Cash Saving Tips

Who's your frugal role model?

2019-04-22T11:52:00.000-04:00

Apparently frugal habits are hard to break, even once you're super rich. I found this great list of 11 frugal habits of the super rich from Chasing Foxes. Which is your favourite?

Bus, Train, or Plane - Go Euro

2017-09-17T04:44:00.000-04:00

I've been living in Germany for about 2 years now and have had a lot of fun exploring Germany and other surrounding European countries. One of the biggest expenses of traveling are the transportation costs. Fortunately, Europe is densely populated with amazing sights to see in a much smaller geographic area (compared to Canada). There are numerous travel options available, but sometimes the choices can be a bit overwhelming. I've listed the main options that I've used since moving to Europe, from most affordable to priciest.

Bus
Long distance buses are relatively new to Germany because trains used to have a monopoly on city-to-city travel. Now there are a lot of options available, like FLiX Bus and Dein Bus. This is by far the least expensive way to get around and most buses are equipped with WiFi. The downside is that the buses can sometimes be delayed and the spaces are a bit tight.

Train
Train is my favourite way of getting around. There is more space than the bus and it's easier to walk around (some trains have dining cars too). The downside is that trains can be slightly more expensive than buses, but are usually less expensive than flying.

Train stations are usually located in the city center, as opposed to airports which are located in the outskirts of the city, which means you don't need additional transportation to get to the city. In addition, there isn't the hassle of security for riding the train. So when you add up the extra commuting time to get to the airport, plus security and commuting to your final destination after arriving at the airport, you can easily shave off two or more hours of commuting by taking the train.

In Germany, there are a few discount train options available. There is the 'happy weekend ticket' (Schönes-Wochenende-Ticket) which you can only purchase on Saturday and Sunday for €40 (plus €4 for each additional passenger, up to a maximum of 4). This ticket allows you to travel anywhere in Germany by train for the day. Sounds great, but you cannot use the high-speed train services, which means that it will take a lot of transfers and time if you want to go far (i.e. Stuttgart to Hamburg). Nonetheless, this ticket is great value, since it also gives you the flexibility to hop-on and off the train for the whole day.

Also, there are regional day tickets which are not restricted to the weekends, but only allow you to travel within one or a group of neighbouring sates. For instance the Baden-Wüttemberg ticket allows you to travel on all local train services within Baden-Wüttemberg for the day. The cost is €23, plus €5 for each additional passenger, up to a maximum of 4.

Plane
Plane is the fastest long-distance (> 300 km) travel option. One of the lowest cost carriers in Europe is Ryan Air, which can actually be cheaper than the train in some cases. However, their travel routes are limited. To find what the best combination of travel method is for you, I've found a website that compares the three main travel methods, finding the optimal combination based on time and price: Go Euro.

If you're in Tübingen, don't forget to say hello!

5 Tips from the 4-Hour Workweek

2017-07-16T10:53:00.001-04:00

I recently stumbled upon a series of YouTube book summaries by Clark Kegley. Clark does a great job of distilling (self-help) books down to a few useful tips that you can apply to your everyday life. Although not a substitute for actually reading, these book summary videos can be a useful tool to help recall important tips from the book. Here are my top 5 tips from Tim Ferriss's 'The 4-Hour Workweek':

1) The 3 currencies of life: time, energy and money
When you're young you have a lot of time and energy, but usually you lack money. When you're an adult usually you have energy and money, but you don't have time because you're working. Finally, when you reach old age, you have time and money, but you no longer have energy.

The important point here is not to value life by a single currency (money), but instead see that life is made up of multiple currencies. With this concept you can try to manage, leverage, and exchange these currencies throughout different stages of your life.

2) Four W's of Freedom: who, what, where, when
Money is no longer the yard stick that defines being rich, instead it's freedom. What does freedom mean? Freedom can be defined as having control over the four W's:

Who - choosing to work with people you like and respect
What - choosing to do the work that interests you
Where - choosing to work from your desired location
When - working at the time you choose

The more W's you control the more free you are. In most cases having more money could give you control of more W's. However, depending on your work, more money may not help. Regardless, it's important to recognize that these factors influence your freedom and that you may be able to come up with creative ways to control more W's in your life (e.g. be a freelance copywriter).

