Jul 212018
 

So you’ve just finished reading The Four Hour Workweek (or any entrepreneurial self help book) and you’re all amped up to quit your job and automate your own business. Except you don’t have a business. And you don’t have the guts to quit your job. And the other suggestions in the book, like hiring an online assistant, are a frivolous use of your meager savings.

What If You Can Almost Retire?

Let’s entertain an exotic thought. Say you’re doing pretty well financially. You have a ton of money saved, and you want to retire. But you don’t have enough to cover all your expenses passively (i.e. earning 3-4% investment interest will not cover your yearly expenses).

As you may know I find reducing expenses more effective than attempting to earn more money(link, link, link). But what if you’re at your expense-cutting limit? Cutting any more expenses would force you onto the street, or stop you from eating.

The answer is creative and extreme savings ideas!

Using Inequality to Your Advantage

Taking a note from The Four Hour Workweek, you can stretch your money significantly if you earn in Dollars but spend in Pesos. Moving to a low cost of living country could enable you to retire years earlier. And lets face it. Your life in a foreign country is likely to be way more interesting than staying at home.

The cheapest countries tend to be equatorial countries for some reason. Maybe nice weather isn’t good for the economy because people are too hot to work. But that’s a good thing for retirement! Think about the benefits:

  • Good weather year round (assuming you like it stupid hot)
  • Delicious food (assuming you like it spicy and flavorful)
  • Nature (assuming you like beaches, mountains, and jungles)
  • History (assuming you like imperialism and genocide)

Central and South American countries will keep you close to the same time zone as Canada. They are friendly with delicious food and incredible nature. Southeast Asian countries are further away, but have similar benefits. Especially if you prefer fried rice to refried beans.

So how much cheaper are these places? And how can one decide where to go? Well let’s compare some typical expenses for a typical retiree lifestyle in some typical and non-typical destinations. For more detailed comparisons there are websites like Expatistan and Numbeo

CANADA, Penticton MEXICO, Cuernavaca COLOMBIA, Medellin
2 bdrm apartment $1,500 $900 $650
Food (Restaurant per person) $15-$25 $8-$12 $5-$10
Domestic Beer (store bought) $2.70 $1.70 $1.15
Transportation (public) $45 $30 $36
Transportation (gas price) $1.21/L $1.14/L $1.06/L

Now before you start yelling at me, I know there are other things to consider besides money. Language for one, if you don’t speak Spanish you’ll be restricted to English expat communities which typically are more expensive. But come on. Learning a second (or third) language is an excellent way to spend your free time.

And I know you have friends and family back in Canada. And I know you might have Canadian real estate, and gym memberships, and library cards. Well how about becoming a snow bird? Make a cheap country your wintertime destination. You can reap all the benefits of a cheaper lifestyle for half the year, and still maintain a lifestyle in Canada during the best months.

If you want to stay in your new country longer, many countries have retiree visas. Just prove that you have retirement income, no criminal record, and provide a health check. Speaking of health care, bring your medical records, and get health insurance, it’ll probably be $100/month.

Find more detailed info at Wikitravel and check out my post on how to leave Canada financially



Jun 032018
 



KramerBank

I’ve been banking with BMO for nearly a decade now. I opened a BMO bank account because my PC Financial bank wasn’t able to process an international cheque (Australia). When I moved to the USA I was forced to close my PC Financial account because they didn’t support non-residents of Canada. Luckily I never closed that BMO account and they do support non-residents. I’ve also had a BMO credit card for over a decade (but I’m replacing it soon)

Me trying to deposit an Australian cheque

Now that I’m back in Canada I’ve been exclusively using my BMO bank account. In the USA I banked with Chase. After using and American bank I am completely shocked at the state of Canadian banking today. I’m speaking primarily as a BMO customer but my understanding is most of the big banks are similar. Let’s go into some of the reasons I’m done with BMO:

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May 242018
 

Starting with the goods if you want to skip the article: Use the promo code below with Questrade to get your first $50 in trades for free after opening an account:

PROMO CODE: jqzswtbb

 

So you are ready to start investing in Exchange Traded Funds (ETFs). You understand how mutual funds are costing you tens of thousands of dollars and it’s time to take control of your own future. Or maybe you are a crazy gambler and want to try your hand in the stock market. Either way it’s time to actually open an account. But where should you start?

