Canadian Personal Finance News | October 2013

DIY investing might be perfect for you...but your spouse might not know how or even want to take over your system when you can't anymore.

The following article is from Canadian Real Estate Wealth Magazine. Buried treasure can be found in the Caribbean, and you don't need a pirate ship to find it. The treasure comes in the form of affordable real estate in five sub-tropical markets primed for growth.

Are you focusing on the things you CAN control, or the things you CAN'T?

At most institutions, you really need at least $25,000 before it's worth opening a self-directed brokerage account. Before that, you'll get zinged with some type of annual fee, whether it's a "quarterly fee" an "annual fee" or a "minimum balance fee."

It's natural for young families to face financial pressures as they juggle the cost of housing and kids. But today, they live in a vise. On one side, a housing market that can be astronomically expensive for first-time buyers. On the other, daycare costs.

Finance star, Nobel prize winner, and author of Efficient Market Hypothesis calls active management "zero-sum game"

One of the last things we want to discuss when getting into a new relationship is money. Money is a topic most of us want to avoid anyway. Not many people can claim complete mastery over their own personal finances, and there's always the fear that someone may reject you if they find out about your debt load, credit history, spending habits, or other financial skeletons in your closet.

Occasionally, investors will tell me that they have a financial advisor who doesn't charge them for the service. They never receive a bill or see any fees deducted on statements, so there's no reason to question this. But they may have been sold this idea by a less-than-scrupulous salesperson.

David Bourque called TD Canada Trust about a credit card issue. At the end of the call, he was given a sales pitch to buy insurance to protect his balance if he became sick or lost his job. "I was told there would be no fees charged if I paid off the balance in full," he says.

When you retire, will your spending increase, decrease or stay the same. Different people will answer this question differently but let's take a look at some of my observations from working with people and helping them retire over the past 20 years.

Finally, a realistic article about competing financial priorities for regular Canadians.

Morningstar admits that fees are a better predictor of mutual fund performance than their own ratings. Hm.

Right now, no Canadian insurance company offers flood insurance, or more specifically coverage for anything caused by a flood that could be classified as a natural catastrophe, or overland flood insurance. As First Foundation provides home insurance to Alberta residents, after the devastating floods that hit Calgary and surrounding areas in the summer of 2013, we have seen interest from people looking to be protected from future flooding.

Sometimes I think there's no point in planning for retirement. I think it would be better just to save everything humanly possible and hope for the best. Today's announcement in Ontario of the new (increased of course!) hydro rates are just one example of why planning for retirement seems pointless.

One of the rules of thumb about retirement often mentioned by financial planners is the 4 per cent rule. Like all rules of thumb, it is supposed to be a rough guide that gives you a quick fix without a lot of math.

A client asked me the other day "what does it mean on my CPP statement of contributions (SOC), when it says that my pension "could" be a certain amount". I thought that was a very good question, as I counted the word "could" at least nine times, whereas I saw the word "would" only once.

I must be doing it wrong. As a well-documented thrifty, nifty, and sometimes creative gal, I'm the first to humbly admit I can't do it - I can't raise my kid on a budget of $3,000 a year. That's $250 a month, people.

"Wide diversification is only required when investors do not understand what they are doing." -Warren Buffett I got my start in investing in individual stocks back in the late 1990s. I was dating a woman who'd put herself through medical school by working as a nurse at night and on the weekend and by day trading.

But Time perception is fraught with all manners of bias and cognitive perception errors. Given how you Humans experience Time, your awareness of all that is going on around you, there exists a heavy bias to the Church of What Is Happening Now. I call it the Recency Effect, but there are lots of other names for this phenomena.

Meet Ralph from West Virginia. He's 82, and you need to listen to what he has to say about life, goals, money, and happiness.

You must admit, nobody has as many uplifting titles for their blog posts as I do. I have previously had such cheery titles as " Stress Testing Your Death" and " Is it Morbid to Plan for an Inheritance ".

"Hsee’s experiment showed that when we have a reasonable idea of how much we’ll consume when we’re done working, we stop working, and, when we reasonably match work with our lifetime consumption, we’re happier for having achieved that balancing act. Too little work, and we’re miserable when we stop working. Too much work, and we’re miserable while working and miserable afterwards because we rue the missed time."

Jeff Yeager likes to haggle. The Washington, D.C., author is something of a virtuoso at this lost art, with a deep playlist of tactics that he estimates saves him 10 per cent to 15 per cent a year on his spending. "I try to negotiate on all sorts of things, every day," Yeager says.

"These salespeople will almost never veer into actually providing in depth financial planning because financial planning requires complexity and creativity, and the pressure of a large reward will get to them, and their performance will suffer."

Still, no matter how much we earned, if we had not made the decision to stop borrowing money to acquire things and experiences, we would never get to the point where we could feel financially independent.