The Finance Blogger

Habits to become Financially Stable and Successful

August 7th, 2017 ernie Posted in Financial Advice No Comments »

habits to become financially stable and successfulIt takes effort and discipline to become financially stable and to stay that way. Even a temporary relaxation of your financial judgement can jeopardize your stability. Spending too much on a credit card, going on a trip you cannot afford, taking on more debt than you should are examples of what not to do. Becoming financially stable and successful also has benefits as well. For example your stress level will be much less. You can relax more when you are not worried about money. Take the time to review where you are when it comes to the following suggestions to become financially stable and successful. What changes do you need to make in your life?

Become Financially stable and Successful

The following are ways that will gradually take you in the direction you need to be financially stable and successful. There will be setbacks from time to time. Emergency payments will be needed which will deplete your savings. This unfortunately is part of life. But if you stick to your plan, you can quickly recapture your savings and reach stability again.

  • Make savings automatic and save all raises or overtime payments you receive
  • Control your impulse spending. Avoid expensive lunches and dinners, clothes etc
  • Evaluate your expenses, and live frugally.  In fact live well below your income.
  • Invest in your future. Save for emergencies and for retirement.
  • Keep your family secure. Save for emergencies so that you can deal with them when they occur.
  • Eliminate and avoid debt. Debt costs money, credit cards have high interest rates. Avoid them like the plague
  • Use the envelope system or the account system. One for savings, one for emergencies and one for every day bills and expenses
  • Pay bills immediately. Set up an automatic payment so that you never miss any payments and negatively impact your credit rating. Late payments also incur penalties and extra fees.


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Advice from Warren Buffett

April 21st, 2017 ernie Posted in Financial Advice No Comments »

Advice from Warren BuffettAdvice from Warren Buffett comes in various forms. Some are made up while others are direct quotes. This particular piece of advice comes from a TV commentator who interviewed Warren Buffett and summarized his comments. It sounded really good to us so we decided to include it in this post for our readers to review.  There are other posts that you might want to review as well which cover his advice over the years. Feel free to check them out. As always if you have comments, please leave them. Our readers will appreciate different points of view.

Advice from Warren Buffett

“The trick in investing is to watch ball after ball go by and wait for the one right in your sweet spot. If people are yelling, ‘Swing, you bum,’ ignore them. There’s a temptation for people to act far too frequently in stocks simply because they’re so liquid.” Later in the film, he observes that “the biggest thing in making money is time. You don’t need to be smart, just patient.”

That is the trouble with most people today. They are too impatient and not willing to wait. Many investments, blue chips that pay good dividends are not going to provide the get rich quick schemes that consumers look for. However over 10 years, these stocks usually grow and they pay dividends all of the time. Reinvest those dividends and combined with growth you will usually do very well if not better than many indexes.

There will also be upticks and down ticks in the stock market. Being patient with good quality low risk blue chip stocks usually pays well. They always seem to return to their previous highs and even higher.

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Be Smarter about Your Money

March 21st, 2017 ernie Posted in Financial Advice No Comments »

Be Smarter about Your MoneyDo you often wonder why some people seem to have more money to spend than you do? They might even make less than you do, yet can go on trips and have a nicer home. How do they accomplish this feat. The answer is actually quite simple, Be Smarter about Your Money and how you manage it. We have compiled a list that consumers should consider. Applying these ideas will help almost everyone Be Smarter about Your Money and make it last much longer.

Be Smarter About Your Money

Salary – review deductions, eliminate unneeded deductions as appropriate, take advantage of share plans, contribution plans offered by the company, use direct deposit
Saving – designate 10% for future needs, never to be touched unless there is an extreme emergency. This is in addition to retirement savings.
Avoid credit card debt – pay off all credit card debt and avoid the high 19% + interest charges
Live below your means – and you will always have money to save and provide independence during retirement years
But credit itself is important – you need to have a good credit rating. Borrow some money and pay it back on time and never miss a payment
Understand your spending habits – keep a budget and track expenses. Make decisions about miscellaneous expenses that cause you to fritter away your money
Automate everything – utility payments, taxes, mortgage payments, loan payments etc to avoid ever missing a payment. Missed payments are expensive in terms of fees and credit card ratings.

Get the big purchases right

Save big dollars by negotiating, comparison shopping and only making the purchase once you have worked out your budget and payment
Build up that savings account – for emergencies that will always come up. This is in addition to the 10% we mentioned earlier
Cover your insurable needs – including mortgage, loans, education for the kids, etc
Always get the match. To 401(k) plan to get the employer match – this is like a bonus and can add thousands of dollars to your retirement savings plans
Save a little more each year – when you get a raise, your savings amount should go up accordingly
Choose your friends and neighborhood wisely – it is tough competing with wealthier friends or big spenders. Don’t! You will not be tempted.
Talk about money – with the family so that they understand your goals and how they can contribute.