3) DEAL: define, eliminate, automate, liberate
This is an acronym used to help you remember four important tools that could help you reach your freedom goals:

Define - be absolutely clear about what you want
Eliminate - stop wasting time on unimportant things (e.g. block Facebook)
Automate - remove yourself from the workflow (e.g. outsource tasks)
Liberate - free your working location (e.g. telecommute)

4) Having all the time is not the goal
All this discussion about freedom could be miscontrued as a message to stop working. Life without work can become boring, meaningless, and empty. Therefore, it is important to have meaningful work because it provides a venue for both giving to society, as well as personal growth.

The goal is to have an adequate balance of work, rest, and play. Work can be an enjoyable part of life if you're doing the right kinds.

5) 80/20 Principle and Parkinson's Law
Also known as the Pareto Principle, the 80/20 principle states that roughly 80% of the results come from 20% of the causes. This principle is commonly cited in business where it is commonly observed that 80% of sales come from 20% of the customers. The priority would be to keep those customers happy.

A 'vital few' of our actions leads to the majority of our results. We must first identify what those few things are, then focus our efforts there.

Parkinson's law states that "work expands to fill the time available for its completion". To harness this law you could shorten deadlines.

Here is Clark's video book summary:

Think and Grow Rich - Napolean Hill

2017-05-07T14:44:00.001-04:00

Think and Grow Rich by Napolean Hill is a must read personal finance book. This book is not a practical guide with current tips on how to start an "e-business", but rather a study on the philosophy of the most successful people in recent history.

Hill first published this book in 1937, at the height of the great depression. Hill ventured to write a book chronicling the mindsets of the wealthiest people of his era (e.g. Andrew Carnegie).

I found an excellent book review on this Youtube channel (Clark Kegley) and have written out the top 8 take-home messages:

Mindset - It's more about the person you become and skills that you acquire than the dollars in your bank account.
Think - It's important to take time to think deeply (e.g. meditate or go for a long walk). It takes time to have good ideas. Keeping a journal is a great way to achieve clarity.
Desire - Successful people are always driven by an obsession for their craft.
Organized Planning - Breakdown large goals into smaller ones. Achieving smaller goals will keep you motivated. Never set a goal without doing something towards its attainment.
Persistence - Success is often just one step beyond failure, don't give up! The media loves to publicize "overnight successes" without mentioning the 10 years of hard-work.
Seek Feedback - Constantly seek feedback for improving. Always get a 2nd opinion and listen to the wisdom/advice of people who you wish to emulate. You are the average of the 5 people you spend the most time with.
Specialized Knowledge/Skill - Expert knowledge is impossible to outsource. Knowing a lot about a specific topic/having a specialized skill will increase your value.
Faith - Believe in yourself. A quote that summarizes this point is to "fake it 'till you make it."

Finally, here is Clark Kegley with a book summary:

TransferWise - Lowest Cost Currency Exchange!

2017-02-25T03:59:00.000-05:00

(Click for full-view)

Since I've moved to Germany, there have been countless times when I need to exchange Canadian Dollars for Euros (or vice versa). Exchanging currencies through the banks or currency exchange shops can be excruciatingly expensive.

A friend recently introduced me to TransferWise. After trying TransferWise a few times, I've become a full supporter. It is by far the easiest low-cost way of exchanging currencies. You can use TransferWise to transfer money between yourself, family, friends, or anyone else with a bank account. Essentially you get the same exchange rate shown in Google's currency convertor plus a small fee.

The only caveat is money must be transferred between two bank accounts in countries that TransferWise operates in (over 40 countries). So TransferWise works best if you are transferring money from one bank account to another. This may not work for you if you are traveling for a short time to a foreign country, need a small amount of local currency, and do not have a bank account there. Alternatively, if you have a trusted friend in the foreign country you're traveling to, you could transfer money to them and have them give you that money once you arrive (to avoid high currency exchange fees).

