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Financial Resume: Investments

This was written back in 2007 a year before I got laid off. I was cockier about my Financial Resume at the time. I am glad I bought banks back then because I lost money with Nortel.

As my regular readers can tell, I speak frankly about some of my more enormous blunders in life, and my investing “strategies” have to be my biggest failure in my financial resume.

Let me see if I can make a scorecard on this one:

Positive

  • Bought banks in 2003 with money that was left from High Tech bubble implosion, and those banks have been a god send in my RRSPs. They have grown and I only really bought them for their dividends, but that has to be the best decision I have made (with my wife, I’d like to point out).
  • I get my matching funds from my company’s Deferred Profit Sharing Plan, and I have not touched that money yet. I have invested it badly, but I have not spent the money either, and it is starting to recover slowly. (effectively get an extra 3% a year for this in retirement funds).
  • Created RESPs for my kids, and the funds in there have stayed there, and I will not touch them. The money is growing ok, but I am most proud of not taking any out yet either. The one gift you can give your kids is an education!
  • Have been able to save almost 7% of my salary for a while in RRSPs, so I do have a nest egg of sorts.

Negative

  • Road High Tech stocks like Slim Pickens all the way down. I knew it was happening, yet I couldn’t pull the trigger and take my losses, and when I finally did, I stayed away for a good long time, which is a kind of good thing. I work for a high-tech company, so a lot of my built-in retirement stuff from the company went in the toilet at this time too. This is the stupidest thing I have done financially. In the immortal words of a fellow high-tech worker, “I drank the Kool-aid”, when they kept saying, “It will come back, really!”. No matter how many positives I can think about myself, this one is SO negative, I cannot recover.
Boom goes the High Tech Bubble
Ride it Down!

Overview

So there you have my view of my investments. There is no need to go over individual wins or losses regarding specific security; there is no point in that.

My investing is getting better, I have made some classic blunders, but I am slowly learning from my mistakes, which is essential.

My financial resume isn’t bad after all, it’s nothing fantastic, and I know people who have been able to set up a plan and live to it and are much farther ahead of me, but I am doing as well as I can now, so that is all I can wish for now.

Financial Resume

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Cars: from my Financial Resume

I have written about my Financial Resume before. I have made some good decisions, and bad ones too. Many times luck played a large role in whether it was a good or bad decision. This was written back in 2007 for your reading enjoyment.

So now we have run down my two significant purchases, which are both houses that I have lived in (I think owned a bit presumptuous, since the bank OWNED most of both houses, really). I tend to remember things by cost, so what are the subsequent major purchases by price in my life?

University tuition kind of counts there; however, I was fortunate enough not to have had to foot that bill, so I will not be counting that on my resume. I think that the cost of Education is always a good thing and is a positive investment, even though you never get any tangible assets out of it. So I must rephrase that last sentence: you get a better job, you get more self-esteem, and you gain knowledge which is tangible assets, but not quickly “price tagged.” If you are doing a Financial Resume, then make sure you include your education costs. However, remember that as long as you didn’t borrow from a loan shark, this “investment in yourself” is a success no matter what. Give yourself a gold star!

Your Car is a Money Pit?

What did I blow lots of cash on next? You guessed it, the money pit cars I have purchased in my life. I would dearly love to live in a city where having a car is not a necessity, unfortunately where I live in Ottawa means the mass transit system is not a usable option for my family (although we do use it to get the kids to school, that is another price area). I did try for a while to have only one car and take the bus, and that worked somewhat, but the amount of time I was spending on the bus was driving me crazy, knowing that my journey in a car was only 12 minutes (it was 60 minutes on the bus). We’ll discuss this point later.

Let’s start at the current money pit. The present Van I have I bought new (I try not to mention it by brand and type, primarily out of fear of being sued), which I decided I was going to do, given I had bought my earlier Van used and had some issues with it (read later for that story). However, I got fooled into spending too much money on my new Van. I got pressured into buying earlier than I wanted with a threat of “… 0% financing is going to go away soon…” bull poop. It stayed around for another year (but I still bought the Van earlier than I wanted).