Material purchases won’t make you happier in the long run

Focus on friends and family

Read a book, or 10 – There are countless personal finance books out there.
Know where you stand – prepare a financial plan every year and assess your progress towards your goals
Taxes matter – minimize taxes owed every year as much as possible
Make more money – get another job to help meet your goals
Don’t think about retirement, but financial independence – meaning when you have enough to retire, you are now independent and can pursue other dreams or continue working

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Playing in the Stock Market

January 21st, 2017 ernie Posted in Financial Advice No Comments »

Playing in the Stock MarketA friend of mind had never been a stock market guy. EVER! He always had been very leery of the whole deal. But, this fella William O’Neil is starting to change that for him. His book is really good. Thought you may have heard of him. Playing in the Stock Market can be like gambling, however you can educate yourself and increase the odds of success. However there is still a large risk which you have to be prepared to accept.

My response to him was as follows and maybe it will help others which is why I posted here!

Playing in the Stock Market

I have been in the stock market for many years and have done very well.

Based on my experience you have to decide what kind of an investor you are. – speculative, growth, income, low risk income. They all come with different levels of risk and it depends on how risk tolerant you are.

I stay away from mutual funds, MER’s are too expensive and they get paid regardless of how they perform.

I guess I am an income guy, which means I invest in Blue chip Canadian stocks that pay a dividend each quarter. They have a long record of paying their dividends and have a history of increasing their dividends on a regular basis.

Make sure you are diversified with no more than 5% of my investment in any one company. Part of managing risk.

The blue chips also have a slow growth element in addition to paying dividends. I use yahoo to track my progress. There are lots of ups and downs. When it goes down 10 or 15% it is pretty hard to handle. But if you are well invested, hang on because they will come back and you still get your dividends.

This guy is talking more about speculation which takes lots of time to manage. It is gambling on the stock market!

I would develop your own strategy and stick to it based on your risk tolerance. Review and adjust your strategy every 6 months. Decide if you want to take the dividends in cash or re-invest in the same stock or buy something else with the cash.

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Are you smarter than a millennial about finances

December 21st, 2016 ernie Posted in Financial Advice No Comments »

Are you smarter than a millennial about financesMillennial’s have a reputation for having the following issues – stagnant wages, increasing student loan debt, fear of the stock market and they have a tendency to overspend on their social lives. Are you smarter than a millennial about finances? Other generations have their own issues with managing their finances. At the present time baby boomers are overly concerned about retirement and whether they will have sufficient money set aside to live a high quality of life during retirement. We decided to compare both ends of the spectrum.

Are you smarter than a millennial about finances?

Millennial’s are demonstrating that they are good in several areas the baby boomers have not excelled in. For example they are creating budgets, tracking to those budgets and following the budget. This is something that boomers are not known for doing.

They are also setting savings goals for everything from retirement, two non-retirement items such as travel, a home, and other things they deem important in their lives.

They are also not afraid to ask for help. If they don’t understand something they will seek advice, usually online and from other millennial’s. The baby boomers on the other hand have traditionally been very independent and avoid seeking advice from professionals.

Baby boomers have a tendency to set retirement goals. They plan to retire in a given or specific time frame in their lives. Millennial’s on the other hand are more focused on ensuring they have sufficient money for retirement. They are willing to work longer to achieve some of their goals.

Bottom line, is that millennial’s are still young and untested as far as life’s challenges are concerned. The big question will they be forever different than baby boomers. Or will they gradually follow the same path as their baby boomer parents and grandparents?

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How to invest a financial windfall 

December 7th, 2016 ernie Posted in Financial Advice No Comments »

How to invest a financial windfall You have just received some money and you want to know how to invest a financial windfall. Develop an investment strategy based on your risk tolerance. Not everyone can tolerate the wide swings in the stock market. If you are the type to lay awake at night and worry about the value of your investments as the market response to various world events you probably should not be in the stock market. At the very least you may want to invest in solid blue-chip stocks that only pay dividends and have little opportunity for growth or decline.

Your growth and income requirements over the lifetime of your investments should also be considered. It is much better to start when you’re going towards saving for retirement. However if you have only 10 or 15 years to retirement you may want to be more aggressive with regards to your investment strategy.

How to invest a financial windfall

The following broad guidelines should also be considered as part of your investment strategy for your financial windfall.

Diversify across industries and within industries. You might be familiar with one industry or you got a hot tip from a friend. Ignore these temptations and focus on protecting your investment by investing across industries as well as within those industries. Never replace all of your money in one company or investment.

Diversify between the stock market and the bond market. The bond market is actually larger than the stock market in terms of total amount of money invested. You should consider investing in bonds to receive a steady income of interest payments.

Invest money in bonds using a bond ladder approach. When you invest in bonds, they should have a laddered maturity dates. In other words you want each one to mature in a different year so that you never have all of your money maturing in a low interest year.

Save some cash for a rainy day and for emergencies. Your windfall is a great opportunity to make sure that you have some cash set aside for emergencies. There may come a time when you need some cash to cover the debt or emergency expense. This emergency fund will come in handy.