Here's a short video on how TransferWise works:

Living in a Vancouver Storage Locker

2017-01-14T16:45:00.001-05:00

I recently read this article by the CBC about a man who converted a Vancouver storage unit into a livable apartment. Although this is illegal and crazy, I have to admit that this is one of the most ingenious set-ups I've ever seen. You probably shouldn't do this:

8 Wealth Habits of Financially Successful People by Ron Malhotra

2016-06-19T13:21:00.000-04:00

I recently finished the "8 Wealth Habits of Financially Successful People" by Ron Malhotra. This book is an introductory guide to personal finance, which I thought was succinct (with less than 80 pages). However, I felt that it was less entertaining than other introductory personal finance books such as: The Wealthy Barber (Chilton), The Millonaire Teacher (Hallam), or The Automatic Millionaire (Bach).

The 8 wealth habits as described by Ron are:

Think Differently
Invest in Yourself
Don't Trade Time for Money
Invest to Increase Wealth
Preserve and Protect Wealth
Don't Take Unnecessary Risks
Be Conscientious About Your Money and Future
Surround Yourself with Trusted Experts

This book is very short, so it works well as a review of basic personal finance concepts. However, it lacks any real depth into any particular personal finance topic.

Here's a short video from Ron explaining some psychological hurdles that keep us from becoming making wise financial decisions:

The 6 Best and Worst Places to Buy Rental Property in Canada

2016-03-16T17:46:00.000-04:00

I came across an interesting article the other day from Money Sense by Romana King that listed the 6 best and worst places to buy rental property in Canada. I decided to summarize her tables in one place:

I was recently living in Vancouver and would agree that the real estate prices there are ridiculously expensive. It would be very difficult to succeed as a real estate investor in Vancouver, however it's an awesome city to live in. Charlottetown on the other hand would be a much easier place to become a real estate mogul, given that you like potatoes and Ann of Green Gables.

The 11 Best Tips For Buying Your First Investment Property:

7 Best Dividend Investing Tips From the Experts

2015-12-12T13:14:00.001-05:00

I am an avid dividend investor. I think owning dividend paying stocks are a great way to supplement and diversify your income streams. As the saying goes "you shouldn't have all your eggs in one basket", meaning you shouldn't rely solely on one income stream (i.e. your job).

You might be asking yourself, what is a dividend? Firstly, companies can issue shares of their company in the form of stocks to raise expansion capital. When you purchase company shares, you are investing in the company, thus becoming a part owner of the company. This entitles you to the company's profits (if there are any). Typically when a publicly traded company earns a profit there are two ways in which they can use them to benefit the shareholders: 1) The company can retain the earnings with the intent of eventually increasing the share price, or 2) The company can give some of the profits to the shareholders in the form of a dividend.

What are the best tips when it comes investing in dividend stocks? I recently stumbled onto an article by Jimmy Atkinson at Dividend Reference entitled "101 Dividend Investing Tips from the Experts". You can find it here: http://dividendreference.com/guides/dividend-investing-tips/

I've selected what I found to be the seven best dividend investing tips from the article above:

Diversify but don’t over diversify. Adding one stock to a 10-stock portfolio adds a great deal of value, but adding 10 stocks to a 100-stock portfolio may not add any value. Most studies show that a diversified portfolio of 15 to 30 stocks is the optimal number of individual investments.
— Ken Faulkenberry, The AAAMP Value Blog
While dividend yield has its importance, an intelligent investor should pay greater attention to a stock’s dividend growth rate and yield-on-cost. An investment that pays 3 percent on your cost is good, but what’s even better is an investment that pays you 10 percent on your cost down the line. Divided growth is what makes this possible.
— Quinn Mohammed, Dividend Beginner
Be a net accumulator. Contrary to what the financial media blitzes us with on a minute-by-minute basis, there’s nothing glorious about buying and selling stocks. If you ascribe to that manic strategy of trying to cycle in and out of equities, you’ll wind up emulating the proverbial hamster on the wheel rather than Warren Buffett. Don’t get me wrong, I’m not blindly advocating buy and hold either. What I am suggesting is that you focus on being a net accumulator of assets; my favourite being dividend growth stocks. In my years of investing, I have only sold a single stock.
— Ryan, Get Rich Brothers
I like to buy shares (new position or adding on) soon after the ex-dividend date. Share prices tend to hit a short term peak just before ex-dividend and the price will often drop below the ex-dividend share value in the couple of weeks following ex-dividend. In many cases the price savings will be several times the just paid dividend amount. This strategy will produce a lower average cost per share and higher effective yield.
— Tim Plaehn, Investors Alley
To gain an instant dividend portfolio consider low-cost indexed mutual funds or ETFs. Vanguard offer several dividend focused funds with low fees which pay qualified dividends.
— Trevor, Dividend Life
A good portfolio is like a garden. It takes maintenance, time and attention to detail, but ultimately should grow by itself. It should not take continuous work, but occasional pruning. A well understood and well balanced portfolio can be a piece of beauty.
— AlphaTarget
The first place any investor should look for high quality dividend stocks is the Dividend Aristocrats list. This is how I constructed my own long term dividend investing portfolio. It’s a great starting point for further filtering and research to find some of the highest quality companies that have a long history of annual dividend raises.
— Keith Park, Div Hut

