills feel free to comment and I will expand on the topic and answer them to the best of my ability.

Tax Free Saving Account

2010-10-28T22:18:00.000-04:00

Saving just got a whole lot easier

The new Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).

How the Tax-Free Savings Account Works

Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.
Investment income earned in a TFSA is tax-free.
Withdrawals from a TFSA are tax-free.
Unused TFSA contribution room is carried forward and accumulates in future years.
Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
Contributions are not tax-deductible.
Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
TFSA assets can generally be transferred to a spouse or common-law partner upon death.

Information retrieved from:

http://www.tfsa.gc.ca/

How I Managed To Get Through College Without Debt

2010-10-28T22:00:00.000-04:00

I put myself through college by working and with scholarships and managed to stay debt free. Before school started I took out a small loan for my first car, so I could get to school. I paid it off in just under a year. For me debt free has meant that I'm just careful with my money. I don't buy anything until I can pay in cash. But the thing is that I can still get almost everything I need right away. I'm never really stressed about my money. I'm glad that I don't have debt.

Money Saving Tips

2010-10-28T21:53:00.001-04:00

Use Ebates for up to 25% cash back.

Combine your cable, internet and telephone service.

Slow down your internet service.

Improve your credit score.

Send away for and follow up on rebates.

Buy Your Next Cell Phone from Amazon.

Buy a refurbished Mac.

Convert to a gas water heater.

Request a reduction in the interest rate for your home equity line of credit.

Request a reduction in the interest rate on your credit cards.

Refinance you mortgage.

Get rid of Private Mortgage Insurance.

Get your books from the library.

Get DVDs from the library.

Get DVDs from Red Box.

Read magazines at the library or online.

Subscribe to magazines that are must reads.

Buy your car over the internet.

Request a discount on trash service.

Never pay checking account fees.

Get a rewards card.

Don’t pay interest on credit cards.

Take advantage of 0% credit card offers.

Replace incandescent bulbs with compact fluorescent light (CFLs) bulbs.

Drive your car longer.

Pay your life insurance annually.

Pay car insurance semi-annually.

Increase insurance deductibles.

Think before submitting an insurance claim.

Get rid of your home telephone.

Consider VOiP telephone service.

Shut vents in unused rooms.

Eliminate some cable service.

Agree to limit gift giving.

Get healthy.

Cancel the health club membership.

Pass on extended warranties.

Take your lunch to work one more day a week than you do now.

Buy low cost mutual funds.

Take advantage of employer 401(k) matches.

Use flexible spending accounts.

Get tires from Costco or other wholesale clubs.

Keep tires properly inflated.

Stop smoking.

Drink less alcohol.

Buy term life insurance.

Buy generic over-the-counter medicines.

Get organized and avoid missed payments.

Buy online when it saves you money.

Consider MythTV PVR in replace of TiVo type services.

Use Open Source software when possible.

Check the insulation in your home.

Buy energy efficient appliances.

Stay married.

For full explanation of these money saving tips follow this link to the full website:

http://www.doughroller.net/smart-spending/51-painless-money-saving-tips/

Investing in Stocks

2010-10-24T22:42:00.000-04:00

There are two basic types of stocks that I will be talking about in this segment:

Preferred Stocks and Common Stocks

These are both bought and traded in the same way however they are different in a couple of fairly significant ways. First off preferred stock is a much less risky investment than common stocks. The reason for this is that they are guaranteed to be paid dividends from the company every year and second they are protected by being closer to the actual company, what this means is that if the company where to go under the holder of preferred stocks would be paid back what they could of their original investment. Basically they are one tear above the common shares meaning that they get their share of the pie before any money is paid out to common shares. This is an important safety feature for the investor because it gives them more reassurance in their investment as well as more security. Now going back to the start of the paragraph i would like to explain what dividends are, these are payments that stakeholders of a company receive from a company usually once per year. This money comes from the profit made by the company in the past year. The key difference between common stock and preferred stock is that companies are required to give these dividends to preferred stock holders and not to common stock holders. This essentially creates another level of income from the investment, which is always a positive. Both of these stocks are traded on stock exchanges around the world and money is usually made on these investment from buying the stock and allowing it to raise up. From there the investor can sell the stock at a higher price for a profit.