If you have not already got the message, never put all of your eggs in one basket. This is the most important advice in this entire post. You have just received at financial windfall. You want to make sure that it continues to provide you with income investment equity for a long period. The best way to do this is to make sure it is invested diversely.

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Seven Habits of Highly Successful Retirement Investors

July 28th, 2016 ernie Posted in Financial Advice No Comments »

Seven Habits of Highly Successful Retirement Investors

This list could apply to any stage in life. But this post is focused on seven habits of highly successful retirement investors. We put together this list based on our own experience and from reading about what it takes to be a successful investor. It worked well for us and we know it will work for you as well. Is it difficult to understand, no? Is it difficult to apply all of the time, yes? As long as you do not make big mistakes and you apply these rules the majority of the time you will probably do alright from a financial perspective.

Seven Habits of Highly Successful Retirement Investors

Avoid Emotional Spending – always take a day or two to think about your spending. Many people purchase on a whim and regret their purchase later. By waiting a day you give yourself time to consider the purchase from all perspectives including whether you can afford it.

Don’t Lend Money – to friends and family unless you can afford to lose it. Most people want to help family members out, but it often ends badly.

Don’t always pick up the Check – it is nice to be the generous guy in the group, however, it is expensive and people tend to take advantage of you after a while.

Avoid Comparing to Other People – focus on your own situation and life. It is impossible to compare with other people since they lead profoundly different lives.

Don’t spend all of Your Income – save for retirement, for emergencies and for those special things that you want from time to time. Living within your means with these saving ideas in mind means you can whether the emergencies that always occur in our lives.

Don’t rely On Credit Cards for Cash – cash from credit cards is almost as expensive as payday loans. Interest rates at 20% or higher make this one of the most expensive ways to borrow money. If you must borrow, get a low-interest loan instead of using credit cards.

Always track your Expenditures and Income – if you track it you will know where your money is going.

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Financial Regrets of older Consumers

July 14th, 2016 ernie Posted in Financial Advice No Comments »

Financial Regrets of older ConsumersThe number one financial regrets of older consumers is not traveling enough while they were younger or while retired. Tied to this regret is not saving enough for retirement. Also for emergencies that we all must face from time to time. It is hard to know which would one of these is more important. Clearly if you did not save enough for retirement to do the things you would like to do, traveling is out of the question. So many people have all of these great plans for retirement. They include travel to many exotic locations. But then they find out that they just cannot afford them. This is when they truly experience regret.

Financial Regrets of older Consumers

Start saving early to provide the financial freedom and flexibility to do just about anything you want to. Someone who starts early to save for retirement and puts together a sizable nest egg has a lot of flexibility in what they can do while retired as well as retiring earlier than many other people.

Financial freedom allows consumers to pursue interests in retirement including travel. Someone who saves a million dollars by the time they are 50, can retire early. They can continue working, purchase various toys that they enjoy, or even continue working. Once they are retired, they should be able to balance their lifestyle to the amount of income and savings they have.

Plan your retirement, the type of retirement you want to have and learn just how much money you will need for that lifestyle. Set your objectives and start early. Adjust your interest change and you get older. All the time you are aiming for a retirement that is absent of regrets and provides you with the flexibility to do just about anything you would like to consider.

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Hiring a Financial Adviser

October 21st, 2015 ernie Posted in Financial Advice No Comments »

Hiring a Financial AdviserYou have worked hard for your money and now need the services of an expert to help with the investments, and plan your retirement.  Hiring a Financial Adviser may be the answer. We all need to and want to make lots of money to enable a great retirement. Unfortunately, there are so many fraudsters and poor performers lining up to take your money. It is really difficult to know just who to turn to. The myths and they are myths are – he is on the radio or TV so they must be good; a neighbor or friend uses an adviser so they must be good, they have flashy offices, are well dressed, etc, so they must be successful! These are myths and many people have been burned badly. They needed to take a few easy steps to confirm and verify who they are dealing with. So how do you protect your money and select a qualified adviser?

Hiring a Financial Adviser

Trust, but verify – trust your adviser until you have a reason to doubt them. Verify everything, their background, their designations, and especially their recommendations. Make your own decisions about how to invest your money with their input. Do not blindly follow their advice and always follow the one rule of investing that is so important. Practice diversity and do not put all of your eggs in one basket.

Check every key bit of background – check claims of work background, training, and education. You really do want to know who you are dealing with and whether their resume and claims are true or not.

Verify credentials and designations – ask for a list or copies of the designations. Find out what these designations are and how difficult they are to qualify for them. There are just too many online designations that can be purchased for a small fee with no training what so ever.

Ask questions –  If you are being referred to an adviser because someone likes them, ask lots of questions. What verification did they do; why do they like them; what is the relationship like; what information do they provide and so on? If you get wishy-washy answers, the referral may still be of, but you need to do your own verification yourself!