In addition, here is Dan Caplinger from The Motley Fool with three things you probably didn't know about dividend investing:

Big Savings with Airbnb! Top 5 Booking Tips

2015-09-25T02:15:00.002-04:00

I recently finished a two week cross-country road trip starting from Vancouver and ending in Toronto. I decided to go through the US because I had not seen much of the interior US and I thought gas and accommodations would be cheaper (even with a weak Canadian dollar of about 70 cents to the US dollar).

Gas did end up being cheaper, even with the US exchange rate. One of the biggest savings came from staying at the many Airbnb’s available along my route. Since the US has more populated city centers than in Canada it wasn’t hard to find an affordable Airbnb at each destination. Also, with more Airbnbs to choose from at each destination, the competition usually kept the prices lower. It helps if you have a vehicle and are able to travel to the Airbnb since lower prices are usually available outside of the city centers. Airbnb’s website provides a price filter which helps you find the cheapest places to stay around your destination.

Another important note when using Airbnb is that you should book your stay a few days in advance, since your booking requires the host’s approval. It’s important to keep an up-to-date profile (on Facebook or Airbnb). There are however “instant books”, which do not require a host’s approval. With “instant books” you get the room booking as soon as you submit your payment information.

I always stayed in a place with a few reviews (the more the better), always with a score of at least 4 stars out of 5. This will also factor into the price, since places with great reviews may charge a slight premium over rooms with no review history.

The most expensive Airbnb I booked was just outside of Yellowstone National Park. This area had few Airbnbs to choose from and because of the park’s popularity the hosts were able to charge a premium. The cheapest Airbnb I booked on my trip was in Chicago. I booked a room just outside of the Chicago city center which saved tens of dollars a night. I was still able to access downtown via the subway.

To sum up my 5 Airbnb user tips:

Keep an up-to-date profile (either through Facebook or Airbnb). This will help your hosts get to know you and therefore accept your booking request. The more information you give them the better, so be sure to send them a friendly message about yourself and your trip. As you stay at more Airbnbs you will also be reviewed as a guest, good guest reviews will help your future booking requests.
Choose a high population destination. More people usually equates to more high quality Airbnbs and lower prices.
Have a car. If you can get to Airbnbs slightly outside of city centers you can usually save more.
Book in advance. Unless you’re booking with an “instant book”, you’ll have to book a day or two in advance to give your host a chance to review your profile and to accept your booking request.
Check the review. Be sure to book accommodations with a few reviews (the more the better), with a score of at least 4 out of 5 stars. If there are no reviews it may be cheaper, however you run the risk of having a creepy host or accommodations that do not match the description.

Here's a video with more Airbnb booking tips:

9 Most Affordable Places to Retire

2015-03-01T15:02:00.000-05:00

I'm currently living in one of the most expensive cities in the world, Vancouver, British Columbia, Canada. This got me thinking that instead of trying to save and earn more so that I can one day retire, I could retire earlier and live a better lifestyle in a more affordable city.

The fast lane to your retirement may lie in finding a locale that is more affordable than the place you're currently living. Of course it also needs to be close to family and friends, and provide the lifestyle you currently enjoy. You may not need to live all year round in your retirement getaway, but perhaps a few months a year.

I found this article in US News that lists the 9 most affordable places to retire overseas:
9 Affordable Places to Retire Overseas

I've summarized the locations and sorted them by the average monthly budget:

Rank	City	Country	Montly Budget (US$)
1	Nha Trang	Vietnam	$650
2	Chiang Rai	Thailand	$750
3	Ipoh	Malaysia	$897
4	Dumaguete	Philipppines	$1,000
5	Cayo	Belize	$1,100
6	Loja	Ecuador	$1,100
7	Granada	Nicaragua	$1,300
8	Tralee	Ireland	$1,500
9	Carcassone	France	$1,750

See you in the south of France!

