Lazy Investor

Wal-Mart Anniversary Sale is going on until Oct 8. I went to the store to find the good deal, especially to load up my vitamin’s supply which is at 50% off. This is the best price for Jamieson Vitamins and OMEGA-3 I could ever find.

In the end, I bought 18 OMEGA-3 and 9 Multi-Vitamins in total. This should be enough supply for my whole family for a whole year. We are all set until next anniversary sale. Wee~~~~

Hum…..now I feel that I looks like a drug dealer. Haha…..

I was updating my monthly net worth and noticed that although I am paying $487.36 for my car loan each month, the total loan amount decreases only $425 per month. Where does all the additional money go? Interest Charges!!!!! So I am handing over more than $60 per month to the bank, which will total in for more than $3700 in 5 years, in other words, over 60 payments. The bank makes around 15% of ROI by lending the money to me in 5 years(2.9% per year).

When I finance the car, I know the interest rate is going to be 2.9%. It looks small. The actual interest charge, $60 per month, never crosses my mind. I feel like the bank just robbed me. If you are leasing the car, it is even worse. You are being robbed twice. First by the car dealership for having the privilege to drive THEIR car and then by the bank for lending you the money. At the end of the lease, if you want to buy out the car, great, the dealer has another opportunity to make money off you. What about financing the car after the lease is due? What? You want to be robbed by the bank once again, and usually at a super high interest rate like 8%(Believe me, that is the interest rate for a used car or a car just off lease)?

Now think about how much the bank is making for the mortgage rate of 5.5% on a half million dollar home. No matter the house price or interest rate goes up or down, there is only ONE who is sure to make the money, the bank!!

OK, enough talking, I am off to do some research on the bank stock so that I can rob all the home owners out there.

I added another $3500 to my Questrade account to balance my ETF portfolio. I wanted this to be done before the new dividen pay out date which is around Sep 27th.

Currently, I am following the couch potato approach as introduced by MoneySense. I have five ETFs in mine, XIU, XSP, XBB,XIN, and XRE(as I want some real estate exposure). Each of them accounts for 20% of the overall portfolio.

I am planning to do a balance to the portfolio twice a year. And each time when I do it, I will have the trading cost to be under 1% of the money added.

Also, I am comparing the couch potato portfolio to the aggressive portfolio I have with ING Direct. It seems that the ETFs are consistently beating the ING aggressive portfolio, either less loss or more gain. I think it is mainly due to the lower fee structure of the ETFs. At the end of the year, I will take a closer look, and then may just switch my ING portfolio to a couch potato one as well.

The Great Canadian Rebates is a website that offers Cash Back Rebates on almost every purchase and hundreds of online coupons to merchants who will ship to Canadians. It is a very good webiste to save money. It offers cash rebate from 1%-18% on your purchase from the retailers who are partners with them. This includes Canadian Tire(3.33%), Chapters(3.33%), WestJet(1.33%), DELL(1%), Priceline(2%), etc.

I usually purchase Canadian Tires Gift Card through them at 3.33% using my 1% cash back credit card and then use the gift card to buy gas at the Canadian Tire Gas Bar. This way, I save 4.33% each time I fill up the tank of my car. With the Canadian Tire Money being offered, the reward is even bigger.

Also, I just found out that they offer 2% cash back for purchase from Priceline as well. Now I am kicking myself not using it for the trip to Orlando.Otherwise, we could save even more……

I think I should really check into GreatCanadianRebates before I purchase anything online in the future…….

We recently booked a trip to Orlando for three people. Including air tickets, 4 nights in a four star hotel, 3 days Disney World park passes and 5 days car rental in Orlando, we managed to have the cost under $800 per person.

Through the whole process of this trip planning/ordering process, I would like to share some tips that might save you a bit when traveling.

1. Fly from US. I know this is not going to work for everybody. But if you live close enough to the border, it is almost always cheaper to fly from the states. There are far more less expensive airlines down there. With the Canadian dollar being so strong, it is even better. For example, if we fly AirCanada to Orlando, it would have cost us more than CAD$400 per person. But flying with JetBlue has only cost us CAD$260. It is $139 savings for each person right there.

2. Dump the traditional travel agency. We first started with booking Hotels with Sears Travel. But then find out their price is not competitive in any way. Sometimes the price they offered us is even higher than the price posted on the Hotel’s website. When we asked what hotels they would recommend to stay in Orlando, they just said,”oh, they are all great hotels”.