Go through these steps to find an adviser and always stay current with your investments so that you know what is going on with them at all times.

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Advice from Warren Buffet

August 21st, 2015 ernie Posted in Financial Advice No Comments »

Advice from Warren BuffetAdvice from Warren Buffet is like gold falling from the sky! This is a man who has built an empire. He is near the top of those that are the richest in the world. We should listen to his advice, since in just about every case his tidbits make so much sense.  The quotes in the picture are bang on. If more of us followed these suggestions, we would all be better for it. But there are some suggestions that are even more basic which we like and want to talk about in more detail. We cannot take credit for these suggestions. We can add in our own two cents worth to the items listed in one of his latest advice discussions.

Advice from Warren Buffet

Never stop learning – this is probably the single most important piece of advice that anyone can impart to you. Just because you finished school regardless of the level achieved, you have actually just begun to learn. Adults must continue to learn throughout their lives and the more you learn and apply what you learn, the greater the chance of success will be.

Never lose patience – when you lose patience in an argument, in business or in life, you have lost the battle. Your emotion takes over and your thought process is less than perfect when you lose patience with whatever you are involved in. Warren Buffet knows that it is really the long term that counts, provided that you have invested in learning and staying on top of the issues.

Give credit where credit is due – we all rely on others for help and suggestions throughout our lives. People respond to recognition and will perform better in the future if they know they will be recognized for their contributions. We all are human and we all like to get a simple thank you for a job well done. It can pay dividends to you in the future.



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Warren Buffets Financial Rules

June 7th, 2015 ernie Posted in Financial Advice No Comments »

Warren Buffets Financial RulesIn a recent letter to his shareholders, Warren Buffet shared the following advice. We took the headlines and added our own thoughts on this advice based on our own experience and feelings. This is based on our experience as a small time successful investor. We are not suggesting that we are smarter or have more experience than Warren Buffet. We are building on his experience. This post tries to add some value to his expert advice based on our own experience. As the picture shows, you should never lose money. But then again, not everyone is willing to put the effort into investing that Warren Buffet does. Treat investing as if it is your job and that your livelihood and retirement depends on it which it does.

Warren Buffets Financial Rules

  • Treat your investments like a business
  • Stocks are Inflation Protection over the long term
  • Volatility is not risk, it must be managed – short term vs. long term
  • Focus on multi decade horizons
  • Watch the fees from transactions and management fees

Treat your investments like a business – you may feel that you are a small investor with too small an investment to really matter in the big scheme of things. You may feel that your vote does not count for much. While on a percentage basis this is true, it is your money that you are  investing and your investment should meet your business goals for investing. Long term investments that pay regular dividends in a company that has long term prospects and is well managed are just a few of the business issues that investors need to consider.

Stocks are Inflation Protection over the long term

Compared to GIC’s, bonds and other fixed interest rate return types of investments. Consider that bonds are paying a very low percentage interest income at this time, while inflation is also low. In fact once you take into account your tax situation on the income and inflation you are probably losing money if you are invested in fixed income securities. Sure there is risk with stocks, but well managed companies with dividend income have a tendency to do better than the inflation rate!

Volatility is not risk, it must be managed – short term vs. long term – many investors are worried about volatility. It is only an issue if you sell when the stocks are declining. Invest for the long term and ride the wave. It will be volatile but the trend is usually generally up ward as many stock charts will show. Assess if you will need the money in the short term. Can afford to lose any funds? If not you probably should stay away from any volatile investments.

Focus on multi decade horizons

Start investing early in your life, focus on companies that you understand and have long term prospects. Focus on companies that are well managed, that pay regular dividends and have a history of increasing their dividends on a regular basis. Look for companies that paid their dividends during economic down turns.

Watch the fees from transactions and management fees – if you trade often, the fees will add up over time and cost you a good deal of money. The same applies to management fees for managing mutual funds or for managing your portfolio. Pay for value and pay for results.

Warren Buffets Financial Rules are part of a larger strategy that each investor should consider and personalize for their situation.



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Americans have no Emergency funds – financial ruin

May 21st, 2015 prrichar1 Posted in Financial Advice No Comments »

Americans have no Emergency fundsAccording to a survey released Monday by of more than 1,000 adults, 37% of Americans have credit card debt. This debt equals or exceeds their emergency savings. That’s one in eight Americans who could not survive a financial emergency of some kind. In addition to not having savings that would or could be used in a financial emergency. They have also used up some of their credit and would find it difficult to borrow additional funds. This kind of situation places extreme stress on the family. Also, the individual when someone loses a job. There are major repairs required for their car or they have significant health issues that they need to deal with. Americans have no emergency funds to deal with life’s curveballs.