Stocks are the most volitile investment that you can make but they usually give the largest return, once again going back to the golden rule (the larger the risk the larger the return). As stated before the preferred stock is more protected and therefore the prices of these stocks fluctuate much less than common stock making their return smaller.

Hopefully this information is use full to everyone who is trying to get a better understanding of investing. If any readers have questions i encourage that you post a comment and i will get back to you as soon as possible.

Top Ten Money Saving Tips

2010-10-22T21:08:00.001-04:00

Save Money Tip 1

Spend Less. This is not over simplifying the best way to save money! It is essential if you are serious about being a long term money saver and being able to save money every day. Review what you spend and look at ways you can save money. Consider making telephone calls for instance only at off-peak times. Do you really need to have newspapers and magazines delivered? Can you do without those coffees you buy at break time everyday - would a flask of coffee taken to work save you money? What about using the public lending library instead of buying books or music CDs? Once you start looking for little ways to save money and spend less you will quickly become an expert and really save money. Save Money Tip One

Save Money Tip 2

Establish a personal budget. This is essential for families and individuals and can be the fastest way to save money. You will instantly see your incomings and outgoings once you create your budget. You will not be able to save money unless you know how much money you have coming in, and how much money you have going out. Once you have prepared a budget of incoming money and outgoing money, you WILL be able to identify areas where you can save. It is MUCH more difficult to save money over a long period of time (the rest of your life?) without a budget. Save Money Tip Two

Save Money Tip 3

Bulk is good. Think about shopping and buying in bulk. Save money grocery shopping by planning meals in advance and bulk-buying. You can also save money by cooking in bulk. This is a real way you can save money with little preparation and almost no extra outlay. Always purchase generics when you can. Prepared foods and convenience foods will always be much more expensive than the generic ingredients needed to make the food. Preparing food in bulk and in advance also gives you the opportunity to plan ahead and be more accurate in your budget. Save Money by buying in bulk whenever you can. One thing to be aware of when buying in bulk is to be sure that any product you buy will get used before it goes bad - you won't save money if you have to throw stuff away. Buying in bulk is not only a good way to save money it is also a good strategy for coping with and surviving emergencies. Save Money Tip Three

Save Money Tip 4

Make sure a sale is a sale. By this I mean do your price research before you commit to making an expensive purchase in a retailers money-off sale. You have to be sure the sale really is a sale and not a creative marketing strategy of the store to encourage you to spend your money without thinking. Once you have researched the true price of a product (any product) you are in a good position to take advantage of a sale, special offer or discount and really save money. "Buy one get one free", "50% off", and "Huge Discount" will only help you save money if the actual price you pay is lower than you would pay somewhere else for exactly the same product. Save Money Tip Four

Save Money Tip 5

Buy used. Sure, we all like to buy new. But there are huge money savings to be made in buying used. Typically cars lose one-third of their value in the first 24 months from new. Why not buy a car 24 months old? Other items such as clothes can be worth even less just the day after new. Look for ways to buy "as good as new" items and save money. Typical products you might consider buying used to save money include: cars, clothes, electrical goods, garden items... tools and sheds, household items... pots and pans, the list of used goods where you can save money is endless. Save Money Tip Five

Save Money Tip 6

Don't carry excessive debt. Some debt in our lives may be essential. We may need a mortgage to purchase a home, we may need to use our credit card to make purchases until pay-day, but your aim to save money should be to have as little debt as possible. Credit Card deb is typically the most expensive debt we may carry. You will be able to save money every month if you make it an absolute rule to pay off your outstanding balance every month. If you can have the discipline to do this you will save money by effectively having no debt, and thus no interest charge on your credit card(s). Save Money Tip Six

