Today I put two of the items that I wrote down in action – they are:

1. for every coffee I buy, I put the exact same amount in a savings account
2. every two weeks I’m funding my TFSA with $50 automatically

Buy a Coffee – Save a Coffee

So for option 1, it may not seem like a lot to simply put in $1.65 or $1.71 into a savings account, but you know. I have always blogged about the ‘real cost’ of coffee (especially if you buy one from Tim Hortons or Robins every day) and it can get pretty pricey. By basically putting away the $1.65 into savings – truth be told I don’t feel so bad about it. Sure you may say that the coffee I just had cost me $3.30 by the time it’s said and done, but did it really? I didn’t spend the other $1.65, I saved it.

Saving I find is psychological, and if I can justify some of the purchases I make by saving the exact same amount, then I’m ok with it. I still don’t drink a morning coffee anymore like I used to and generally only take one when I need a good pick me up.

I also plan on doing the same thing for when I eat out, or when I generally purchase something that is a ‘want’ and not a ‘need’. Eating out also counts, so that Blizzard that I bought – yeah, it’s going to cost me double out of my spending account.

Once I have $50 saved up, I will put it into my TFSA. Not only does this increase my savings, but it will also deter me from spending needlessly if I don’t have the money to cover the savings portion.

TFSA Auto-Contributions

I’m not sure why I haven’t been doing this before, but I’m also going to be adding $50 every pay to my TFSA. This is going to be the beginnings of my "Emergency Fund" which I hope to have in place in a few years. I could go on about what an Emergency Fund is and why it’s important, but I’ll save that for another post.

The TFSA (Tax Free Savings Account) to me make a lot of sense. Can you imagine if I turned say $5000 into $50,000 over 10 years? I could take that money out tax free!! SWEET! That’s the idea anyhow, but of course I need to save up the capital first.

As Gail wrote in her book – in order to have $5000, you need to have $500, and in order to have $500, you need to have $50.. so yeah – I have to start somewhere and I plan on starting now, after all – if I don’t save money for myself.. who is going to?

How do you save money?

The reason that I like it so much is that it fills in the gap in how to research a great company and gives great explanations as to what some of the confusing terms are when you’re looking at a stock. I will do a bigger review later on, but I though i’d comment on the fact that most people (including myself) will do more research into that new laptop or iPad or whatever before we look into the ‘hot tip’ of a stock company your boss just told you about, or the extremely undervalued company which is on sale right now and about to move higher.

With the Internet at our disposal, investors are armed with almost too much information. You can research and develop ideas on absolutely everything, from the latest technology put into the 4g iPhone to nuphedragen reviews or some other drug you want to use to lose weight:P

The point I guess I’m trying to get across is that before you go and invest in a stock or any investment. Do your homework. If your goal is the “long-term”, than it makes sense to spend at least a “short term” researching what you’re investing in.

This is the first link that I came across here was from Popular Mechanics and I must say that it was pretty interesting (well, other than the first ad I noticed was for a blackhead extractor of some sort that looked like a dirty needle). Anyhow.. the magazine was from 1944 – for the grand sum of $0.25.  I actually scrolled through almost the entire magazine, and what I noticed was that it was almost entirely war-written. Something about the war, or something referring to an area of the war, etc.etc. It was certainly interesting.

So now I’m going through to see what other books they got there… may I suggest if you have a few minutes.. you do the same

• Style at Home
• Canadian Living
• Homemakers
• Decormag, Madame
• Coup de Pouce.

Not sure about 1/2 of those.. but Canadian Living and Homemakers are likely good ones?

Hit up the link or click on the pic for more details!

https://secure.greatcanadianmagazines.com/mars/

As you may or may not know, I am currently employing the SM (Smith Manoevre) on my mortgage and I’m very excited to do so. In my opinion, right now is a great time to invest.. and there is no better way to build wealth then by deploying a leveraged strategy using OPM (Other Peoples Money!).  Again this is my opinion, and one which I know some agree with, and lots don’t agree with. However one thing is for sure.. I am going to try to make the best decisions with my own money better than anyone else, cuz no one else cares about it as much as I do!

That said, I was reading an older book.. from 1991 actually.. called ‘Wealth Without Risk for Canadians’ by Charles Givens and I came across a very interesting strategy in it.. #99 basically says (and I don’t have the book with me to direct quote), but “borrow money from the equity in your home to invest in stocks, mutual funds, even real estate.. and the borrowed money is tax deductible”. This is exactly what the SM states.. however this was written over 10 years before Fraser Smith released his book. Odd that Fraser Smith has been given credit for something that has been around for longer than 10 years eh?