Here's a video which lists "25 Of The World's Cheapest Places To Live":

Blue Chips or Purple Chips?

2015-02-04T21:04:00.000-05:00

In the world of investing blue-chip stocks are defined as a stock of a large, well-established and financially sound company that has operated for many years. A blue-chip stock is generally the market leader and is often a household name. While dividend payments are not absolutely necessary for a stock to be considered a blue-chip, most blue-chips have a record of paying stable or rising dividends for years. The term is believed to have been derived from poker, where blue chips are the most expensive chips.

In John Schwinghamer's Purple Chips, he further refines his investment strategy to purple-chips, stocks that are of the highest quality blue-chips. What are the criteria for a blue-chip stock to pass as a purple-chip stock? Here are the three criteria listed in Purple Chips:

A minimum 7 years of positive earning per share (EPS) growth.
Smooth and predictable growth in EPS.
A minimum market capitalization of $1 billion.

In addition to these three criteria John lists three Financial Health Ratios that helps separate the purple-chips from the blue-chips:

5-year return on equity is greater than 10%.
5-year return on assets is greater than 10%.
5-year net profit margin (average) is greater than the industry average.

Here's a short video introduction to the book:

Are You Ready for the Fastlane?

2014-11-22T20:54:00.000-05:00

The Millionaire Fastlane by MJ DeMarco is unlike most personal finance books. DeMarco explains that the road to significant wealth isn't through saving and scrounging, or trying to deprive ourselves of lattes, but it is through entrepreneurship that great wealth is made. He mentions that most personal finance gurus are quite wealthy, however they didn't attain their wealth from the same advice they peddle, such as "pay yourself first" and "save 10% of your income" (most attain their wealth through writing books). Although this is still good advice, it's not how the affluent gained their wealth.

So the "fastlane" to wealth is entrepreneurship. One of DeMarco's quotes that stuck with me is that "to make millions, you have to affect millions." I think this quote sums up entrepreneurial success, successful businesses help solve problems for a lot of people. They provide a service or product that's in demand.

Building a successful business is incredibly difficult and may not be for everyone. It's important to get into business for the right reasons, which DeMarco says is to help people solve their problems. Going into business just for the money will inevitably lead to failure.

The premise of what DeMarco is saying is true, vast wealth is held by a select few who have risked their livelihood on an idea that their service or product was something the world needed. The reality is that the majority of the population is risk adverse and would never want to attempt to start their own business. There's nothing wrong with that, however it's important to note that you won't be travelling down what DeMarco calls the "fastlane" to financial freedom, but the "slowlane."

Here's a video book review:

Common Stocks and Uncommon Profits

2014-10-13T00:41:00.000-04:00

In our quest for investment knowledge it is best to learn from the best. Renowned investor, Warren Buffett, has said that his investment style is 85% Benjamin Graham and 15% Philip Fisher. This naturally leads us to wonder, what is Philip Fisher's investment style? In Philip Fisher's 1958 publication Common Stocks and Uncommon Profits, he distills his wisdom from a career as a securities analyst.

First of all Fisher sees stocks as part ownership in companies and thus they should be analyzed as such. One key lesson Fisher shares is the way he gains knowledge about companies he's considering investing in. He calls his method the "scuttlebutt" method. The scuttlebutt method is a way of learning about a company through the business grapevine. After thoroughly researching the fundamentals of a company, Fisher would start asking questions to people with knowledge about the dealings of the company such as competitors, customers, former employees, suppliers, etc.. This is a way of gathering information that may not be accessible by reading annual reports and helps paint a picture of the company's economic future. The scuttlebutt method seeks a deeper understanding to what makes the company a success, or uncovers any alarm bells signaling upcoming dangers.

