Canadian Personal Finance Blog

Busy week, so I am taking a break and publishing one of my favorite posts, about Risks and dealing with Risks.

Cancer, Now That I Have Your Attention

Yup, I am really talking about that, as Cancer’s ability to kill Canadians is rising, and Canadians are taking care of Cardiovascular issues more. Six out of every 10 deaths in Canada are caused by these two issues. Cancer is becoming more of a killer, is the bottom line for now.

So what the heck does this morbid topic have to do with Financial Planning issues? Maybe I’m just feeling morbid? No, but, if you look at this data, maybe you need to ask yourself the following important financial questions:

• Do I have enough life insurance so that my family can survive my death? Same question for your spouse too?
• Can my family survive financially a prolonged illness (as Cancer is capable of being)? Do I have any disability insurance?
• Do I have a will?
• Do I have enough health insurance to deal with a catastrophic illness?

If you are young and single, no it doesn’t matter that much, but if you are young and just married and planning on having kids, NOW, is the time to do this kind of stuff in place. No I am not selling insurance (and I am not advocating whole life insurance at all), but I am saying, go find out about what you need to deal with these concerning numbers about Cancer.

Hope for the best, and plan for the worst! (a wise saying).

This post was originally My Top 5 Investing Regrets of My Life, and I wrote it in response to a challenge from another blogger. This week I have been cleaning up my blogs old posts and I realized I really do have a treasure trove of interesting posts, so I apologize for resurrecting yet another “chestnut” but I really like this post as well. Have a great weekend folks!

Top 5 Investing Regrets of My Life

As part of a writing concept put forward over at Problogger I am making this posting about my Top 5 Investing Regrets over my lifetime. Thanks to Mrs. C8j for proof reading and suggesting content changes as well.

I offer this as a list for folks to learn from, and maybe not make the same mistakes that I have made.

5. Bought Whole Life Insurance

When I was just married and was quite naive when it came to investing, a gentleman from a very large insurance company sold me on the value of whole life insurance as an investment tool and as a way to protect my wife in case something goes wrong. Lots of flashy graphs showing how it becomes self-sustaining, and all of that stuff.

This was a mistake on my part, if I had bought term insurance at the time (I was in my 20’s) I should have paid somewhere around $10-15 per month but I was paying upwards of $50 to $75 a month (I don’t remember the exact amount it was way too much).

I thought this was investing, but I finally met someone who set me on the straight and narrow, and I cancelled the policy, but if I had invested the $40 or so extra I paid a month in an RRSP back then, I’d be much better off now. The good part of it is that I realized my mistake and corrected it, or I’d be looking at this “investment” wondering why I did this. Mistakes happen, but that is why pencils have erasers.

4. Not Understanding the Tools Available

Even after taking two business courses at University I forgot the tools that were available to me on my on line trading site. I monitored things closely but I did not realize the power of the tools that my on line site gave me:

• Bottom limit rules, which I could set up, to automatically sell my investment if they dropped below a certain price. This can limit losses and save you a basket of money.
• Buy orders to pick up a stock I am looking at, at the price that I wanted to buy it. I just bought with a market order, and it went in as soon as I pressed the “OK” button. If I’d looked at the stock and liked the stock, but thought it was overpriced, I could simply put in an order to buy when if it dropped to the price I wanted to purchase it at.

These two simple tools would have saved me a lot of money, if I’d thought a little bit about the tools that were available. Remember, a good tradesman uses their entire toolbox (not just the hammer).

3. Invested with my Heart and not my Brain

This comes back in my #1 mistake, but it’s important to have a Plan for your investments and have a set of rules to work by (and use the tools available to you). If you set down a clear set of rules about when you buy , and when you sell, then you are not relying on your instincts, and your decisions are easily understood.

It’s not hard to make up some simple rules about when you think you should buy a stock, and as soon as you do that rules for when you are going to sell it (because you eventually are going to do that). Some good rules for when to sell:

• Stock drops below a target price after a certain date (so you aren’t constantly buying and selling).
• Stock has not grown by more than 5% in the past year
• Dividend from the stock has either disappeared or has dropped below your goals for the stock
• Stock is now worth twice as much as when you bought it, and you want to remove your original investment, to protect your money.