Americans have no Emergency funds

Without savings for emergency funds, a consumer who is facing a large bill for something, it usually means a downward spiral into bad credit zones. Perhaps potentially repossession of vehicles, loss of their home, and so on. Consumers will take drastic steps to survive and put food on the table. This can include not paying for utilities, rent or mortgage payments, and car payments, The net result is a poor credit rating which also usually means that they will be unable to borrow funds in the future. If they are successful at finding a lender who will loan them money, the interest rates will be much higher to cover the risk of not being paid.

It is far easier to do with less when you are working and build up an emergency fund to rely on during difficult times. Some people will ask how much should be set aside? Start by setting aside at least 10% of your income. More if you can afford it and save at least one year’s salary. The more the better. Some consumers have been out of work for several years and the majority have taken as long as 6 months to find a job. That is a long time with no income. Emergency savings that will hold you for at least a year will take a lot of the stress away and allow consumers in this situation to focus on finding a new job to replace the one that they lost.

For more posts about financial advice, click here.


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1 in 3 Americans on verge of financial ruin

May 7th, 2015 prrichar1 Posted in Financial Advice No Comments »

1 in 3 Americans on verge of financial ruinAs many as 1 in 3 Americans on verge of financial ruin! It is hard to believe that so many people could be financially ruined if they lost a job. Or if they could not work due to health issues or an accident at work. Life can be hard and difficult for many in these situations. It gets even worse if you have no savings for emergencies or for retirement. This is the crux of the problem for many Americans. No savings to rely on for emergency situations and little savings for retirement.

If the economy goes bad like it did in 2008, 2001 in the eighties and early, many Americans will suffer as a result with no food on the table and no money for rent, heat etc. What can consumers do to avoid this problem and what should governments do to help deal with this social problem. There simply is not enough money to go around to help people without the public helping themselves.

1 in 3 Americans on verge of Financial Ruin

It is simple, save 10% of your income. If it means suffering a bit, do it anyway because the suffering that you will have if you have no money at all will be far worse. Saving 10% can be difficult at times, however after a few months you will get use to living on 90% of your income. Every time you get a raise make sure that 10% of that raise at the very least goes towards savings that can be used in emergency situations such as when you are laid off.

Avoid spending money that you do not have. Avoid credit cards and if you have to use one, make sure that when you do use it, you have the money to pay the balance on the statement when it arrives. You will avoid paying high interest rates on the over due balances which most people cannot afford.


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5 ways to a successful (financial) life

March 30th, 2015 ernie Posted in Financial Advice 1 Comment »

5 ways to a successful lifeThere are many different issues that creep into our lives that make us happy and unhappy. Some we can control and others we just have to deal with. We make the best of it or compromise as best we can. If you have a choice and it will make your life happier. Why not take the action that will make you happier. We are going to focus on what can make us successful from a financial perspective. Focus on 5 ways to a successful life. These are the main items that we have learned over a long career.  They have made us better off financially and also contributed to a happier life.

5 ways to a successful life

Commuting – use to take me over an hour each way. We all know of people with less commuting time and much more. But the bottom line is that was over 10 hours a week of lost time in my life. Sure I read on the bus, kept up with emails and even caught the odd nap. But bottom line I would rather have walked to work to get my daily exercise, fresh air and spent more time with the family.

Chasing the Market – the market is volatile at best and timing is difficult to match. So how much money did you lose trying to chase the market vs. investing in some blue chip dividend paying stocks. They generated income and let you sit back and enjoy life. Starting early and allowing the investment to build meant that when it came time for retirement, I was able to retire young with enough money to live comfortably!

Cheap Housing – we all or should I say most of us buy the big house. They come with the huge mortgage, high taxes and high utility costs. This money that goes for these things can never be invested and is lost for all time. Sure you should gain on the house as long as you maintain it and live in a good neighborhood. But chances are you will never recover your investment. Live inexpensively and take the savings to enjoy life, save for retirement etc.

Last of the 5 ways to a successful life

House Bound or Experiences – coupled with the above, you can choose to be house bound or live cheaply and have many experiences over your life time. People with experiences are generally happier than those that bought the big house and were house bound.

Work for More than a Paycheck – We need to pay for the basics, a place to live, food, clothing and entertainment. But if your job is not interesting it is going to be a long hard grind over 30 to 35 years. Aim for an interesting job that pays the bills. When it is fun and interesting to go to work, everyone does better and is more successful at what they do!

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Financial planning – family first

February 21st, 2015 ernie Posted in Financial Advice No Comments »

Financial planningIf something were to happen to you tomorrow, would your family be taken care of? Would they know where to find all of your financial information. Is important to communicate with your family so that they understand what investments you have. Discuss plans about your investments. This is really basic financial planning. Of course some selfish people just don’t care about their families and do not bother to leave any info at all. The survivors must search records and documents to find the information needed. They have to review all financial records, close accounts etc. It can be a lot of work and there is the risk that your family will suffer some hardship as well if the money you set aside is not immediately available to them.