Now being fair, I found Fraser Smiths book much more detailed on how to set up and employ the strategy, the tax tips, how to capitalize the interest in your Home Equity Line of Credit, etc. Basically it’s like taking the small blurb that Charles Givens wrote about, and expanding it and detailing it into an entire book.. and, for that matter.. and entire lifestyle as he now lectures and teaches about it. Crazy!

Speaking of the SM, I’m now in the process of trying to decide how I want to invest the equity of my home. I have a really good amount of money that’s sitting there doing nothing at the moment, and I don’t like that. Especially as I mentioned above, when I think now is the time to invest (for long term of course). So I’ve emailed my banker and I’m waiting for an email back. I want to set it up so that I automatically either transfer money out of the HELOC (home equity line of credit) to a broker for my own trading, or put it into a fund which I’ve researched enough and is looking good for future growth.

This is a hard decision to make… however I’m really starting to lean towards a brokerage, as I believe that I can not only beat what mutual funds can deliver, but also I have the ability to use hedging strategies like options. Another good point is that one of the good things about mutual funds is that they tell you what their markup is! So hypothetically, I could own pretty much the exact same stocks as all the top funds have.. and I can get that information for free! Ok, that’s it.. I just decided.. I’m doing this myself!

Well, as much as I’d like to help everyone out there achieve their financial dreams.. I’m really not that interested in doing that.. I am looking out for #1 in this regard.. sound selfish? Well, who else is going to look after me and my finances? I can tell you that financial services you pay for are more than likely more interested in you putting your money in their funds or companies in order for themselves to make a living… of course they’re going to do that.. Ok, I’m getting off topic… what I want to write about today is about choosing the right fund to go along with the 10% investment strategy that Chilton speaks of. I believe NOW is the right time to buy some of these things… and I don’t mean all at once either… I will post something on that later on.

So I’m on the hunt for a great fund, with great performance and almost just as important, a great fund manager. This can not be over-stated. As Chilton says in his book.. if you were going to bet on a hockey player (back in the 80′s), would you bet on Wayne Gretzky to score, or Dave Poulin (this is a little dig on my brother by the way).. anyhow.. 99.9% of you would put your money on Wayne Gretzky.. or at least I would hope you would. So why is that different with choosing a fund and a manager? I want the Wayne Gretzky of fund managers out there working for me… not Dave Poulin (ok perhaps he retired and became an unreal fund manager.. but that’s not the point).

So I’ve decided that I have to look up some good funds with good performance.. i’m talking 10% a year +… keeping in mind that last year would have sucked no matter WHAT fund you put your money in.

Any suggestions? I’ll post later on what I’ve researched and found.

I’m glad I did.

The Wealthy Barber

Now I should mention that I’m not finished the book yet, but I already like it as I’m about half way through it. It really hammers down a bunch of points which I already know.. but always good to know that it’s a smart thing to do and gives you lots of hints on how to go about starting to save, plan, and invest properly.

Some of the points which really hit home in the book are the following:

1. the power of compound interest – this can’t be understated.. see my blog post here to know what I’m talking about.. it’s amazing.
2. choosing the right investment vehicle – now they focus on finding the right mutual fund, buying every month, and keep on doing it. The book gives a great example on why it’s important to make monthly contributions for dollar cost averaging, and I will also write a post on this later on.
3. finding the money to save - the book advises us to save, right off the top .. 10% of your earnings. Even if it’s only $100 a month, put it away.. when you put it into a compound interest calculator with some very achievable interest rates.. well, how quickly it can add up will surprise you.
4. the importance of a will & life insurance – pretty nice to have a whole chapter devoted to this rather boring subject, I particularly liked the life insurance part in which they give you some guidelines on how much you should have, or, if you have no dependants, how little you should have. Very interesting stuff.

As I say, I’m only 1/2 way through the book, however the points that they bring up in it are extremely valuable so far.. I only expect it to get better in the 2nd half, however even if it doesn’t.. I think this really should be a book which ALL CANADIANS SHOULD READ! I also believe that all Canadian students should have personal finance taught to them in high school, and this book would be a very good ‘text’, hell.. I could even draw up a curriculum on it.. as the book itself is written such that a barber is teaching the author about personal finance… very cool idea. Don’t you think that all of us would be better served with having knowledge on the power of compound interest, savings, and investment types rather than how long the Civil War in the US lasted? As interesting and important as the Civil War in the US was.. I’d rather read about it during my retirement years.. which would be a lot easier to achieve if I’d been given the right information back in high school… wow, that would have been 15 years of compounding interest this year. *sigh*