These are some pretty simple rules, and you should think of your own, but they are something to think about.

2. Did not start an RRSP or Retirement Fund soon enough

This is a common mistake. Saving for my retirement, using sound investment rules, would have me much farther ahead in my life, I think. Set down a set of concrete goals for investing a certain amount of money every year, when you are much younger and you will not be playing the “catch up” game later in your life (as I and others are doing right now). Did I have the money back then? Well, maybe not, but even a little bit of money put away in your past makes your future that much better (it’s kind of like how to get better at playing Golf, go back in time and start playing earlier).

Time can be your best friend when it comes to investing, especially if your investments are growing over that time.

1. Did not sell out of High Tech in 2000

I have talked about this blunder before, and being a High Tech guy in the industry, I knew this was a bubble, yet, I “drank the Kool-aid” as well. I fell for the stories being told, and I rode that bomb all the way down to the ground. If I had set rules for investing, I would have at least bailed out and only got singed or lightly burnt, instead of completely incinerated the way my investments did. The funny thing is that my employers stock is the one I got burnt on the worst, and you would have thought I would have known better, but, then again in hindsight I can see what I should have done, but at the moment, it seemed like a good idea?

Take your losses, but also take your profits and move forward with them, don’t just leave your money lieing around, make it work for you.

I hope this helps you, dear reader, in your investing plans. Yet another fine, “do as I say, and not as I do” posting by the Canadian Financial Opinions.

Last night the National Capital Financial Bloggers Association met, and we did what we normally do, swap stories and ideas about finances and the like (see the N.C.F.B.A. blog roll in the side bar for the sites authored by this group).

During these discussions the topic of time share condominiums came up and that led me to tell this story (which I previously published here).

The Worst Financial Advice I Ever Gave

Most of you know that I am very unlikely to give you direct advice in any financial area, and this story is one of the reasons why.

My wife, myself and some friends went on a vacation to Florida (this was about 17 years ago). My Father In Law had told me about how if you go to a Timeshare Condominium sales pitch, you can get free tickets to some of the sites around Orlando, which sounded good to me (Free is always a good price).  We found that at the Motel we were staying there was an entire courtesy desk filled with Timeshares offering this deal, so we signed up for a “sales demonstration”.

Off we went to this sales pitch, and it was hilarious,and surreal. I must mention one of my friends on this trip was Michael James On Money himself and his wife, so we were sure we weren’t going to buy. The salesman (who we nicknamed “Ray Don Bob Ron Don”, don’t ask why, but it was funny), tried all the sales pitches:

• Slow playing us to see if the condo would sell itself  (it didn’t)
• Pandering to our wives about how there was little or no housework  (they laughed)
• Telling the men they could rent whenever they wanted (I asked if we could get to stay during Daytona 500 week, he said yes, I laughed)
• How much money we’d save (we in turn figured out how much money they were making per building on the initial sale, and then how much they were going to make per year on their service fees).
• Finally asking, “Would you buy this place for nothing?”, and then saying, “OK your price is between FREE and our selling price”, which always makes me chuckle.

I must admit that we played along and acted very much out of character (worrying my wife a great deal), but at the end, there was no sale, we got our free tickets and we left (our salesmen grumbling about how we were, “… too analytical…”. I was struck by how the people at the sales pitch “closing” room looked like deer in headlights while paying for their time share with their Credit Cards, a very disturbing site.

Fast forward a few months and a dear friend was off to Orlando with his new wife, so I told him the story about getting free tickets for a theme park and all you had to do was sit through a timeshare sales pitch. He said he’d think about doing that, and nothing much more was said.

My friend returned from Orlando a week later, picked me up to go to work and he told me all about his trip.  I asked had he gone to the timeshare sales pitch, and he confirmed that he had. I then railed about how pathetic the sales pitch was, and what kind of an imbecile would buy one of those things, etc., etc., etc., for about 5 minutes.

Once I finished, my friend said in a very small voice, “We bought one…”

The car ride to work was very quiet that morning.

From that day, I always shy away from giving anyone any financial advice directly, I will tell them what has worked for me, and let them decide for themselves