Where do you find the money to invest and save? You reduce your expenses by doing things such as driving less, cutting cable and/ cable packages, cheaper cell phone plan etc. An individual needs to set save a percentage of their income. This has to be a priority before paying rent, paying mortgage, buying groceries or anything else that you spend money on. You will see your savings grow and when you have enough saved it is time to make your money work harder for you. If you are short money before the end of the month, a person should look at additional forms of income such as a second job or part time home business. NO ONE is going to be in your face to pay yourself first so its take a lot of discipline.
Starting out, buying shares in established companies that pay dividends can be advantageous. When Canadians invest in dividend paying stocks from Canadian corporations, the dividend income is taxed favorably over ordinary income (marginal tax rate). Interest from savings accounts and bonds and dividends from foreign companies are taxed at your marginal rate. The dividends from foreign companies can be offset by the foreign tax credit as there is a 15% withholding tax when buying US stocks in a non-registered account. Companies that pay dividends also increase their dividends on a yearly basis.
You can use your dividend income to help pay bills or you can reinvest the dividends to help compound your money. You can use the dividends along with fresh capital to invest in the stock market or use DRIPs. You have to leave money alone to see the benefits of compounding.
DISCLAIMER:
Tuesday, May 28, 2013
Saturday, May 25, 2013
Recent Buy/ Trade
On May 23, 201, I purchased 70 shares of Dundee REIT at $35.40 with $5.20 commission in my margin account. At my ACB, the yield is approximately 6.31%.
Why did I purchase this REIT at this price? The 52 week low / high is 34.05 / 39.740. The REIT has a lot of government departments as tenants in their REIT portfolio. I also like this REIT as their other tenants in their top 20 tenants are highly successful companies. According to Morningstar.ca as of May 25, 2013, Dundee REIT is trading at Price/ Book of 1 and ROE of 12.8% (TTM). In January 2012, Dundee REIT purchased Whiterock REIT to make it one of the biggest REITs in Canada. I was a unit holder of Whiterock REIT and elected to have my units redeemed as cash. As the Whiterock REIT units was held in my margin account, I transferred the cash I received to my TFSA and purchased shares of Dundee REIT and held it ever since.
My plan is to sell these 70 shares for $150 -$170 gain excluding distributions. I will continue to hold my other units of Dundee REIT in my TFSA.
DISCLAIMER:
Why did I purchase this REIT at this price? The 52 week low / high is 34.05 / 39.740. The REIT has a lot of government departments as tenants in their REIT portfolio. I also like this REIT as their other tenants in their top 20 tenants are highly successful companies. According to Morningstar.ca as of May 25, 2013, Dundee REIT is trading at Price/ Book of 1 and ROE of 12.8% (TTM). In January 2012, Dundee REIT purchased Whiterock REIT to make it one of the biggest REITs in Canada. I was a unit holder of Whiterock REIT and elected to have my units redeemed as cash. As the Whiterock REIT units was held in my margin account, I transferred the cash I received to my TFSA and purchased shares of Dundee REIT and held it ever since.
My plan is to sell these 70 shares for $150 -$170 gain excluding distributions. I will continue to hold my other units of Dundee REIT in my TFSA.
DISCLAIMER:
Monday, May 20, 2013
How do you spend your money?
When you receive money what is the first thing you do?
The average person spends money and tries to save what is left at the end of the month. The problem is when the end of the money comes there is usually no money left or little money left at the end of the month.
What did I decide to do?
I pay myself first before spending money on rent, bills, food, entertainment. Paying yourself first means you are making yourself most important in your life. This allowed me to build an emergency fund and start saving and investing. This has definitely made it easier to sleep at night. After paying myself first, I try to live off what is left for the month.
A couple of books that talk about the pay yourself first concept is The Richest Man in Babylon and The Wealthy Barber.
DISCLAIMER:
The average person spends money and tries to save what is left at the end of the month. The problem is when the end of the money comes there is usually no money left or little money left at the end of the month.
What did I decide to do?
I pay myself first before spending money on rent, bills, food, entertainment. Paying yourself first means you are making yourself most important in your life. This allowed me to build an emergency fund and start saving and investing. This has definitely made it easier to sleep at night. After paying myself first, I try to live off what is left for the month.
A couple of books that talk about the pay yourself first concept is The Richest Man in Babylon and The Wealthy Barber.
DISCLAIMER:
Friday, May 17, 2013
Income Trade
A few days ago I decided to do an income trade. I purchased 100 shares on Royal Bank (RY) at a cost of 61.26 excluding commissions. I then wrote a covered call with a Jun 21/13 62 call option for an option premium of 69.05 after commissions. This amount gets immediately into my broker account. Using a covered call allows an person to increase there rate of return.
If the price of Royal Bank stock goes above $62.00 the option might be "called away". That means I am obligated to sell my shares at $62.00, which is the strike price. If the option expires worthless, I will then decide to sell or sell with a covered call.
DISCLAIMER:
If the price of Royal Bank stock goes above $62.00 the option might be "called away". That means I am obligated to sell my shares at $62.00, which is the strike price. If the option expires worthless, I will then decide to sell or sell with a covered call.
DISCLAIMER:
Tuesday, May 14, 2013
Dividend Update April 2013
April 2013 was the highest dividend income I ever received in one month. This is income that I didn't have to physically work for.
This is a whopping $228.49.
Every month I continue to add capital to my savings and investing accounts. I also DRIP some stocks to "average down" a few investments to lower my yield on cost. I would like to add more stable blue stocks to more portfolio that pay a decent yield.
Currently, I invest mostly in a non-registered account as I am using leverage a little. This means I am using other people's money (OPM) to increase my income through dividends. The interest money I borrow to invest is tax deductible.
I will update my dividend tab with the above total.
DISCLAIMER:
This is a whopping $228.49.
Every month I continue to add capital to my savings and investing accounts. I also DRIP some stocks to "average down" a few investments to lower my yield on cost. I would like to add more stable blue stocks to more portfolio that pay a decent yield.
Currently, I invest mostly in a non-registered account as I am using leverage a little. This means I am using other people's money (OPM) to increase my income through dividends. The interest money I borrow to invest is tax deductible.
I will update my dividend tab with the above total.
“Do you know the only thing that gives me pleasure? It's to see my dividends coming in.” -John D Rockefeller
DISCLAIMER:
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