I didn’t buy the extended warranty when I bought the Van (another mistake since I ended up purchasing that later for more than the initial offer). The Van itself is still under warranty, so its high costs so far are Snow Tires, Oil Changes and one brake job. So far, I would grade this purchase as a “wash” I have enjoyed having a new car, but I paid too much for it, and I suspect this car is going to turn into a money pit after it goes off the extended warranty.

I should have bought a used Honda Van, but then again, I might have had to pay as much as I did for my North American product. I would view this as a lesson learned and put it on my resume as an essential learning experience.

What Did I Buy?

Previously I bought a used Plymouth Voyager. It was pretty well most of the time. Still, it had its “peccadilloes” and odd behaviour, and I was foolish enough to have it serviced at the dealership (which is a HUGE mistake, given I have a very reliable and honest mechanic who I was dealing with at the time).

The Van itself was reliable for about three years. Still, after that, it started to go “downhill” quickly (that made the van 5 or 6 years old, which is about when Voyagers fall off a cliff, metaphorically speaking, in terms of service costs, in my experience). Head gasket jobs, brake jobs, paint problems, air conditioning failing. This convinced me to buy the new Van that I currently own. I kept the Voyager around for a while as a second car, but it guzzled gas too much, so I donated it to a friend whose daughter’s Van had died. The Voyager stayed on the road for a long time after getting rid of it, so maybe I was also paranoid (once I lose confidence in a car, I cannot drive it).

Overall I’d mark this purchase as a good buy. I bought it used, paid it off quickly, managed to get a lot of big stuff fixed out of what was left on the warranty, and got rid of it when it became a significant financial burden. Maybe not a gold star for this one, perhaps just a blue star.

When I disposed of my Voyager, a dear friend was getting rid of her nine-year-old Honda Accord (trading it in for a nice Toyota car), and they offered her $2500 as a trade-in. I offered to pay for that car since I knew it was economical and well maintained. The friend was gracious enough not to harass me about paying off the car either (which is embarrassing since you should always pay friends and family FIRST). The vehicle is still on the road. I have put about $2000 worth of radiators, tires, windshields and brakes into it, but that is over three years, and it has been very reliable. I view this car purchase as a Gold Star on my Financial Resume. It was a reasonable price, and it has been a reliable second car for almost three years.

Are Automobiles Worth It

The moral is to buy used and know the reputation of the person from which you are buying the vehicle.

Financial Resume

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Financial Resume (cont’d)

Yesterday I started out discussing more financial resume stories (which all of us should attempt to do at least once to see how good a job we are doing with our moneys).

Today we speak of my second and present house and the purchase of it. At the time we had outgrown our old house and thought we could afford a larger house in a different part of the same town we lived in. It was about 80% more expensive than the current house we are in, higher taxes, larger floorspace and thus higher utility bills as well. There was another bedroom so at the time it meant each of my kids could have their own bedroom and it had an unfinished basement which we could expand into.

Financially the decision wasn’t too hard, since interest rates were relatively low. We have since replaced the furnace, the roof, added gutters and have finished a large section of the basement (so that is money we have effectively put into the house, but they were also needed so I am not sure exactly how you balance that pay out). The investment itself currently is worth about 50% more than what we paid for it (if you believe the City of Ottawa’s estimators, and from what I can see of the houses around us, that is not a bad estimate).

Was this a good investment? Housing is always a funny one for a strict black and white comparison. We needed a bigger house, we are in a nice neighbourhood, I am not planning on “flipping” this house to make a large profit on selling it (since I have to live SOMEWHERE), so I think thanks to an inflationary spiral in the housing prices in Ottawa this house looks to be a good investment, but housing prices are like stock prices, the only time it really matters is when you (1) buy them and (2) sell them, any fluctuations in between are simply “potential” profits, not real ones (unless you take out loans on the basis of the value, but I am not going to do that).

I think this would be a good investment for now. We have enjoyed living in it, we have to put more money into it, to replace windows and add some other parts to it, but all in all, a good place to put my moneys.

What about Tomorrow

Tomorrow what else can I look at in my financial resume?

A happy note the Bank of Canada didn’t raise interest rates yesterday, so another month of stable interest rates! Whoo Hoo!! 4.25% still and holding, good for us!

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