Also, within Common Stocks and Uncommon Profits is Fisher's 15 key questions which he asks about the prospective investment:

Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
Does the management have a determination to continue to develop products or processes that will still further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
How effective are the company's research and development efforts in relation to its size?
Does the company have an above average sales organization?
Does the company have a worthwhile profit margin?
What is the company doing to maintain or improve profit margins?
Does the company have outstanding labour and personnel relations?
Does the company have outstanding executive relations?
Does the company have depth to its management?
How good are the company's cost analysis and accounting controls?
Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competitors?
Does the company have a short-range or long-range outlook in regards to profit?
In the foreseeable future will the growth of the company require sufficient equity financing so that the large number of shares then outstanding will largely cancel the existing shareholders' benefit from this anticipated growth?
Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
Does the company have a management of unquestionable integrity?

Fisher elaborates on each question, explaining the importance of the question and the answer he is looking for. If the answer to a majority of these questions are favourable than it is likely that the investment has great long-term growth potential.

Today Philip Fisher would be labelled as a "growth" investor since he seeks capital appreciation in companies with long-term growth potential. In some cases he may even prefer a company that doesn't pay a dividend so that profits can be re-investing into the company financing its growth. In this case the belief is that the company has the capability to grow faster than the gains the investor could obtain investing elsewhere.

Common Stocks and Uncommon Profits is a classic investment guide and should be on the book shelf of any do-it-yourself investor:

Valu-Mart Student Discount on Tuesday 10% Off, Waterloo Ontario

2014-09-21T18:31:00.000-04:00

As of September 2014, the 10% student discount at Valu-Mart in Waterloo, Ontario has changed to Tuesdays.

Tips to save on groceries:

Welcome to the World of Income Investing

2014-08-10T19:54:00.000-04:00

Yes, You Can Be a Successful Income Investor by Ben Stein and Phil DeMuth is a great introduction to income investing. This book covers the basics income investments available to investors which include:

Bonds
Stocks
Preferred Stocks
Real Estate Investment Trusts (REITS)
and Annuities

Armed with this knowledge you can start to build your own income producing portfolio. One of my goals is to completely replace my earned income with passive (portfolio) income. I've estimated that in order to do that I'll need a portfolio worth approximately $800,000. Although this sounds like a lot, reaching this goal will become easier as the portfolio grows. This is because the income the portfolio produces grows as the portfolio grows, accelerating its growth (given that you reinvest all the income that your portfolio produces).

One important thing to note is that as your income portfolio grows you should be investing in lower risk income options, such as bonds. My recommendation would be to invest aggressively at first, when your portfolio is relatively small, then over time as your portfolio grows invest into safer, lower yield investments. As you're closer to reaching your goal it will be more about capital preservation than growth.

Here's some advice from Ben Stein:

The Most Important Thing - Book Review

2014-05-04T21:57:00.000-04:00

"The Most Important Thing" by Howard Marks is a bit of a misnomer, it should be entitled the "Most Important Things" since he covers an important investing topic in each chapter. Overall this is a great book for any value investor. Marks does a great job of explaining the philosophy of value investing and understanding investment risk.

The following excerpt succinctly describes value investing:
"The relationship between price and values holds the ultimate key to investment success. Buying below value is the most dependable route to profit. Paying above value rarely works out as well.

What causes an asset to sell below its value? Outstanding buying opportunities exist primarily because perception understates reality. Whereas high quality can be readily apparent, it takes keen insight to detect cheapness. For this reason, investors often mistake objective merit for investment opportunity. The superior investor never forgets that the goal is to find good buys, not good assets."

And in this paragraph Marks describes investing defensively to minimize risk:
"Risk control and margin for error (when price is below value) should be present in your portfolio at all times. But you must remember that they're "hidden assets." Most years in the markets are good years, but it's only in the bad years-when the tide goes out-that the value of defense becomes evident. Thus, in the good years, defensive investors have to be content with the knowledge that their gains, although perhaps less than maximal, were achieved with risk protection in place...even though it turned out not to be needed."

Here's a brief clip where Marks describes overconfident investing:

Index Fund Investing

2014-04-02T22:40:00.001-04:00

There are a lot of options out there when it comes to investing your money. The RRSP deadline has recently passed and those of us who have contributed to our RRSP's were probably bombarded by a ton of choices. Index funds are your best choice when it comes to keeping investment costs and portfolio turnover low, which is the key to investment success.