Financial planning – Get Organized

Some of the items to consider as part of the communication to your family and financial planning as follows:

  • Estate strategies,
  • What do you own
  • What do you owe
  • Lists of all accounts, location etc
  • Your Will and location
  • Special instructions
  • Long term goals
  • College, marriages, grand children

The above sounds like a lot of work, but it really does not have to be. Keep it simple and put the list together, put it some where save and make sure that you tell your family where it is. If you are comfortable discussing finances, sit down with the kids etc and discuss the issues with them. They will probably forget, this is normal. Create a written family plan. Explain where everything is .

Pay bills to keep the house running, utilities etc along with hospital and funeral costs. High light these points and how your heirs will handle these items. Once you have created the plan it is pretty easy to keep it up to date on an annual basis.

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Future Money Trends to Consider

January 30th, 2015 ernie Posted in Financial Advice 1 Comment »

Future Money TrendsWe decided to write this post about future money trends since it is the start of the new year and we have just finished paying for the holiday expenses. Now it is time to begin thinking about where to place our savings and investments for retirement so that we can maximize our future savings and quality of life in retirement. We have whatever we plan to save for the year and the decision regarding where we place our money among multiple choices will have a huge impact on our lives moving forward as we raise families and plan for retirement.

Future Money Trends

What are the major areas that are hot in the coming year in terms of trends. From the reading and research that we have completed, they appear to be the following:

  • Environment
  • Markets
  • Innovation
  • People
  • Government

No one has a clear crystal ball about the future, but there are clearly some things that will affect all of us on the macro level.  You may have your own opinions about what they are and the impact that they will have on us. That is actually a good thing since each one of us must apply our own individual situations to each of these areas and asses the impact that it is going to have on us. the planning horizon is also important. Are you looking 10, 20  or 30 years in the future? These five are our thoughts about the major areas that will impact us over the next 20 years.


Has been in the news in a big way over the past 10 years. There is no doubt that this is going to impact every human in the world over the next 20 years and beyond. Investing in environmental products might be a good bet, providing you pick the right companies and products. Reducing your own personal impact on the environment must also be a good thing.

Markets – will be volatile over this period of time, however history has shown that if you invested in quality stocks that are diverse, chances are your nest egg will grow over time at the average of 7%. You can invest in speculative equities, however you can lose big time or make huge amounts of money. Can you sleep at night with the risk and can you tolerate the loss if that happens?

Innovation – we have more and more innovations that are coming on line and there seems to be no end in sight. The key questions is what disruptions will occur over 10 years that will fundamentally change the industries you are invested in. For example will the combination of solar power, wind power and electric vehicles change the car culture so much that the entire industry shifts?

People – major changes are taking place in India and china as more and more people join the middle class. Some people suggest that the west is in decline unless there is a major shift in the population with more people moving to North American and Europe. How will the current Arab situation resolve it self? How will this effect us all over the world more than it already has.

Governments Do Play a Big Part

Government – come and go, especially the dictators and economies that are not doing well. Will democracy continue to survive or will it succumb to it’s own inertia and red tape that seems to be enveloping our culture? The big areas to keep an eye on are Russia – will it survive; Will China continue it’s major evolution and become a dominant power; will Indian and Pakistan also evolve; and what will happen to Europe? These economies and governments are all in transition of some sort and will have a huge impact on us in the next 30 years.

What is your guess as to what is going to happen regarding Future Money Trends ?

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Financial Rules for the Road Ahead

January 10th, 2015 ernie Posted in Financial Advice No Comments »

Financial Rules for the Road AheadLooking to improve your money management in the years ahead? Here are 31 rules for the Financial Rules for the Road Ahead. While they might not all apply to your personal situation, pick and choose the ones that make sense for your personal situation. Talk to experts to get some help regarding the best approach to take. These rules can be considered general guidelines. Everyone can and probably will apply them a little differently than another person. But take the time to read them. Even doing one thing differently might just make your financial life a lot better. Good reading and good luck managing your retirement finances.

Financial Rules for the Road Ahead

1. Check your retirement progress by taking your nest egg and applying a 4% annual portfolio withdrawal rate, equal to $4,000 a year for every $100,000 saved. Will you have enough retirement income—or should you be saving more? 4% is considered the industry average.

2. Don’t automatically claim Social Security or CPP (Canada) at age 60. It often makes sense to delay benefits so you get a larger monthly check unless your genetics suggest otherwise.

3. Never buy a home unless you expect to stay put for at least five years or longer. Between mid-2006 and early 2012, the S&P/Case-Shiller U.S. National Home Price Index plunged 27.4%.

4. Planning to remodel your home? If you’ll get a lot of pleasure from the improvements and you can afford the cost, go ahead. But don’t kid yourself that you’re making an investment, especially those high priced renovations.

5. Never use a custodial account to save for college costs. Focus on a  tax-free growth account.

Avoid Student Loans

6. Don’t let your children take on more student loans than they can reasonably handle, given their expected career and likely earnings. Don’t jeopardize your own retirement by helping them out more than you should.

