Canadian Personal Finance Blog

This is a day to celebrate all Father’s and their contributions to our lives, and I am very lucky to have had a Father who taught me many things, and continues to teach me even now.

In honour of this day, I will post (yet again) the greatest piece of financial advice ever given to me and it was (by surprise) given to me by my Father:

There once was a court jester who enjoyed a good joke, usually at the expense of the King, which got the Jester into deep trouble. One day the Jester was having a particularly “devilish” day and insulted the Queen in a large public forum. The King was OUTRAGED by this and ordered the Jester executed for his insolence and the guards dragged the Jester off to the dungeons.

Hours passed and the Jester (who was a quick thinking man) thought how can I get myself out of this mess? Finally the door to his dungeon opened and the guards dragged him back to the King. The King said, “I have enjoyed your buffooneries over the years, so I will give you one wish before I put you to death for your crimes.”.

The Jester thought what could he wish? Then he came up with a plan, he knew that the King adored his horses so he came up with the following, “Sire, all I ask is that you give me a year’s reprieve, and during that time, I will teach your horses to Sing! This will make you the envy of all other monarchs. If at the end of this year I am unable to get your horses to Sing you can execute me in any gruesome fashion you wish.”. The King looked perplexed and then confused, but finally he thought that he had nothing to lose, he would either be the envy of Europe or the Jester would be executed, either way was fine by him.

The guards then took the Jester towards the Royal stable, when one of the Guards asked the Jester, “Why would you make such an obviously impossible deal, surely you know no one can get a horse to sing?”

The Jester smiled and whispered to the guard, “Many things can transpire in a year my friend, I could die and thus I have cheated the executioner… the King could die and I might get a reprieve… or the horses could sing!”

My Dad told me this story after we discussed payments schemes for money he was loaning me to buy my first house. What was he telling me? I’ll leave that to you gentle reader, as usual with a story from my Dad, you get from it, what you think, not necessarily what he thinks you should.

No that is not my pet name for the guy who stuffs my super mailbox, however, I do get some very interesting e-mails and 1 yesterday I felt I had to make a comment on.

Art for Financial Gain

This e-mail almost had me passing my liver I was laughing so hard. It started off with:

If you’re looking for an alternative to investing in stocks or real estate, art might be the way to go – whether you have $1,000 or $10,000 to spend.

You are not serious or as my daughters might say WTF? For my regular readers you know I have very little skill when it comes to investing in stocks (I have had many more flops than wins), I think I know as little about Real Estate, but then again, I have a nice house (which is not an investment in my mind) and I know I never want to be a landlord, so that covers most of the investing areas I know of, but this e-mail suggests Art?

Don’t get me wrong, I like art and I own art, but it is Art for Art’s Sake. I am an amateur ornithologist, especially liking pictures of birds of prey, so I own a couple of Robert Bateman prints which are worth something, I think. This e-mail is saying that I should work with this web site to make money using a methodology outlined by an entrepreneur.

Pardon? So as with most get rich schemes, I give someone I don’t know money to invest and hope they don’t simply squander it, in an area where I have no expertise other than, “That looks nice to me”? I think I’ll be passing on that “investing idea”.

Other Interesting Mail

I also get lots of other interesting e-mails, which fall into a few categories:

1. How my girlfriend is unsatisfied with me, and I need herbal Viagra of some kind. Why is it my girlfriend is unhappy but my wife isn’t? Curious why those ads always talk about my girlfriend.
2. Get rich schemes for this blog and how if I use the right keywords like: Royal Bank of Canada, Scotiabank or PC Financial, I will make a fortune. No Canadian Capitalist is the only successful financial blogger I know of right now.
3. Phishing e-mail from people in the former Soviet Union or Nigeria who want to send me $1,000,000.00 because I am a good person.  I think I deserve that money, but no, I don’t answer those either.
4. Occasional inquiries from readers about specific things and even some who ask for investing advice. Here is my investment advice: Pay off your debt and never ask me about investing advice, I will steer you wrong.

I enjoy reading mail and e-mail, and I like reading comments too (especially the nice one who said the Globe and Mail got it wrong and that I was one of the top 5 Canadian Financial Bloggers).

Be Cautious

The CBC asks the question are Canadian Investors being too cautious?

Canadians are sitting on a record $45 billion in excess safe, liquid assets that would normally be invested in the market, according to a report Wednesday by CIBC World Markets economist Benjamin Tal.

So people who want you to invest so they can make money on the transactions think we aren’t investing enough? I am pretty sure that Laura Secord thinks I am not eating enough chocolate too, but I don’t listen to her either.

We in Canada have seen some SPECTACULAR investment busts in Bre-X, Nortel and the high tech bubble, and others, be skeptical and be cautious. Invest in what you understand and know (to paraphrase Warren Buffet), unless you are able to deal with losing the money you invest!

As has been pointed out by both Canadian Capitalist and Michael James the Bank of Canada’s 1/2 point rate drop has not been reflected by the major banks yet, in terms of Mortgage rates (especially in longer term mortgages). Short term mortgages and credit vehicles that are typically based on the Prime interest rate, do reflect this dropping, but longer terms (greater than 6 months) certainly do not reflect this drop.

Why are Mortgage Rates not Lower? Darn good question. Currently the TD Bank’s prime rate is 4.75% and that is also what they are charging on their variable rate 6 month mortgage, however, after that the rates start climbing, to a maximum of 7.75% for a ten year fixed rate mortgage (more than twice the current Bank of Canada rate).

Remember that all rates posted on these sites are negotiable in some fashion or another, and here we come to the real core of this post.

If the bank says, “We don’t negotiate Mortgage rates”, simply leave, and call a Mortgage Broker and you might be surprised that the Broker can get a cheaper rate from the exact same bank (and remember the Broker makes money on this too).

Banks Need You

Remember, if you are a good credit risk and you want to truss yourself up with a long term debt like a Mortgage, the Banks want you! They want your business, and they want your money passing through them. They want you even more, if you carry balances on your Credit Cards, but let’s not go to that subject today, but remember, the bank wants your business, and keep that in mind.

When you are talking to a bank about Mortgage rates and such, it is an excellent time to discuss getting Free Banking too. This corporation wants your business, now is the time to be asking (or demanding) for the best deal you can get. Be prepared to talk to a few banks, and also be prepared to be promiscuous with that information, tell the banks the deals other banks are offering you, and see if they will match the deal or even make a better deal (I don’t suggest lying, mostly because I am a lousy bluffer or liar, being dishonest isn’t the way to go).

Let me be honest, I am awful at negotiating, but I am learning that it is an important skill to develop, so I work on it. It is all a game for me, and getting the best deal I can, is the goal of the game. A really good tactic is to get friends or family to tell you what deal they got, and see if you can beat that deal. You may not get that deal, but maybe you’ll get a better deal, you never know, until you negotiate.

The only thing I can tell you for sure, if you do not try to negotiate, you will not get a good deal from the bank. Strangely the opposite of this is not true (i.e. if you negotiate you will get the best deal), but, if you don’t negotiate, I promise you will not get a good deal (unless your father or mother or a relative owns the bank or works at the bank, but then you are playing the game by using connections, so go for it).