A good example of an index fund portfolio is to own three indices:

Candian Bond Index
TSX Composite Index
Dow Jones Industrial Index

The amount you allocate to each will depend on a few factors such as your risk tolerance and your time horizon for your investment. More weight should be towards bonds and less to equities (stocks) if you are risk adverse or if the money is needed relatively soon. A rule of thumb is to use your age as the percent allocated to bonds, i.e. the younger you are the more you should have invested in riskier (potentially more rewarding) equities.

The key is once you've chosen your allocation, you rebalance your portfolio no more than once a year to maintain the same allocation (thus forcing you to buy low and sell high). As your portfolio grows in size it may be advisable to add a few more indices such as a European Index or Japanese Index, this will add another level of diversification to your portfolio and a few more asset classes to rebalance.

Just watch this short video and hopefully you'll agree that index funds are the way to go:

Brown Bag Savings

2014-02-20T00:55:00.000-05:00

Hi frugal friends,

sorry I haven't been posting cash saving tips lately. Since finishing school and entering the "real world", I've been trying to climb the corporate ladder.

One bad habit that I've been getting into is eating out. I find that after working a full day it can be difficult to make dinner, let alone prepare something for lunch the next day. However, eating out is one of the biggest expenses and getting into the habit of eating out less can save you tons over your career. I remember living on $30/week of groceries when studying, that's a lot of Kraft Dinner and eating beans out of the can.

I found this great little video on how to save more on brown bag lunches. The girl in this video is easy on the eyes too!

Moving? Get Free Moving Boxes!

2013-10-14T22:01:00.000-04:00

My friend was moving apartments the other day and he was telling me how his roommate had taken some of his moving boxes without his permission. When he told me he had paid good money for his moving boxes, I told him that when I moved I just went to the grocery store to get some cardboard boxes they were going to throw out.

An advantage besides getting free boxes is that you can dispose of them after the move, thus freeing up space. Ask for "banana boxes", which are pretty big and can carry quite a bit of weight. They need to have a liner in the middle of the bottom of the box which is usually a strong construction paper material.

Good luck and remember to lift with your legs!

Here's a video with some extra cash saving moving tips:

Another Book from the Shark Tank

2013-09-02T01:21:00.002-04:00

Robert Herjavec is best known for his roles on the reality television shows Dragon's Den and Shark Tank. In these shows budding entrepreneur's approach self-made millionaires for capital to help seed the growth of their business.

Robert Herjavec's "The Will to Win" is less of an autobiography (although he does talk about his upbringing and background) and more of a book packed with business advice and career tips. Robert is the son of a Croatian migrant who immigrated to Canada as a young boy. His father was stuck at a dead end job for his entire life sweeping factory floors because it was difficult for a non-english speaking immigrant to get decent work. Despite his father's bleak job opportunities, he was happy to move to a country where people were free to express their political opinions.

Robert started from humble beginnings and from that developed a strong work ethic and drive to succeed. Robert's initial source of wealth was a security software company he started. Later as his wealth grew he invested in various other things.

This book contains a lot of tip lists such as:
- Ten ways to measure productive fun
- How salespeople can handle rejection
- Three ways good leaders handle communication

I found that the tone of this book was sometimes that of a lecturing parent and sometimes the advice was a bit lofty and abstract. Something that any football coach would yell, like "work hard", "don't cheat", etc... . I found that the most interesting bits were the actual stories he told about his work experiences and the deals he's made. If you like the show Dragon's Den and/or Shark Tank than you'd probably like this book. Also, there is a book available by Kevin O'Leary another Dragon/Shark that you'd probably like (Kevin O'Leary).

Here's a short clip about the book:

RetailMeNot has come to Canada!

2013-06-29T14:37:00.001-04:00

Do you ever shop online? Have you ever been a click away from check-out and asked if you have a coupon promo code?

Well here's a website that does a great job of compiling online coupons in one convenient location. RetailMeNot was only available for US sites but has just recently launched a Canadian version. This is definitely a site to check out if you online shop.

Here's a how to video:

The Best Way to Build Wealth

2013-05-22T00:30:00.002-04:00

Here's another great read from "The Little Book..." series. The Little Book that Builds Wealth by Pat Dorsey is a book about finding great companies to invest in. He takes an important lesson taught by Warren Buffett which is to look for companies with economic moats. Moats used to be water ways built around castles to protect it from incoming invaders, an economic moat is similar only that it guards a company's earning from competing companies.