7. Insure against the big financial risks in your life, while skipping the small stuff. Always take health travel insurance, especially Canadians traveling to the U.S.! Extended warranties, trip-cancellation insurance, and low auto-insurance deductibles? Just say no provided you can afford to self insure.

8. If you aren’t rich, buy term life insurance to protect your family. If you’re super-rich, consider cash-value life insurance to save on estate taxes. Re-evaluate each year.

9. Worried about layoffs? Limit your fixed living costs to 50% or less of your pretax income. Fixed costs include expenses such as mortgage or rent, property taxes, debt payments, groceries, utilities, and insurance premiums. At the 50% level, you know that—with money from your emergency fund—you could get by on half your old income if you lose your job.

Prioritize Your Expenses

10. Think about which expenditures gave you a lot of pleasure in the past year and which were quickly forgotten. Use that to guide your spending in future years

11. Always contribute at least enough to your employer’s 401(k) plan (RRSP for Canadians) to get the full matching contribution. Even if you leave your employer, immediately cash out your 401(k), and pay taxes and penalties, you’ll likely still come out ahead. Canadians can sometimes transfer RRSP’s to managed or locked-in accounts.

12. Expect modest returns from stocks and bonds. The worst that will happen is you’ll save too much. The average return has been in the range of 7% over the long term with significant swings in the market both positive and negative.

13. Think about your paycheck—and how secure it is—as you decide how big an emergency fund to hold and how much debt to take on.

Invest in What You Understand

14. Avoid investments you don’t understand. Among other financial products, that likely means skipping equity-indexed annuities, leveraged exchange-traded index funds, hedge funds and mutual funds that mimic them, and variable annuities with living benefits.

15. Shun investments with high expenses or whose costs you don’t fully grasp.

16. Never keep 100% in stocks—or 100% in bonds. A well-designed portfolio will always include both investments. Diversity is the key to surviving wide swings in the market and interest rates over the long term.

17. Buy individual company blue-chip dividend-paying stocks, and think hard before purchasing actively managed mutual funds. Some charge as much as 2% of the balance whether they make money or not! Corporate blue-chip bonds are also good.

Tax Efficient Investments

18. Check that you have tax-efficient investments in your taxable account while using your retirement accounts to hold investments that generate big annual tax bills.

19. When did you last re-balance your portfolio back to your target weights for stocks, bonds, and other investments? If it’s been over a year, it is time to review.

20. If rich stock valuations and skimpy bond yields make you nervous, you can always pay down debt instead especially if interest rates begin to rise.

21. Never have a year when you pay nothing in income taxes. Take advantage of a low tax bracket by converting part of a traditional IRA to a Roth. In Canada convert RRSP’s to TFSA’s.

Monitor Your Credit Report

22. Check your credit reports for inaccuracies.

23. Always pay your bills on time. This is likely the biggest factor affecting your credit score. In particular, late payments on credit-card bills and loan payments are quickly reported to the credit bureaus.

24. Are you on track to pay off your mortgage by retirement? If not, consider making extra principal payments.

25. Never carry a credit-card balance, which might cost you 20% or more in annual interest. You’ll never earn that sort of return in the financial markets over the long haul.

26. If you have more than enough saved for your own retirement, consider taking advantage of gift-tax exclusion to make gifts to your children and other family members. It’s a great way to brighten their lives—and the cheapest and easiest way to reduce the potential hit from state and federal estate taxes. Also, use TFSA’s to reduce tax on investment income in Canada.

Always Have a Will

27. Get a will. You’ve been promising to do so for years. Make it happen.

28. Check that you have the right beneficiaries listed on retirement accounts, life insurance, and any trust documents. Let’s face it: You probably don’t want your ex-husband inheriting your individual retirement account.

29. Try not to spend money in Roth IRAs. Instead, leave these accounts untouched for your beneficiaries, who could enjoy decades of tax-free withdrawals.

30. When giving to charity, consider gifting appreciated investments. You’ll potentially enjoy three tax benefits: an immediate tax deduction, avoiding capital-gains taxes on the investments donated, and a smaller taxable estate.

31. Keep an eye on the big picture: You want to design a financial life for yourself where money worries are minimal, you have special times with friends and family, and you devote your days to activities that you think are important and you’re passionate about.

For more financial advice, click here.

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Making Financial Decisions as You Get Older

January 22nd, 2014 ernie Posted in Financial Advice No Comments »

Making Financial DecisionsAs we get older it gets more and more difficult to make financial decisions.  And as we begin to realize that we are having difficulty making financial decisions, we become even more cautious.  In fact, some people will be afraid to make any kind of financial decision in case they lose their fortune.  Some clients believe they must have a large amount of cash in their accounts just for emergencies.

Short term memory loss, Alzheimer’s, and dementia are the leading causes for people who need to make decisions about their finances and are no longer able to do so.  At this point, the spouse or the children must take over these kinds of decisions. They must make sure that all of the monthly bills are paid. Also that the person has sufficient money to pay for groceries.