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Apr 072018
 

Everyone has encountered blogs, or web-logs, at some point. And everyone has written blogs whether they realized it or not. At the core, a blog is just writing. If you’ve written a little as an email you can write a blog.

Why tho

If you are reading this I assume you are interested in blogging. Well. Unless you read everything I write regardless of the content. In which case you obviously have excellent taste.

Blogging has hidden benefits. And even if no one ever reads what you write you’ll get these benefits:

  1. Improved Communication Skills – Nearly everyone communicates through writing. Therefore by practicing writing you can improve your written communication. If your blog is public you’ll be especially critical of your own writing. I often update my old articles with better writing. Rereading your old work you’ll realize just how terrible your writing used to be. The only solution is more practice.
  2. Improved Understanding and Memory – Good writing is only possible if you know your topic in depth. Research is essential. Even if you’re a veteran of your topic you’ll need to keep up to date with the latest happenings. As a result your knowledge and memory of the topic will greatly increase.
  3. Self-confidence Boost – Knowledge is power. The more knowledge you have about your topic the more confident you’ll be discussing it in the real world. Especially if it’s a controversial topic like climate change or veganism.
  4. Credentials – A personal website is a great way to advertise yourself. A personal blog lets prospective clients/customers/employers know what you’re all about. Assuming that’s what you want…
  5. A Clear Mind – Journaling has been shown to improve well-being. Regurgitating your thoughts onto paper (or in this case, the internet) will let your mind relax as you’ve “exported” your ideas to the cloud. Your mind no longer need to juggle as many thoughts and ideas. I know blogging and journaling are different, but if you start a personal blog to summarize your ideas it’ll have a similar effect.

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Mar 202018
 



I’m always on the lookout for interesting ways to save money. Unfortunately giving up luxuries like lattes or alcohol is normally the only way. Typically there is a linear relationship between money saved and quality of life. Meaning quality of life increases as spending increases. Buy the nicer car and be more comfortable, go to the more expensive restaurant and eat better.

Fortunately the world is not so predictable, or fair. There are numerous exceptions to the spend-more-get-more trend. You simply need to re-frame money saving opportunities to highlight their benefits. For example, take alcohol (and recreational drugs in general). For the low price of $9/drink you get reduced inhibitions and a generally fun time. But what if you ordered water instead? Well, aside from being that jerk at the bar who doesn’t spend money, you’re likely to have a similar amount of fun. People who have fun tend to make those around them have fun.

Beyond fun I like to focus on health. Alcohol is not healthy (Wow great insight I know). Even one drink per day has been linked to increased cancer risk, especially in women. Also vomiting, stomach aches, and hangovers are good enough reason for me to reduce alcohol consumption.

For me, the financial and health benefits of abstaining outweigh the fun of consumption. This attitude has the added benefit of sounding morally superior to all my alcoholic friends!

Remember when I took that wine making class and forgot how to drive? That's because you were drunk!

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Feb 082018
 

So you’ve decided to move back to Canada eh? Maybe you didn’t like your new country, or maybe Canada lured you back through family, friends, access to nature, relative political stability, employment, universal healthcare, politeness, excessive skiing…. should I keep going?….. beavers, mild summers, few natural disasters, legal cannabis (pending July 2018), funny accents (or lack thereof), hockey, poutine, flannel shirts, immigrants, subsidized education, and of course the majestic moose.

Regardless of your motives for returning you’ll need to figure out how to re-establish your financial life to maple country. It’s not going to be simple, but it can be relatively cheap.

The information here will also be relevant to new immigrants. If you are a new immigrant or refugee there are additional government services to help with your transition that us former residents don’t get.

PICK A RE-ENTRY DATE

It’s very important that you pick a firm date to regain Canadian residency. Both countries will be after your precious taxable income and this date determines who gets first dibs. Typically it’s the day you physically arrive in Canada. The CRA will use this date to determine when to start taxing you. Here’s some things to do before and after that date:

ORGANIZE YOUR INTERNATIONAL FINANCES BEFORE YOU RETURN

You’ll need to decide what to do with your foreign financial accounts. This decision will mostly depend on your plans for the future and how the other country deals with non-residents.