Save Money Tip 7

Save Money. No, I mean really save some money. Each week or each month get into the habit of putting an amount, however small into your savings. You could start by saving a very small fixed amount each time and then move to putting in larger amounts once you begin to save money from your other money saving strategies. You will find that by saving money on a regular basis you will quickly build up a store of reserve money and also feel motivated to save more. The hardest part is to take the first step and start saving money - so START TODAY and save some money NOW! If you find it impossible to save money once you have it, consider having money deducted from your paycheck direct each month. This can be a great way to save money rapidly as once it is set up you will not notice it is being collected and your savings will grow with no more effort from you. Save Money Tip Seven

Save Money Tip 8

Shop Wisely. Consider markets, superstores, farmer's markets, local shops, marts and stores. Anywhere is worth checking out to see if you can save money. Farmer's Markets can be particularly good places to save money. Typically you are buying direct from the producer of the product so the savings are passed on to you. Use your bulk buying strategy here - farmer's markets often offer opportunities to save money by buying larger quantities of staples, for instance potatoes, rice or corn. Save money and shop wisely. Save Money Tip Eight

Save Money Tip 9

Eat in rather than out. This is a huge area where you can save money. A cup of coffee taken out could easily cost you TWENTY times (or more) what it would cost you to make it at home. So think before you drink when you are out. Eating is the same. Fast food restaurants are counting on you eating food that you perhaps don't really need at that time but buy just because it is quick. Why not wait until you get home and have a more nutritious meal and save money at the same time. Save Money Tip Nine

Save Money Tip 10

Use less. This money saving tip is a lesson we all need to learn. We live in a consumer society where waste is a huge problem. If we could all use and consume less there would be less waste, less power consumption, and the benefits for you are SAVING MONEY. Consider using less shampoo when you wash your hair, this may not mean washing your hair less effectively it means not flushing the excess shampoo and your money down the drain. What about saving on heating? Turn the thermostat down or put on extra clothes when you are cold. Turn off lights, the TV and the computer when they are not in use. Each little saving you make will build up and enable you to save money. Huge savings in energy can be made which will save you money and be good for our planet and the other people on it. Save Money Tip Ten

Investing in Bonds

2010-10-20T22:20:00.000-04:00

Bonds are a great way to invest your money and make a small profit. These bonds are basically companies and the government asking the public for a loan. In return for these loans they give a small return usually somewhere around 5% over a certain period of time. Some bonds can be 1 year long while others can last up to five or more years. These bonds as stated before can be purchased through the government who usually give the least return, as well as companies. Usually a general rule of thumb is that the larger the company, or the more financially stable the company the lower the rate of return will be. The smaller or less secure companies will need to give a larger return because they are more risky. This ties into the general rule of investments which is the larger the risk the larger the return. So now that we have discovered what bonds are I would like to talk about where you can buy these bonds. Generally these bonds are traded on their own market, similar to the stock markets, Bond markets list many different bonds at certain rates and different dollar values. Bonds can also be bought directly through the government when they are offered. A great example of this would be Canadian Savings Bonds which I believe are currently available. Also throughout the duration of the bond the owner is paid what is called coupons, this is a annual or bi-annual payments that are given to the bond holder as payment for buying the bond. These coupons are the only money that you receive until the end of the bond which is when you are reimbursed the amount of your original capital. Another interesting thing about bonds is that you can actually trade these bonds once you own them. This allows investors to regain their investment and then some if they would like to make a profit without waiting the entire term of the bond or if they just need the money. The unfortunate thing about bonds is that they do have risk, if the company that you purchase a bond from goes under you can lose your investment. This once again refers to the golden rule the larger the risk the larger the return. Another downfall of bonds is that the money that is invested is locked in for the duration of the bond unless it is sold or traded.

Bonds are a great way to invest and save money if you are able to invest large amounts of money, and are also able to live without that money for a long period of time. Bonds are one of the more secure ways to invest and are good for people who do not want to take on too much risk.