Making Financial Decisions –  Get Help

Not everyone progresses at the same rate. Many people will be able to manage their money well into their old age. A large percentage of people will need help in making decisions of some kind to manage the money. It is this time when the children or the spouses must take over and manage their parent’s money.

If short term memory loss and diseases such as Alzheimer’s and dementia are not a prevalent issue, older adults can make just as good decisions s people in their 20’s based on their extensive life history and experience.  If you find yourself taking more time to make financial investment decisions, you may want to turn to someone you trust and help in making those decisions.

The number one thing to be careful of is not to depend on and put your trust in one person, and not to put all their money into one investment.  Asking questions of the people and getting several people to help you make the decision that you can trust as well as diversifying your investments is the best way to protect the investment.  This is one of the reasons older people were victims of financial fraud as much as $2.9 billion annually because many of these fraudsters picked on elderly people.  You may want to take precautionary means to protect their investments and to avoid becoming the victim of financial fraud.

Children of older parents should gradually insert themselves over an extended period of time depending on their parent’s ability and take over the day to day management of their finances. This can be a delicate issue for everyone and should be handled with care and diplomacy.

For more financial advice, click here.


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Teach Your Children to Save

January 8th, 2014 ernie Posted in Financial Advice No Comments »

Teach Your Children to SaveTeach Your Children to Save can be one of the most important things to do in life. We are responsible for teaching our children of so many things to prepare them for all of the challenges that we have in life. One that many people ignore is how to manage money and how to save money. This is why we wrote this post to try and contribute some information that we feel will be useful to many people, adults as well as children. If you have enough money to get by and do the things you want to do, you can enjoy life much more than if you are destitute.

Teach Your Children to Save – Make Saving a Habit

We do not receive any financial training what so ever in school and most do not receive any from their parents either. Teaching your children to save some money for something that they would like to purchase is probably one of the most important things that you can teach them when it comes to money management as they grow older.

Follow the Ten Percent rule

Save 10% from everything you earn and invest it for the future. We like to suggest that you save the 10% for retirement. If you begin early in life, you will have much more than you can imagine for your retirement. It will also provide the flexibility for you to retire early if you  need to or want to and enjoy life. Save now and take advantage of the ability to compound your interest and savings.

Have a Savings Lists

In addition to the 10%, you may also want to save money for other things that you would like to have in your life. Whether it is a trip, a car or a house or something else in your life, saving and paying cash will leave more money in your wallet compared to paying interest on debt that you build up.

Be a banker for your kids

Teaching your kids to save and being a banker for your kids is another lesson to teach your kids. Keep records and make it important to you and to your children. They will appreciate learning about banking later in life.

Teach your children about compound interest:

When you save money and earn interest on what you save and then reinvest that interest and then earn interest income on the interest you reinvested, this is called compounding. It is amazing how fast the interest can accumulate and the value of your money can grow over the years.


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Managing your Finances

December 21st, 2013 ernie Posted in Financial Advice No Comments »

Managing your FinancesTaking responsibility for your finances and managing your finances is one of the most important things you can do to ensure a better quality of life for both you and your family.  Some of the statistics are quite scary when you consider the impact it will have on the family’s personal finances and their ability to deal with emergencies, and plan for retirement.  If we can get people to begin to manage your finances, we know that as a country and as individuals will be much further ahead.

Managing your Finances

Here are some facts that might surprise you:

  • 6/10 Canadians live paycheck to paycheck
  • the yearly savings rate of Canadians have strop from 12% of income to just under 2% today
  • household debt has doubled in the past 10 years
  • credit card charges have risen from $70 billion-$2 trillion in the past 20 years
  • the average household credit card debt is $16,000
  • 84% of graduates felt that they would have benefited from more education on financial management topics
  • the average college graduate is over 23,000 that
  • there is no system to educate Canadians and Americans by managing their finances

More Topics to Cover

The following are some of the things that the writer feels that many people would benefit from if they were to receive more education on these topics:

  • how money works
  • dispel myths and misconceptions about money and debt
  • why people cannot save money
  • why it is important to save money early in life
  • how saving 10% can provide you with financial freedom
  • compound interest
  • how to invest your savings and maximize income
  • understanding the stock market and the bond market
  • should you purchase a rental property
  • how credit cards and credit card interest work
  • impact of not paying your credit card on your credit rating
  • what you need to do to have an A+ credit score
  • what is the difference between good debt and bad that

If people understood the issues behind the above concepts they would be in a much better position to manage your finances and to also make sure that they are financially secure and can withstand emergencies that come along from time to time.  Whether it is a health problem, job loss, a sudden large repair on your home or car or something that just comes of the blue, understanding the above issues will increase the probability that consumers can deal with these financial issues and have money set aside to fund their retirement.

In the coming weeks, we will cover the qualities topics in much more detail stay tuned for more posts about these subjects and basic money management of your finances.

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