We ended up booking the hotels and car rental through Priceline.com, which we are very happy with. We used the “Name Your Own Deal” on Priceline. You select your travel date, the desired area of the city you want to stay, the hotel star level, and how much you would pay for the hotel. Then Priceline will do the search for you. I recommend to check out two websites, one is www.biddingfortravel.com and the other one is www.betterbidding.com , before you go to name your own deals. You will find some bidding strategies and the winning bids from other people on those two sites, which can be used as a guide line as how much you should start to bid on a hotel.

Don’t use “Name your own deal” if your travel dates are not set since all the bookings will not be refundable.

We have a Tim Horton’s by our office building with a walking distance less than 500 meters. Everyday, sure enough, many people will go there and buy a cup of coffee even if we have free one in the office. I want to do a calculation to see how much two coffees a day is going to cost us.

Let’s say we buy two medium double double a day, one in the morning, one in the afternoon. I think the price for each one is $1.39. We work 5 days a week. There are 52 work weeks in a year.So, we spend $1.39*2*5*52=$722.8 a year for two coffees a day. Let’s say you put the $722 into a GIC or other investment vehicle earning moderate 5% return each year. At the end of year2, assuming your marginal tax rate is 40%, you will have $1465.68 in your pocket, after tax.

How much it costs to fly back to China? I think it is around the same figure. What about vacations within North America? The trip I am going to take to Orlando will cost me less than $900, keeping in mind that we won’t go cheap for the trip and will stay in a four star hotel. So the message is clear. You never think two coffees a day will keep your vacation away, don’t you?

But don’t get me wrong. I don’t believe in dying loaded. Life is about to enjoy it as much as you can. I mean, if the coffee from Tim Horton’s is so much difference from the free coffee offered in the office and will make you so much happier, by all means, go to Tim’s and buy yourself a nice cup of double double. If not, why don’t you save two coffees a day. When next time, people wonder how you can afford to go back to China every other year or going on vacation each year, you can say out loud and proudly, “I am paying for that with my coffee money.” I guarantee you the satisfaction level will be so much higher than two coffees a day.

I just finished reading this all-time Canadian bestseller, The Wealthy Barber,which I bought from Chapters around two weeks ago. I could not believe how fast I finished reading this book. It only took me two weeks to finish all ten chapters. I remember that sometimes I need more than a hour to just flip one page of the text books. With this book, I simply have problems putting it down.

The Wealthy Barber covers many financial planning topics, including Investment, Wills, Life Insurance, RRSP, Mortgage, and Income Tax. It is very understandable and entertaining financial planning book. It explains everything without intimidating charts and graphs and a series of lifeless numbers. After reading this book, you will find out a good financial planning is nothing but common sense.
I would like to quote some words from the book, which I think either very useful or entertaining.
In the chapters talking about basic financial planning, it says:
“Wealth beyond your wildest dreams is possible if you learn the golden secret: Invest ten percent of all you make for long-term growth” Now you know the famous ten percent rule.
Ever wondering why your personal budget never works while business budget always do? See below:
“a business only has to budget for needs. It’s in the best interest of the business to limit those needs as much as possible. An individual, on the other hand, must budget for both needs and wants. It is a rare person who can do that successfully because, for too many people, a want becomes a need”
Afraid of risk when investing and would rather to have all your money sitting in your bank account earning interest? The wealthy barber says:
“Be an owner not a loaner over the long run.If it were consistently more profitable for businesses and individuals to leave their money in the bank than to invest it in North American enterprises, we’d all be in big trouble.”
I could not help laughing when I read the following:
” A broker is someone who invests your money until it’s his.” Haha, I feel the financial advisor is no difference. So be your own financial advisor because nobody cares about your money more than you do.
Wants to time the market and think somebody might have the forecast power?
“As for consistently accurate short-term forecasts, there is no such animal”; “Patience is always one of the most valuable attributes in investing.”
What about real estates?
“With real estate, it’s a matter of timing. There is no dollar cost averaging here.” Know nothing about dollar cost averaging? You need to pick up the book right now.

OK, I could not quote more from the book. In fact, the above is less than 1/3 of the highlighted in the book I have. I actually know about most of the points in the book, but still I learnt something I never knew before, especially for the wills and insurances. I used to think that we all need life insurance when we get older. But the fact is actually opposite because we should be self-insured already when we are old. It is the time when we are young that we need life insurance.(If you are single and have no dependents, you don’t need insurance.)
So if you know nothing about ten-percent rule, dollar cost averaging, when and how much life insurance you need, how to use income split technique to lower your tax bill, so on and so forth, you need to read this book. You will be glad you did.
For anybody in Florenceville area, I will be more than happy to lend you the book if you want to read it.