Saving money becomes a routine

2010-10-17T21:34:00.000-04:00

Household budgeting tips

Match your long distance company with your calling habits. If most of your calling is done in the evenings, get a plan that gives you unlimited evening and weekend calling.
Turn off lights and anything electrical behind you.
Cook with covered pots. It takes much less energy to cook if the pot is covered.
Plan meals for the weeks / month ahead prior to going to the grocery store.
Make a shopping list and stick to it.
Buy store brand foods instead of national name brands.
Use coupons.
Shop on double or triple coupon days.
Shop for groceries on a full stomach.
When replacing light fixtures, consider compact fluorescent.
Turn off the water while you brush your teeth.
Check on prescription drugs to make sure using your health plan saves you money.
Only wash full loads.
Only have one extra set of sheets for each bed size in the house. This helps in terms of clutter also.
Sell at a kids consignment shop and buy what looks good.
If you have a son heading toward 13, don't buy ahead because they can virtually skip sizes.
Learn to cook food that doesn't come in frozen trays.
Water is not just for bathing, try some instead of that next Coke.
Borrow books from the library (and whatever else they offer).
Avail yourself of free community concerts.
Volunteer to usher at your local performing arts center so you see the shows for free.
Make frugal choices you can live with so you don't feel deprived.
Learn the popular size of a product because it may be your best buy (often 18oz jars of peanut butter are loss leaders).
If movies are part of your life, down scale to matinees or the $1.50 theaters.

Tips on Saving Money

Ask yourself "Do I need it?" "Do I need it now?"
Pre-allocate money so that you can take advantage of any savings offered by prompt payment. I save a significant amount on oil that way as well as property taxes.
Pay your bills over the Internet - many of the banks provide for online banking. There is no postage, no cheque writing fee, and all transactions and their clearance dates are clearly listed on statements and user generated reports. Most banks software will also export and download files for use in your software.

Work tips

Pretend the vending machines at the office don't exist, or never have change.
Sometimes I think that my best investment ever was a Thermos bottle. Take your own coffee.
Bring your lunch to work rather than eat out.

Car tips

Car pool if possible.
If you drive an older car, consider carrying only liability insurance if you can assume the risk of loss. Maintain your car.
Get the cheapest price possible on auto insurance.
Know your gas stations and fill up when you're near the cheap one.
Use public transit. And then call your auto insurance agent.
Plan your trips to save gas.
Price shop. Buy used cars; the original owner pays for the new car's depreciation.

Deals of the week, payment madness strikes marketplace

2010-10-15T22:31:00.001-04:00

Jeremy Cato

Globe and Mail Update Published on Friday, Oct. 15, 2010 1:04PM EDT Last updated on Friday, Oct. 15, 2010 2:46PM EDT

There it was in a big, bold headline on the Nissan Canada website: The Bottom Line Clearance Event. Nissan is promising up to $10,000 in “factory reductions” or 0.0 per cent financing for up to 84 months.

Now why anyone would want to get locked into a car payment for seven years is beyond me. SEVEN YEARS? Even if the interest rate is zero and the car performs flawlessly, by the time the loan is paid off you will be thoroughly sick of that Nissan.

Of course, the appeal of an 84-month term is obvious – a lower monthly payment. And Nissan is not the first and only auto maker to offer seven-year loans to Canadians. This type of deal is all about lowering the monthly payment.

But the savvy shopper never buys a monthly payment and auto makers are smart never to offer them. From the car company’s perspective, locking a customer into a seven-year payment plan pushes that customer out of the purchase cycle for seven years. Not a good idea for car companies bent on churning the fleet – sales-wise -- every three or four years.

For the consumer, long payment plans usually come with a massive price tag in interest costs. You really do not want to pay for a lower monthly payment.

Here’s the telling number: $10,971.36. That’s how much more you’ll pay for a 2010 Nissan Rogue with all-wheel drive if you opt for the 84-month payment plan over the 48-month term. So you’ll fork over the price of a brand new Nissan Versa subcompact in extra interest costs to buy a lower monthly payment.

And really, the payment isn’t that much lower. The 84-month payment shuffle makes the monthly payment $502,68, versus $651.12 for the 48-month loan. The key here is that Nissan is offering 0.0 per cent financing on the Rogue over 48 months, but on seven-year terms, the interest rate is 8.99 per cent.

Stretching the payment plan to match what you might say is the life of the car – simply to lower the monthly payment – is a waste of money. If saving money is key to your car-buying game plan, don’t buy the payment; buy the car.