What does a company with a wide economic moat look like? Pat Dorsey explains the four common traits of a great economic moat:

1) Intangible assets - these are strong brands that entice customers to pay more. This also includes patents that a company may own.

2) Cost advantages - some companies have important cost advantages based on scales of operations, proximity to resources or well-engineered processes.

3) Customer switching costs - some companies make it difficult for customers to switch to a competing company's product because switching is expensive and/or time consuming

4) Network economics - the more people who use this product the more valuable it becomes. For example Microsoft Office becomes more valuable as more people use it and share files even if there are free word processing and spreadsheet software available.

One of the easiest ways to tell if a company has a strong economic is by looking at it's long-term (10 year) average return on equity. This value tells an investor how efficiently a company utilizes invested capital to generate more earnings. If the return on equity is in the double digits year after year, it's a good sign that it has a strong economic moat and probably has one or more of the traits listed above.

Happy hunting!

What's your opinion worth?

2013-03-07T01:02:00.001-05:00

http://www.i-say.com/

Here's a great way to make a few extra bucks online. i-Say by Ipsos is a marketing company that tries to understand consumer spending habits by surveying consumers online. Join i-Say and get periodic invites to do online surveys. Each survey you complete is worth a different amount of points, usually the more time it takes the more points it's worth. Once you've accumulated enough points you can exchange them for gift cards and prepaid credit cards (works like cash).

I've tried a few of these sites and i-Say is one of the most legitimate. There are frequent surveys and there are a lot of great prizes to spend your points on. One big bonus is that usually before you qualify to do a survey, there is a pre-survey to get an idea of what demographic you're in. If you qualify you go on to do the rest of the survey to receive your points. If you don't qualify most online survey sites won't reward you with anything, wasting a minute or two of your time. At i-Say you usually still get a few points for doing the pre-survey.

Give it a shot. Finally somebody who's listening to what you have to say and they're willing to pay you for it!

Here is a video about how to avoid scams and make money with online surveys:

Top 3 Personal Finance Books - Setting the Foundation

2013-01-09T01:38:00.000-05:00

Happy New Year!

So I bet you've made a bunch of New Year's resolutions and this year you're going to get all your financial ducks in a row, right? There's a myriad of personal finance advice out there, so it can be difficult to sift through he garbage. Fortunately by reading just a few personal finance books you can be way ahead of the pack.

You might be asking yourself, what is personal finance anyways? Personal finance is the very practical subject about how to handle money in your life. There's no escaping it, we all deal with money everyday. We work hard for our money, so wouldn't it be nice to learn how to get your money working harder for you. Personal finance is about enriching your life by doing such that, it's about learning how to handle your money in such a way to become financially free.

Financial freedom can mean many different things to many different people. There's no one size fits all plan, which is why it's important to tailor your finances to reach your own personal goals. Money should never be an end in itself, but a means to an end, which is why it's so important to set financial goals in the first place.

By understanding the purpose of money in our life we can live a much more meaningful one and truly build wealth. Personal finance isn't about amassing a fortune only to be a miser. It's about having security in knowing that you have enough to weather life's inevitable ups and downs, providing for loved ones, and the freedom of enjoying what life has offer.

The topics covered in these books include:
     - The role of debt (particularly how bad credit card debt is)
     - Setting financial goals
     - Paying yourself first
     - Mortgages
     - Insurance
     - Saving for retirement (RRSP for Canadians, 401K for Americans)
     - Investing

By reading these three books you'll be setting a strong personal financial knowledge base. There will be some repeating themes in these books, but they're each taught in a slightly different way. One author may explain a certain theme that will really get through to you, while another may bore you. So my recommendation is to read them all, eventually something is going to sink in. By doing so you'll gain a clearer picture of what to do with your money so that you can eventually become financially free:

1) The Wealth Barber by David Chilton

For more information visit:
http://reynold-savemoney.blogspot.ca/2010/06/one-of-best-personal-finance-reads.html

2) The Millionaire Teacher by Andrew Hallam

3) The Automatic Millionaire by David Bach

For more information visit:
http://reynold-savemoney.blogspot.ca/2010/09/whats-your-latte-factor-automatic.html

Here's a short video clip about Andrew Hallam's story and some of his solid financial advice: