Strikes : Good or Bad?

WestJet Airlines          

      When the pilot's union of the pilots of WestJet voted 91% in favor of strike action, the travelling public started to worry about their travel plans.  WestJet Airlines employees were not part of a union until recently.  WestJet Airlines employees are WestJet owners, which was part of the commercials.  See, instead of having pensions like their Canadian competitor Air Canada, WestJet employees could purchase company stock as part of an employee stock purchase plan.
       
       On May 25th of 2018, WestJet CEO and head of pilot's union made an announcement that the threat of strike action has been eliminated and the people can book with WestJet with 100% confidence.  One of the major sticking points involved the soon to launch ultra low cost carrier Swoop.  Swoop was going to have pilots from other parts of the world and they would not be WestJet Pilots.  WestJet has come out and said that Swoop planes will be piloted by WestJet pilots.  This will likely mean, the cost to fly on Swoop will be increased to offset thee pay of the unionized pilot.   The parties have agreed to mediation and possibly binding arbitration to come to a contract.
           On this news of no strike action, the price of WestJet stock, WJA.TO, increased 5% and then started to retract to between 2 and 3%.

Canadian Pacific Railway

     Over the weekend, the unions of Canadian Pacific Railway gave a 72 hr strike notice after rejecting the company's latest offer. 

     What happens when a Class 1 railway goes on strike?  The economy is strongly affected as a lot of companies ship by rail to reduce cost considerably and the belief that it is more environmentally friendly.  Trains transport commodities such as coal, crude oil and grain. Trains also transport goods via intermodal containers and temperature controlled intermodal containers.
   
    The federal government will get involved very soon if the matter is not settled within a matter of days.  Canadian Pacific Railway is preparing for a work stoppage.  Their main competitor in Canada, Canadian National Railway, has stated they will not be able to accommodate shippers in the event of strike by Canadian Pacific Railway.

Are Strikes Good or Bad?

      Strikes can sometimes cause hardships for everyday people.  In 2011 or 2012, Metro Transit drivers of Halifax went on strike. The strike lasted approximately 6 weeks and it was during the winter.  A lot of people rely on buses to get back and forth to work and university.  A lot of people had to quit their jobs because they did not a viable means of transportation due to lack of money.  The bus drivers wanted higher pay, more safety and better work schedules.  Bus drivers get to pick their schedule of when their start time and which routes they will drive.  This picking of schedules is done by seniority.
     
       Was their anyone compensation for the public who had to quit their jobs? No there was not.  A goodwill gesture, Metro Transit made the buses free for 2 weeks to help their passengers financially.

         Union employees get paid more than regular employees to the same type of work.  I recall being told by someone in 2005, that their friend got paid $24 an hour to work at Canada Post's sortation plant in Halifax.  Canada Post is unionized.  Courier companies like Purolator and Sameday Worldwide pay their dock employees a lot less. Often times the courier companies work would be harder physically than Canada Post, which has lots of letter mail.

     When I was at Dalhousie University, the professors went on strike about 2 weeks before final exams. All classes were cancelled obliviously, or that was what we were told.  One professor decided to teach his class during the strike saying that you guys are paying for this course.  A few days before exams were scheduled to start, the strike was over.  A lot of students were stressed out during the strike wondering if their semester and possibly year ( full-year courses) were in jeopardy.
 
    Years ago, that a bus driver was suspended for taking his lunch break at a different time that when is lunch was scheduled.  The driver was late due to an accident and construction along his route.  The bus driver was part of a union.  So, his suspension lead to his fellow bus drivers walking off the job.  Did any of the bus drivers get fired?  No bus driver lost their job.  If a non-unionized employee did this, they would be fired instantly.

   When not a part of a union, there is no protection in a job.  A boss or fellow co-worker could scream at you and such.  If you quit your job, you will have a hard time to convince the employment insurance office that you had a valid reason for quitting.  Therefore, your source of income is lost completely as there is no job income or employment insurance income.  We all have been there or know of someone that quit a job because of a toxic work environment.
    Some worksites will not even allow non-unionized workers on site.

Conclusion:

     Strikes can be good or bad depending on the individuals involved.  A strike can lead to better working conditions and higher pay for the employees involved.  The downside is that the public can drastically affected.  An example of the latter is when public transit goes on strike.  The travelling public could be left without a reasonable cost effective way to get to and from work.

Disclosure: Long WJA.TO

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Benefits Of The Rate Hike For Investors

        The FED and the Bank of Canada have recently raised their interest rate by 25 bps each.  What does that mean?  It meant the cost of borrow money will increase and payments on variable rate mortgages and lines of credit will be increased immediately. Consumers and businesses will have their expenses increases due to the cost of borrowing increasing.  Shortly after the Bank of Canada raising their rate by 25bps, the big 5 banks in Canada followed suit within 24 hours.

         A way for banks to make money is too have savings accounts.  The bank then takes the money savers deposit and lend it out at a higher interest than they pay the saver.  The bank "promises" the saver that for the use of the saver's money, they will be paid interest.

         A lot of banks have not raised their rates on the savings accounts along the rates on their lines of credit, loans and mortgages.  So that means the bank will make more money. Therefore the shareholders of the banks will likely be rewarded with increased profits and therefore possible larger dividend increases than the banks have recently done.

Conclusion

     I am a shareholder in 4 of the 5 big banks.  Currently, the only bank stock I do not own is Royal Bank.  So, if North America does no go into recession in the near future then the banks will do well.  I always hear people complain how profitable the banks are each quarter.  My response to them if they are talking directly to me is "With them being so profitable, do you own any shares in any of them?".  I will often get a snarl or " I am too poor to invest!!" response.

     There are ways to invest with very little money.  A person can buy stocks the old way directly through the transfer agent.  How this works, at least in Canada, is that you go to a website like www.dripprimer.ca and try to buy a share of a company.  I will talk about the way I have done through this site.  I posted a message on the share board looking for a share of Enbridge (ENB) and BNS.  Eventually, some will respond and agree to sell you a share.  You then send the person a check with that amount agreed upon. In return, you will get an actual share certificate with your name and I believe your new account number will show up.  The transfer agent sends you the share certificate and not the individual.  The seller as to follow steps outlined by the transfer agent to make their transaction to go smoothly. Once the share certificate is received the buyer can make purchases directly with the transfer agent for that particular stock operating within the guidelines outlined in the company's DRIP program.  Most of the times, investing this way you get to purchase shares at a discount with reinvested dividends.  The downside you do not know the price of shares when you make purchases of additional shares directly with a check or a debit from your bank account.  When buying stocks this way, you directly own the shares in your name.  When you purchase the shares in a brokerage account, you do not own the shares directly but are given all the rights of shareholder ownership  such has voting, dividends, distributions, buyouts, and interest.

    In United States, Capital One (formerly Sharebuilder) allows you purchase fractional shares and the entire dividend gets reinvested. I believe if you put in the order Monday night, to invest X amount of dollars into "ABC", then the shares are purchased the following day.  With Capital One, you can also buy shares like any other brokerage and pay a commission of around $7.00.  Also, with Capital One, you can turn the drip on or off with a click of the mouse.  Most brokerages you have to call or e-mail the brokerage to tell them to turn the drip on or off for each stock in the account.

Need Money To Start?

           When a person decides to start investing, they often do not know where to start.  What type of investments should an individual pursue?  Well, the potential investor has to know what their time horizon, risk tolerance, hands on or hands off, invest themselves or have someone else invest on their behalf.

          A real estate investor is more hands on then an investor in the stock market. See, a real estate investor might have to deal with tenants directly in gathering rent, doing maintenance, and showing the property to them.  The real estate investor might be involved in choosing the proper, buying the property, getting a mortgage and advertising them. It is said that real estate investing is a business. But a individual must ask themselves if they want to fix toilets, deal with tenants, look for new tenants etc.

           On the other hand, investing in the stock market can be done real hands off or hands on.  If an individual decides they want to be a strict hands off investor, they have to find a stock broker or consult with investing professionals who will manage their money for them. A hands on investor can purchause instruments like precious metals, stocks, bonds, debentures etc by doing their own reseach and clicking a mouse.

         The method the rest of this article is about is investing in the stock market.  The big advantage of the stock market is that an individual can close a position really quick.  However, unless an individual investor has basically no control over the direction of the company unless they own a significant amount of shares already. The stock market is highly liquid.

       A question that always comes up is "Where to I start or how to begin?".  Starting out an individual might not have a lot of money.  I believe an individual should read about how the stock markets works.  He or she should also understand how to read financial statements.

       An individual investor does not need a lot of money to begin.  How to you come up with money to invest in the stock market.  Starting off, an investor needs to keep adding cash to the account.  The investor can buy stocks for cheaper commissions than ten years ago.  An investor can purchase stocks the "old way" which was purchasing stocks directly from the transfer agent or purchasing a share from a person.  The investor can purchase additional shares without commissions.  The downside to purchasing shares directly through the transfer agent is that he or she does not know what the price of the stock at the time of purchase.  If they company overs a discount on their DRIP shares, the investor is guarantee to receive this discount whereas a pseudo DRIP by a brokerage might not pass the discount onto the investor.

        Another method of purchasing stocks, is to pick stocks that pay monthly. For example, the investor saves $100 a week and their position size if $300.  So the position that pays monthly can have it's monthly dividend along with new cash to buy another position of the same stock or a new one.  A way to speed this up is to purchase commission free ETF or a REI,  rather than purchase an individual stock.  The reason for this is the ETFs and the REITs have a higher yield, for all intended purposes.  ETFs and REITs pay distributions whereas a stock pays a dividend.  Unlike a dividend, which is all the same type of income, a distribution can have its payment broken into dividends, return on capital, capital gains or interest.  The investor can take the distribution payment and add it to his own capital to purchase shares.  ETFs and REITs have  pay out 90% of their profits to unit holders. The downside to investing in ETFs or REITs, is that their is not much room for growth unless these raise more money through increasing the amount of units.

         When buying a stock that pays quarterly, an individual has to weigh 3 months to see any income from the investment. This psychologically is difficult to see at the beginning as the payments will be small. With having more money to invest at the beginning, can see an investor stay in the game though more patience and able to not throw in the towel so to speak.

Conclusion:

          Investor's will not see huge returns starting off on their journey.  It takes a while for the snowball to gather momentum and grow, but they can help speed up the process.  An individual is actually doing this right now live in real time. Dan of Sharpe Trade LLC is demonstrating starting from $500 and adding $25 each week, how an individual can build an account that pays you an income. This portfolio, which is called Sharpe Income, has an investing section and a capital gains section. The capital gains section will eventually be used to speed up the income investing side of the book. 

         If an investor buys a monthly dividend paying stock, ETF or REIT, he or she can put that capital back to work quicker.  The downside to this that dividend growth stocks, provide higher returns over the long haul as their businesses tend to grow quicker.  The companies that are considered dividend growth companies can use some of their profits to grow the business.

      The most important thing is to start.  I think a person should pay off their debts first as fast as they can and then save as much as possible this allows you to become financially free at an earlier date.
   

Disclosure:  I have no affiliation with Sharpe Trade or any of their subscription based projects. However, I do follow their public side at www.sharpetrade.com.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

        

One Thing You Can Be Sure Of In LIfe

          We all know people who spend their entire paychecks.  These people live paycheck to paycheck. If you do not know anybody specifically, you can roughly tell by their actions if they live paycheck to paycheck.  Some of these people are in dire straights, while others are just more managers of their money. Some people have plans for their money even before they receive it.  These people might have a lot more fun, but they are also a lot more stressed.  Unfortunately for the rest of us, we here the complaining and snapping at people. 

         The one thing we can be sure of that will happen in an individual's life is an emergency.  These emergencies can be things such as car breaks down, roof leaks, or a job loss.  Emergencies can occur without any notice.  People need to prepare for emergencies before they happen.  People prepare by saving 3 to 6 months of expenses in an account for emergencies.  This is called an emergency fund. 

         The emergency fund  has to be easily accessible.  This can be money kept in a savings account, money market fund,  or somewhere in your house.  By having an emergency fund, an individual will not have use a credit card or sell investments to fund these emergencies.

        Having an emergency fund also allows an individual to sleep better at night.  How much money should be in an emergency fund?  The amount of money put in an emergency fund should be at least 3 to 6 months worth of expenses, but an individual should make there emergency fund as big as they need.

   How would you feel when somethings happens like this:

• car breaks down
• furnace breaks down
• get sick
• lose a job
• sewage backup
• house fire

   For anything that people have insurance for, there is a delay from receiving moving from insurance. For example,  if your house or place of residence catches fire and you have to go to a hotel, you will have immediate access to the money via the emergency fund instead of putting money on a credit card. The insurance will take a few days to go through and you might have to put up a fight to get it.

   People who save money these days will actually lose money due to the interest rates that banks pay on savings accounts and how this compares to inflation.  See, the emergency fund is insurance and not an investment.

    Do you have an emergency fund?

  

Photo Credit:  www.shutterstock.com

No Money to Invest?

        When it comes to investing, a lot of people say they cannot afford to invest.  I think people can not afford NOT to invest. What do I mean by that?  Investing means putting your money to work.  If a person spends on their income, they will not get anywhere in life. People often say you need tens of thousands of dollars to invest. The modern day potential investor has a lot of advantages over someone years ago.

       Years ago before the birth and rise of discount brokerages meant that investors had 2 options. They could call up the brokerage and purchase shares or units at high commission. This made it harder to pick entry points.  Also investor's were not able to see real time quotes like they do today.

        The investors of today have another method still at their disposal.  The real old method of purchasing shares is directly through the transfer agent. In Canada, can purchase shares through the transfer agent directly.  Before using the transfer agent, often times the potential investor has to buy a share from another person.  In Canada, this can be done through the website dripprimer.ca.  An individual would then go to the Share Exchange board and put a message on the board saying they are looking for a share in a certain stock. A share certificate is then sent to the transfer agent by the seller and the buyer would receive the share in a few days or so.  When an investor purchases shares through the transfer agent, they have no control of the purchase price of the new shares. Purchasing shares through the transfer agents means investors do not pay commissions and the entire dividend is reinvestment or paid out.  Some of the companies have a DRIP discount on shares purchased with re-invested dividends.  This method of investing do not require a lot of upfront costs.

     Nowadays, investors pay low commissions via discount brokerages. These discount brokerages have commissions of $10 or under compared to full brokerages which have commissions of $30 or more.  Unlike a full brokerage, an investor using a discount brokerage has to  pick their stocks on the own after doing their own research.  Currently, Dan of Sharpe Trade is proving a way this can be down.  You can read about this project, called the Sharpe Income project on Sharpe Trade and search for Sharpe Income or click on the Sharpe Income label.  Their entries on Monday provide a link to the start of the project and also a link for a spreadsheet.

   For disclosure, I have no affiliation with Sharpe Trade LLC or any of its products on their website. 

      A few of the discount brokerages off commission free ETFs for purchasing only or for both purchasing and selling. The fees associated with the purchase or selling is a ECN, or electronic exchange network, fee which is usually very small.

      Exchange Traded Funds, aka ETFs, are cheaper than mutual funds when it comes to fees and trade like a stock on the stock exchange.  Investment fees eat into returns, so an investor should keep their fees as low as possible.

      The power of DRIPs is shown in the following video.

Why Diversification Is Important?

         When most of us started to think about investing, we are told to diversify our assets.  New investors tend to gravitate towards mutual funds as they provide instant diversification. A mutual fund is where money from investors is invested by professional money managers according to the mandate, also know as the objective, of the fund.  If you are like me, you try to buy individual stocks.

         Over the past year or so, a company is Canada has been under hot water. This particular company is called Home Capital Group Inc  (ticker symbol HCG ) and trades on the Toronto Stock Exchange. 

      

Home Capital Group Inc. is a holding Company and operates through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposit, mortgage lending, retail credit and credit card issuing services. Licensed to conduct business across Canada, Home Trust has offices in Ontario, Alberta, British Columbia, Québec, Nova Scotia and Manitoba. (Source : Home Capital Website ) 

    HCG has had a lot of negative events over the last year or so. Some of these are as follows:

• On Feb 10, HCG discloses that the Ontario Securities Commission sent an enforcement notice after the market closed on Feb 9, 2017
• On March 14, HCG discloses that legal and regulatory matters in regards to the issue immediately above.
• On March 27, HCG announces the departure of their CEO which occurred over night. This CEO was in the position less than a year.
• On April 19, 2017 HCG releases a statement on the Ontario Securities Commission intention to pursue an administrative proceeding against the company and 3 individuals. These 3 individuals are Martin K Reid, former President and CEO, Gerald M. Soloway, former President and CEO and currently a director of the Company, and Robert Morton, the Company's Chief Financial Officer.
• On April 24, HCG annouces the pending retirement of Gerald M. Soloway and appoints Robert Blowes as interim CFO.

Click to Enlarge

        The above chart is a one year chart.  The stock as dropped over 50% in value over the past 365 days.  The dividend was increased over this time span.

Click to Enlarge

      

     HCG is down 44.16% since the start of the calendar year.  I recently sold puts at $25 strike price and bought to close for loss of $353.90, which you can read about here.  On April 24, you can see the stock dropped 9.09% during which they announced the pending retirement of the current director Gerald M. Soloway.  

     This stock over the last year  shows why stock market investors need to diversify.  An investor would be out a lot of money if they bought the stock 6 weeks ago or before 6 weeks.  I do believe HCG has to do more to lessen the fears of investors and to right the ship once again. 

    Diversification helps you sleep at night.  I am sure a lot of investors are worried about where the stock price is heading.  Canadian investors can diversify in Canada, although the degree of diversification does not compare to the US Market. 

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

High Interest Savings - Part 3

    This is Part 3 of the High Interest Savings options to combat the low interest rate on the high interest savings accounts.  To read the Part 2 of the series can be read here.

    Another option an individual could consider is purchasing units in a REIT, or Real Estate Investment Trust.  Obviously, an individual would have to careful examing the charts of the stock over a timeframe of at least 3 years. The individual then considering the minimum yield they want to start off with.  The yield will definitely be higher than the current interest rates of high interest savings account.  REITs have to pay out 90% of the profits to unitholders, which is the law for them to be able to trade as a REIT.

    REITs usually pay monthly.  So an individual could decide how much to invest initially in a REIT. An individual could decide to make another investment by saving up more more along with an money paid to them as a distribution. 

    The price of a REIT can be affected by rise or fall of interest rates and what is going on in the economy.  If the economy is getting bad, then the REIT can be affected if the REIT has properties in the area that is doing bad.  A perfect example of this is what is happening in Alberta right now. In Calgary, Alberta there are lots of vacant offices due to the slowdown in the energy sector. An individual must decide if they feel the REIT will continue to lose more value if the economy continues to struggle. 

     The current rate of interest on my high interest savings account is 0.80% per year.  For a REIT, the yield averages is usually higher than 5%. So, we will chose an yield of 7.5%. 

Example

Invest $1000.00.

High Interest savings would pay $8.00 in interest for 1 year.

A REIT with a 7.5% yield will pay $75.00 in distributions in 1 year. 

We see a difference of $67.00 annually. The distribution from the REIT will also be more tax advantageous than that of the high interest savings account. 

So if an individual keeps savings and purchasing more units of the REIT, they will grow their money a lot faster.

Please Note:  The share price of a REIT is highly volatile.

Disclosure:  I own REITs inside my margin account and my Tax Free Savings account.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Pathway to Retirement

     All individuals and couples all have one thing in common when it comes to retirement. We all have to have enough money to live off as people will be unable to work most jobs past a certain age. 

     This income in retirement can come from a pension, capital gains, interest, or cash flow. Some people think their only way to retirement is too win the lottery.  These lottery players think investing in stock market is gambling or that you need a lot of money to invest in the market. 

      I know of a lot of people play various lotteries every week.  These lotteries include scratch tickets, even splits, and the major lottery games. In Canada, one of the lottery games is 6-49.  The odds of winning are 1 in 14.3 million (1 / (49C6).  For those not familiar with math, 49C6 represents "49 Combination 6".  This game consists of 49 numbers in which 6 balls are randomly chosen by a machine. A bonus number is also drawn. If the number on these 6 balls are the same as the 6 numbers picked by the lottery player winner, then he or she wins the jackpot.  The lottery player can also win other ways, but the money will be a lot less.  The scratch tickets winning amounts are a lot less.  So if you add the amount of money paid to play various lottery games, it can add up. Personally, I think a person is better off playing bingo instead of playing these lottery games. If the bingo game has 400 players, then your chance of winning is 1 in 400.