If you’ve spent a significant amount of time abroad you’ve probably established some roots in your new country. Maybe you found a beautiful spouse who will want to visit their family back home every year. If you expect to be making repeat visits you’ll probably want to keep a bank account open for spending money. First check to see if the foreign bank allows non-residents to hold accounts, and check what you need to do to avoid monthly fees. The money will be just sitting there for months at a time and you wouldn’t want it to get eaten by fees.

Depending on your country you might want to keep some of the currency anyways. USD have always been valuable and should continue to be in the future. The downside is that the money will be just sitting there losing value to inflation. I’d advise against holding your overseas money in a savings account that earns interest. Chances are you’ll be earning 0.1% which might be a few dollars per year and you’ll have to deal with more complex foreign taxes.

REASONS TO KEEP A FOREIGN BANK ACCOUNT

  • Frequent visits to said country
  • Currency diversification
  • Easy purchases in foreign currency
  • Bank diversification

REASONS TO NOT KEEP A FOREIGN BANK ACCOUNT

  • No plans to return to said country
  • Avoiding losing money to inflation
  • Avoiding losing money to bank fees
  • Avoiding foreign taxes on bank interest
  • Simplicity of financial account consolidation

What’s that? you got fired and your visa is void and you’re returning to Canada tonight? Bummer. Most reasonable banks should let you transfer your money and close your account remotely. Probably best not to mention that you got deported till after your money is safely back in Canada.

Continue reading »

Jan 062018
 



Welcome to 2018 chumps and chumpettes. Is one of your resolutions to save more money? Well it is now. Here’s yet another “how-to-save-money” list with three ideas.

1 – AVOID LIFESTYLE CREEP


What’s lifestyle creep? Let’s say you just got a raise or won the lottery or found a sac of cash in a dumpster. You take this cash and buy luxury items. Soon enough the items are no longer a “luxury”, they’re just normal, and you think you can’t live without them.

For example, maybe you get a raise and the next day decide to get the $3 Starbucks coffee instead of the $2 Tim Hortons coffee. Or maybe your next car is the $30,000 Lexus instead of the $20,000 Toyota.

After the “honeymoon phase” with your new fancy toy (or habit) it will begin to feel like normal. To make things worse you’ll have trouble downgrading to whatever you had before. Hence the phrase “once you’ve had X you can never go back” <Relevant youtube link>

How to avoid it? Channel all that extra cash right into your investments. By definition a luxury item is unnecessary. I’d wager that retiring 5 years earlier or with a higher income will influence your long term happiness more than owning that fancy whatever.

Continue reading »

Sep 072017
 

Whoa, climate change? On a finance blog? Yep it’s come to this. First, lets get this out of the way. Is climate change real? Maybe, maybe not… Just kidding. It’s totally real and anyone who says otherwise has been reading too many blogs. I mean… well… this blog is fine.

Don’t believe in climate change? You are free to believe in whatever you want but the objective truth doesn’t change based on what you believe.

Anyway this article isn’t for climate science it’s about profiting from the inevidible!

 

You’re saying I can make an unethical buck profiting off the suffering of others?

Not exactly, we aren’t buying stock in cigarettes or leaded gasoline here. Based on my own research into climate change and seeing this emerging denialist attitude, it’s my opinion that the future planet is going to be warmer and there is nothing that you as an individual can do about it. Might as well watch the world turn to hell with a few extra bucks in your pocket.

Alright, I’m listening…

Before I start blindly listing energy stocks we need to define how the world will change as the climate warms. First, lets think of the worst case scenario where average temperature increase dramatically:

  • Hotter summers
  • Warmer Canadian winters (yay!)
  • Stronger storms
  • Rising sea levels
  • Water shortages (fewer glacial sources)
  • Crop failures/famine
  • Mass human migration away from the coast
  • Extinctions
  • Increased vegetation (from higher CO2)
  • Cats and dogs living together, mass hysteria!

Well that’s a scary list, except for #2. What kind of products and services might be in more demand in this new world?

  • Air Conditioners
  • Storm resiliency planning/construction
  • Storm recovery
  • Sunscreen
  • Moving/immigration services
  • Construction
  • GMO crops (resistant to climate changes)
  • Desalination
  • Energy efficiency
  • Green energy
  • Higher elevation land
  • Short shorts

As an engineer this list makes me excited. Lots of investment opportunity here. Finally lets rank them in terms of the greatest potential for short-medium term gain:

  1. Storm resiliency planning/construction
  2. Storm recovery
  3. Energy efficiency *
  4. Construction
  5. Green energy *
  6. Air Conditioners
  7. Sunscreen/short shorts
  8. Moving/immigration services
  9. GMO crops (resistant to climate changes) **
  10. Desalination *
  11. Higher elevation land

*These ones might have fantastic potential if a bright young person comes up with a miracle invention. Unfortunately we can’t rely on that for investing.

**If people weren’t so scared by GMOs this would be higher (especially those that don’t even know what GMO means)

Finally lets go through the points and identify some companies that provide these services:


1, 2, 4 – Storm resiliency planning/recovery/construction

 

Storms and flooding damaging coastal cities is one of the first things we’ll start noticing in the coming decades. Already Hurricane Harvey has flooded Houston and Irma is on its way. Lets find some companies involved in rebuilding and resilience:

Tetra Tech – TTEK – Consulting and Engineering services with lots of disaster planning and recovery services. Up about 19% in the past year

Ch2m (now Jacobs) – JAC – Also consulting and engineering with lots of resiliency work.

Continue reading »

Jun 192017
 

So you’ve read the articles, ETFs are getting saturated and you crave even more investment diversity. You want stability and a healthy return. Lets look at three investing alternatives. (Yes I am aware that #1 is available in ETF form. Shut up)

 

1 – Real Estate Investment Trusts (REITS) – riskiness: low

 

What is it?

A REIT is an entity that owns multiple investment properties and rents them for profit. About 90% of the income is passed directly to the investors, who own shares in the REIT just like any other company. To qualify as a REIT the company must have 75% of their assets tied up in real estate and pass 90% of their income onto the shareholders through a dividend.

Why would I want it?

High returns, real estate market exposure, and liquidity. A REIT is the easiest way to sort of own real estate. Their prices are tied to the housing market and not the stock market. Beyond that the dividend can range from 4% up to 10% with monthly payments. Steady income here we come!

Whats that? you don’t have $4 million to buy a commercial property? Well you can invest in a commercial REIT to get exposure to that market! Furthermore it can take months to actually purchase a rental property and fill it with tenants, but you could log into your brokerage account and buy shares in a REIT right now.

How do I buy into it?

Public REITs trade just like stocks. Log into your brokerage and buy shares.

What else should I know?

TAXES – this is a big one. Income from a REIT property is taxed when the income arrives at the shareholders instead of the company. What this means is your REIT dividend is taxed at your MARGINAL TAX RATE. You seriously need to keep this in mind because suddenly your 10% dividend is more of a 6.5% dividend after tax. But maybe you are thinking what I’m thinking… “What if I put this in a TFSA or RRSP?” Damn straight, it’s tax free! Use this to your advantage. Fill your tax havens with high-tax high-return investments like REITs to keep the high-return but negate the high-tax.

HOUSING MARKETS – Perhaps you’ve heard about the Canadian housing bubble. You may not own any real estate yourself but if you own REITs you will be affected by real estate prices; if this bubble pops your REITs are going to take a huge dump. Maybe this will never happen, maybe it will happen tomorrow, no one knows, but it’s something to be aware of.

 

 

2 – Peer to Peer lending – riskiness: medium

 

What is it?

You get to be the bank and loan money to a business! Lending Loop will let you can put up as little as $25 and you’ll be paid back with interest the duration of the contract. You take on the risk that they might not pay it back, but you collect interest based on the likelihood of that happening.

Why would I want it?

INTEREST. These loans range from 5% to 20%. As of this typing the highest yield is 18.4%, where else can you get an 18% yield? Nowhere, that’s where. Not even here, because you’ll still need to pay tax and Lending Loop will also take a cut. But after-tax yields of 10% are still very possible.

How do I buy into it?

Through their website. Similar to a brokerage you’ll need to sign up and fund your account before you can start issuing loans.

What else should I know?

TAXES – Much like REITs your interest income will be taxed at your marginal tax rate. Your 18% return will be closer to 10% after income tax and Lending Loop’s fees. To make matters worse, you can’t shelter these investments in a TFSA or RRSP (at least not yet).

RISK – Like anything, don’t put all your money into one loan, especially not one with a D rating, there’s a real chance you could lose your entire investment.

 

Continue reading »

 Posted by at 3:17 pm