Finally, take note that if you are a cash buyer, Nissan Canada has a $3,000 factory-to-dealer cash incentive on the table for Rogue buyers. Nissan has $3,000 on the 370Z sports car, too. Here are details for those two deals, plus two others we like.

As usual, Deals obtained most pricing information from www.carcostcanada.com, though for this week other sources were also used.

Six habits that will make you broke

2010-10-14T21:22:00.001-04:00

It's still a week until payday, but your chequing account is almost empty already. Where did all your money go? We all have our black holes, those money pits that seem to magically make our cash disappear. Here are six bad habits that will make you broke, and how to break them.

1. Window Shopping

It can be fun to browse the aisles, and see what's out there. We all have our weak spots, like home goods, electronics or clothes - even if you don't like to go to the mall. You don't even have to leave the house to window shop anymore; those catalogs, the Internet and commercials advertising the latest sale can be just as tempting.

Window shopping is a bad financial habit that takes some discipline to break. Staying away from stores and not requesting catalogs or e-mail updates from your favourite stores is a good place to start. Before buying that latest item you pine for, ask yourself two questions: Do I need it? Can I pay cash for it? If your answer is no, walk away. (For easy tips on saving, don't miss 5 Ways To Trick Yourself Into Saving Money.)

2. Carrying Lots of Cash

You know that paying with plastic is bad, but carrying lots of cash can be just as bad a habit. Cash can give you the feeling of having extra - fun money that's just sitting there.
Only carry enough cash for what you need, and leave the rest at home. Avoiding plastic is great, but budgeting is just as important when choosing to pay cash. If you like the green, try budgeting your cash with envelopes: one for groceries, one for entertainment, etc. (Paper or plastic? Find out in Should You Pay In Cash?)

3. Saving Your Info With Vendors

Those online shopping sites are so considerate to save your address and credit card information - some even have one-click ordering buttons, so you can buy something in just a second. It's very easy, but also very dangerous. Not only does this easy shopping make you broke if you're prone to impulse shopping, it also eliminates the feeling of spending money, since all you do is click.
Don't allow vendors to store your credit card information. Avoid signing up for e-mails and catalogs if those tempt you to shop when you really shouldn't. It can be great to know about a sale, but if you didn't need anything, it's just another temptation.

4. Clipping Unneeded Coupons

We all feel the pinch in this tougher economy, especially when buying groceries. Clipping coupons is downright trendy today - but is it really such a good habit? Sure, getting 50 cents off that package of cookies or that brand-name detergent is a discount, but you may be surprised to find that your grocery bill isn't really going down despite all your coupon clipping. The truth is that buying generic brands that are just as tasty is often cheaper; coupons can make us buy things we didn't plan for.
Start with a grocery list for the week, and then look at your clipped coupons. If you can use one, great, but try supermarket brands too for the best bottom line.

5. Shopping With Your Emotions

It was a rough week, or a good one, or you want to reward yourself for losing a few pounds, so you go shopping. You earned that new dress, that new gadget, that big pie - it was on sale, too. Letting your mood dictate your buying decisions is the quickest way to go broke.
Sober up before shopping. Do you need these items, and can you afford them? Be honest with yourself. Reward yourself by doing something that doesn't cost, like taking a nice bath, or spending time with your loved ones. (Did your emotions get the best of you? Don't miss Damage Control For A Busted Budget.)

6. Not Planning Ahead

It's Tuesday, you're tired, and have no idea what you'll make for dinner. A great night for takeout, right? Using data from the BLS, it's estimated that the average family of four spends over $4,000 on eating out - a very expensive habit that will make you broke in a hurry.
When you make your grocery list, make a menu for the week at the same time, so you always have ingredients for a meal. If your week is hectic, try cooking on Sunday and freezing meals for the week. Plan for lunches the same way; not only will you save money, you'll eat healthier by avoiding fatty restaurant food. (Check out 5 Ways To Get Healthy And Save Thousands A Year for more healthy tips!)

The Bottom Line

It takes some discipline to break these bad habits. With some planning, discipline and avoiding tempting situations, you can break these habits - and maybe even find you'll have a little extra cash at the end of the month.