       The pension can come in various forms. They can be small government pension for old age, a small government pension or a defined benefit pension.  The defined benefit pension is not an option for most people, as usually only government or crown corporation employees have this setup. Defined benefit pension a liability for the employer for as long as the pension receiver is alive.  So most companies have down away with them, and made the worker responsible for his or her own retirement by using a registered contributions plan.

      The downside of a contributions plan to a worker, is the money put in is not guaranteed to be there when you go to take it out.  These plans are called RRSP (Canada), 401k (US), super annotation (Australia) etc. are capital gain types of setups.  So as the value of these plans go up or down, corresponds to the same change in an investor's net worth at that given time. So an investor will have to withdraw money out of this account therefore reducing the balance.

   An individual could invest in investments that pay them either every month, quarter, semi-annual or annual. This pay is called cash flow. So the investment is paying a cash flow in the form of a dividend, interest, premium, distribution, or rent.  The goal of this is to have enough income coming in from your investments to exceed your expenses, which means the investor will be financially free.  Even if the investor is not financial free, the income from the investments will help cushion the blow in cash of a lay off at a job.

    Which is best?  The two best options are pensions and/or cash flow investments in my opinion.  In Canada, an individual can invest in non-registered accounts  or tax-free savings accounts.  These individuals can invest in other cash flow investments such as real estate or oil and gas.

     Most people in Canada have heard about Derek Foster.  Derek Foster let the rat race at age 34 by investing in dividend paying stocks, income trusts and REITS.  Derek used leverage of few times to aid is investing.  To find out more about Derek, feel free to check out his website www.stopworking.ca.

    In summary, an individual who thinking the best chance of retirement is, for lack of better word, is gambling with their life. The odds of winning is so high that an individual should only play the lottery once and awhile for entertainment purposes.

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

     

Is Everyone Treated The Same?

     People want to make some changes in their lives to make their lives easier.  Of the these changes  involve investing or trading in the financial markets. Do you think everyone gets equal treatment as their neighbors to the north, south east or west?

     In the past several months, I had a demo account with Oanda, to learn to trade Forex.  As time goes by, I decided it was time to open a real account with only a few hundred dollars.  Forex has leverage of like 50:1 whereas a stock is 2:1 in a margin account.   Depending on the Forex broker, the leverage can be smaller or larger which is determined usually by the broker.

     During the registration process, a condition came up "You do not live in Alberta?".  For people who do not know, Alberta is a province in Western Canada.  Canada has 13 regulators for securities. Each province and territory has their own securities commission.   I did some research and discovered  Albertans can not trade Forex unless they meet one of the exemptions. I discovered this through google. The Alberta Securities Commission, or ASC, has determined that Forex is highly speculative and people can lose lots of money. This is not new , as I believe the rule is in effect over 10 years.

        I called the ASC, to discuss how a regular person can trade forex.  One of the exemptions is a networth of  1 million dollars or a annual income of $200000 ($300000 if a couple).  I then asked if a person open an account offshore. The person I was talking said, "we can't stop you from opening account offshore. But if it is discovered,  the open positions will be closed without notice and your account closed". 

       The person I was talking to at the ASC, said they had calls from about 20 people in the last 6 months, who in total lost 1.6 million dollars.  Alberta is the only province in Canada, who doesn't allow Forex trading.  I believe people should be allowed to trade as it is his or her money. However, I believe a person should have to sign something, saying the understand their is high probability of losing more money than initially invested.

     A brokerage has to be registered in a province or territory in order for its residents to trade a particular market.  So the brokerages can register with the ASC, but an exemption must be met before the person can open an account.  This also applies to other high risk endeavors such as futures trading.

   Conclusion:

    Maybe the reason Forex, and other high speculative endeavors, are forbidden under ASC rules is due to the fact Albertans can make a lot more money than other provinces due to the nature of their jobs.  This means the probability of a person trying to make money in a high risk environment is increased.   When people lose money in the markets, they like to place blame on someone or something else.  Some people do not want to take responsibility when it comes to losing money.

Disclosure: After the consultation with the ASC, I have no plans to open an offshore account. 

DISCLAIMER

I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.

Choices You Make

    When you go to the grocery store, who make choices of what your coming meals will be in the future.  You can chose to buy healthy  food, junk food, or a mixture of both. If you decide to go for a drive with no specific plan, every stop sign, traffic light, exit ramp on on ramp you have to make a choice on where go next.
     When you get paid from a job, you have to decide what to do with the money.  With a job, your first expenses is income taxes such like employment insurance, pension plan by your country, etc.  An employee has no choice to pay these taxes. But after that an employee has to make all the choices of what to do with the money next.

What Do You Do Next


      The next choice you make with the money determines your future. A poor person will spend it on expenses like groceries, cable, rent or mortgage, restaurants etc. A person with a poor person mindset has all their money goes out the expense column and have nothing left over a the end of month. These people pay everyone else first before they pay themselves first, which is usually nothing as nothing is left at the end.
        A middle class person , who makes more money than a poor person, will have more expenses such as mortgage and car.  Their money goes out the expense column as their money is used to pay for liabilities and other expenses such as groceries, entertainment etc. The middle class people will get a raise and make choices like the buying a bigger house or a new car. There is nothing wrong with this but delay gratification is needed to get ahead financially by saving and investing in income generating assets.
         For an employee that has a rich person mindset, they still have no control over their income taxes from their job. They choose to pay themselves first after the income taxes deducted right off their paycheck. By paying themselves first, they can put this money in their asset column. This has to be done before you pay rent or mortgage, bills, groceries etc.  These dollars placed in their asset column are "their employees". Every time you get paid, if you continue with this process of paying yourself first, your savings accounts and investing accounts will grow.  Eventually you buy an asset which can generate income for you such as dividend stocks, rental real estate, mutual funds, bonds, businesses in your local community done. These dollars in your asset column are "your employees" that work for you 24/7 and never call in sick.  Repeating this process over and over, you income generated by the asset column will become greater than your expenses and you are financially free.   Currently right now, this is my approach to reaching financial freedom.

 Is there Another Way?


   If a person starts their own company by the legal entity corporation, they can use their business setup to buy their investments through a pay yourself first directly though the business structure.  This allows them to grow their wealth really fast because it is more tax efficient.

    A corporation can be used to lower your taxes and to protect your assets if structured properly. As I am not a lawyer or tax accountant I will not talk about the corporate structure in more detail here.  

Conclusion:

      The income generated my the assets in your asset column, will be taxed more efficiently than employee income.  Also the different types of assets will have different taxes.  Income though dividend paying stocks is more tax efficient than interest from a bond or savings account as interest is taxed as ordinary income, or marginal rate in Canada. The tax on interest will  be the tax rate of your tax bracket, but you will not pay the employment insurance tax or pension plan though your own government.   These tax advantages of income other than a job and tax benefits of corporations is why Warren Buffett pays less percentage of taxes than his secretaries.

    

    An easy read about paying yourself first  concept is The Richest Man in Babylon by George Clason.

DISCLAIMER
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.

Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.         

Some Youtubes Videos

I went on YouTube tonight, to listen to some music. One of the videos that popped up was a song about the stock market. Click here to go the the video. This channel  apparently has a few videos related to finance. There is one on money management.  A third video is about The Way to Wealth. 

As people go through there lives, the light bulb comes on for some people. They realize that they need to make better financial choices in their lives. The money you put in a savings account pays very little interest these days. With the rates so low these days, the saver is losing moving due to inflation.

Some options for people are to get a second job, invest in the markets or real estate, or start a small business. With a second job, this could be used to help pay expenses or pay down bad debt at a quicker pace. When investing, people have there money work for them though the companies they are partial owners in, which means they are shareholders.  When a company like McDonald's make a profit, they may share some of those profits with shareholders via dividends.  McDonald's pays a dividend and has done for year.  So after the purchase, a person will get a quarterly check from McDonald's as dividends in proportion to the amount of shares they own on the dividend record date.  This income comes in with zero effort, besides the investment, on a quarterly basis for most companies.

An investor can also purchase real estate that he or she can rent out. Then rental income should be large enough to pay the mortgage payment on the property, insurance, property taxes and other expenses related to running the property.

DISCLAIMER:

     I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should NOT be taken as investment or business advice.  Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk