In an article written by John Quain of the New York Times News Service the electric bike is beginning to replace cars in some European countries. Last year electric cars sold 1.15 million vehicles or 1% of total vehicle sales, however e-bikes sold 35 million units.

E-bikes are often sold for less than a $1,000, their batteries can be removed and charged in less than 3 hours and manufacturers have shifted the from motors attached to the hub of the rear wheel to the more efficient center-drive motors in the crankshaft, this improves the center of gravity and handling. For the e-bike the rider selects which type of assistance they want or sits on the bike and let the motor do the work for you. In large urban cities – the biker riders for food delivery often use e-bikes.

Linking to dividend paying stocks, while most of the manufactures are smaller size, there is a growing demand and eventually consolidation will come to the group. This is an opportunity for you to visit bike shops, find out which are good ones and look at the manufacturers for investment opportunities.

There are more questions than answers, till the next time – to raising questions.

 

If you believe in Global Warming, then you understand or partially understand the new normal for insurance companies. If you do not believe, then when the head of Munich Reinsurance Corporate Climate Centre which monitors climate-change risks says we are in a new normal, then you have to wonder was 2017 an exceptional year or a normal year? If it was an exceptional year, then insurance companies should be expected to pay out less in 2018. If you believe Mr. Rauch’s comments of a new normal, then it is time to consider insurance companies and how much can they pay? In an article by Tom Sims and Alexander Huebner of Reuters noted in a report by German reinsurer Munich Re said last year’s disaster was the 2nd worst in history after 2011. Munich Re believes global warming is having an affect.

Reinsurers are in the business of insuring insurance and are experts in managing risks and rarely get caught off guard. The issue in the business is increases in coverage prices are running at prices less than expected. There is still strong competition, but if this is the new normal double digit price increases are expected at some point.

Linking to dividend paying stocks, we all believe we are trying to do the right thing but maybe it is not enough. We throw things to be recycled because landfill prices have increased, but it seems China has been taking most of North America’s recycling and they maybe wanting less of it. If disasters are the new normal, then greater revenues are going to be needed to prevent and lessen the impact of the disasters. You may want to insure your investments help slow down Global Warming.

There are more questions than answers, till the next time – to raising questions.

As an investor, it is important to know how the company you are investing in makes money. After you determine that you can then see how will different scenarios affect the stock price. In Bloomberg News columnist Shira Ovide examined Facebook. In 2017 Facebook did very well, revenue was up, it generated 46 cents of operating profit of each dollar of revenue and the stock price was up over 50%.

Facebook is the internet’s best combination of quickly increasing sales, fertile profit, large market share in a valuable category and potential future growth from fresh areas.

But, and there usually is a but, all may not be as well as it seems – it is easy to imagine the company’s big opportunities becoming burdens. For example, Facebook makes money by selling ads. The growth of ad revenue was linked to the news feed Facebook users see and sometimes click on. The company’s Finance chief said ad volume was becoming less important and revenue growth would be increasingly driven by the company’s ability to extract higher prices for the ads it sells.

When powerful companies lean on price increases to keep growing, it typically means they are running out of natural growth potential. If they do that, they are no longer a growth company but a more mature one. Growth companies trade a different multiples than mature ones or the stock price will not likely grow by 50% again in one year.

Facebook’s volume of advertising is increasing more slowly because the company made a shift in thinking to slow the number of ads which go into the news feeds. Facebook also is moving in web videos. It takes longer to watch a video than to see an ad on news feeds.

Linking to dividend paying stocks, understanding the business models allows you to decide if the multiple is worth buying at or waiting for a downturn. In the case of Facebook, millions use the service and more will continue to do so, but if you are deciding between Alphabet (Google), Microsoft and Facebook then making a projection into the future helps you pick the stock at the price you are willing to pay.

There are more questions than answers, till the next time – to raising questions.

One of the most important aspect of living is earning an income, for most of the population we leave our formal high school schooling (if you are older think about the personal finance course you had – likely very few if any) our dreams and aspirations are to gain income (job or start a business) to live the lifestyle we believe we should be doing. There is nothing wrong with our dreams – our economy is based on it. Unfortunately many people become skilled in earning a living but not in spending the money they earn. This is great of marketers, sellers of stuff and givers of credit. It is not so great for family finances and relationships. What are some advice?

1. Live off 80% or 90% of your after tax income. The suggestion was 80% but it generally takes a few years or 90% is more realistic. However you get paid – weekly, bi-weekly or monthly and you can only spend 80% of what you make on living. This includes rent or mortgage including the bills – hydro, heat, water, etc. car including payments and operating the vehicle, and food – consumed at home and outside. The other stuff you buy. If you can only spend 80% that usually means some where along the lines you will have to say no to things. If you have not saved for it, you can not buy it. Think of your parents or grandparents before credit cards and easy credit was available.
2. Know your cash flow and live off it.
3. Credit cards are a wonderful additional to your life – if you can not pay the balance off each month, then you can not afford to buy. Wait. Credit card companies (MasterCard and Visa stock are up this year) make their money off of the interest people pay. At 18% plus interest doubles in 4 years. (interest rate divide by 72) if someone pays the minimum. If you buy on credit, you are paying more for what you have bought. Remember if you are carrying an outstanding balance on a credit card by paying it off, you save money.
4. Everyone needs an emergency savings account of $1,000. If you dip into the account, your task the next month is to put the money back. After you have the $1,000 savings account, then you save for the next items in your life.
5. Ideally, you will have money to invest, which is good. Think of methods to use compound interest rates for you, rather than against you. The magic of compound interest rates is by doing a very little your money over time gets bigger and bigger and bigger…. this allows you to have many options in your life.
6. Paying lower fees saves you money unless you get a higher return than the lower fee. In you look at an ETF which has a low fee of 1% or less and it makes the same return as an active managed fund which pays a fee of 2.5% or more, then by buying the lower fee, you made more money for yourself.
7. Buying a house – ideally you will buy what you need and not be too influenced by your neighbors. If you your neighbors go away on vacations twice a year (not necessarily to see family) you will want to do the same thing. What you do not know is they maybe in debt to do it. If you neighbors are renovating their kitchen you may want to do it – even if you really do not need to.

 

Linking to dividend paying stocks, the great thing about them is due to the dividend you get compound interest working for you along with buying a stock which has a good opportunity to move higher. The reason is to pay the dividend on a consistent level the company has to be profitable and profitable stocks trade at higher multiples than non profitable stocks as well as if the market goes down, profitable stocks come back faster. In addition, one of the rules of investing is try not to lose money, if a profitable company becomes less profitable, you know it is time to find alternatives.

There are more questions than answers, till the next time – to raising questions.

If you own a vehicle, even though you may not shopping to buy one there is always some interest in what are the steps to ensure you get a good deal.  On You Tube there are many videos offering advice and one of them offered 6 steps in buying a vehicle.

1. Before you go to the dealership, go to the bank to gain financing. The auto companies will finance you, but if you go to the bank prior to going to the dealership you will know if what they are offering is good and you can go with the least expensive to you.
2. Use the internet to do your homework about the vehicles you are interested in. What is a good price? If you are fortunate enough to be near two dealerships of the same vehicle ask them both to see what they will do for you.
3. All dealerships have the monthly or weekly payment for you. As a consumer you want the lowest payment possible, however as the payment goes lower the length of the contract goes longer and you pay more in interest. You always want to negotiate on price not payment.
4. If you have a trade in, bring it in last. Talk about a second vehicle – you are not interested in trading it in yet. The reason is the dealer should have a reasonable idea what he can sell your vehicle for. In the discussions they can discount one and increase the price of the other – you think you are getting a deal but it is not. If you have locked in the price of the new, then you talk about the trade in and there are many websites which give you approximate value of your vehicle.
5. The dealership has a number of methods of making additional money from you, 99% of the time, you can get it done if you really want it done less expensively some where else. Leave the add ons till later.
6. Another method the dealer can make money is by offering warranties which you pay for. Do you really need them? The answer is generally no.

Linking to dividend paying stocks, car and truck dealerships have a variety of methods to make money from the purchaser. They are not all meant to be money grabs but the necessity of them can be limited, if you understand how the dealership makes its money. Ideally you want them to make something to stay in business, but not at your expense. When you are investing in a company, try to understand how the company makes its revenues and then you can tell whether it is doing ok or really well. Processes count.

There are more questions than answers, till the next time – to raising questions.

 

As the year ends, most people will watch at least one movie for entertainment. Likely you will watch more than one whether it is on cable TV, Netflix, You Tube or borrow from the local library. All industries look forward to the new year with projects and in the movie industry – the big distributors know which movies are expected to come out during the year. If you are a big movie fan, you can see which ones you are interested in and then ask how much money will they make?

The lists are published and you can begin to examine how the movie factors into the company’s revenues. How much money will the company make and how will that affect their stock? If you are looking forward to particular story lines – if you love the story line and the trailers you can make a decision on the outlook for the movie.

Linking to dividend paying stocks, similar to all large organizations one product success will have an affect on the bottom line, but most large companies are diversified. In the movie case for example Marvel is owned by Disney, but Disney has many franchises and they want all of them to do well. Will a movie move the stock price. a little, but the franchise and broadening will. A diversified company tends to make a profit every year and as long as it is making money and paying dividends, it can be a hold.

There are more questions than answers, till the next time – to raising questions.

If everything we do we try to make things simple, eventually myths come up and for those outside the industry, it is accepted as truth. Sometimes the myths are not correct, in some ways they are not necessarily wrong, but conventional wisdom is not always perfect. Doug Hoyles is co-founder of a large personal insolvency firm and wrote a book called Straight Talk on Your Money published by Milner and Associates, Toronto, 2017.  Mr. Hoyles is reflecting on his years of practice and offers advice on how the system is structured.

Myth 16  Investment Expertise is the Key to Good Money Management

In all things, you should start with the basics.

Reducing debt – pay off as much debt as possible.

Minimize Expenses – try to live on less than you earn

Develop a Savings Habit – saving to purchase, rather than financing saves you money.

Enhancing financial literacy – learning about investments, what to start with and what to avoid will help you.

The 80/20 Rule of Money Management

In most things in life and investing 80% of the benefit is derived from 20% of the cost or effort. In many businesses 80% of the profits is generated by 20% of the products and 80% of the revenue is generated by 20% of the customers.

(Last year of the 30 stocks in the Dow Jones Industrial Index 10 stocks drove 80% of the rise in the index. The other 20 instead of being at 25,000 the index would be at 21,620.)

Look at debt differently  if you owe money on a credit card, paying it down earns you a 18% return. You might want to examine VISA and MasterCard to own the stocks.

Myth 17 Budgeting is Essential for Financial Success

Budgets are great for tracking your expenses.

A suggestion by Mr. Hoyles is when you know your expenses, whenever you get paid set up automatic payments to the bills you owe. If you get paid every 2 weeks, then after the bills are paid, the rest of the money is yours to live off. There is no rule which states you have to pay bills once a month. For example the hydro bill, you can twice a month.

Myth 18   I am Immortal

Life Insurance – if you die tomorrow how will your family function? One aspect if you own a home is the mortgage so buying term life to cover the cost of the mortgage is often a good idea.

Will – if you have assets, you need a will to distribute the assets the way you want them after you die. If it is not in the will, you had to tell people before or feelings will be hurt.

Spouse – it is good to tell your spouse what you are doing.

Myth 19  Pay Yourself First

The goal is not to develop a savings account, the goal is develop good financial habits to managing your money.

If you have no debt, paying yourself first is a great thing. If you credit card debt at 20% and pay yourself a savings account of 1% are you better off? Earn 19% pay off the debt.

Myth 20   Joint Bank Accounts are Essential for Couples

For joint business, you should have a joint account. Each couple should also have their separate accounts for themselves. Most couples will have conversation about money, what is important? who controls? it is best to tell each other and also to have some degree of independence and control over yourself.

Myth 21   You Should always Help Your Friends and Family

Never loan money to family or friends – how do you get repaid? but if you do, ask

Can I afford to Help?

Will helping help?

How do I protect myself, if I help?

Myth 22  Life is Like a Box of Chocolates

Life isn’t always sweet…but it is predictable.

Plan for tomorrow – things tend to happen on a reasonably predictable curve, you can prepare for them. This year there will be December 25 again and you will have an urge to spend – start saving now for it. You may go over budget but you will have the savings to protect you.

Linking to dividend paying stocks, life is emotional and complicated, but investing does not have to be. Try to invest in profitable stocks which provide a dividend and the dividend can help you with your living expenses. If you invest in a fund, most funds provide a larger payment in December, which can help you with the Holiday expenses. It is possible to plan.

There are more questions than answers, till  the next time – to raising questions.

 

 

 

If everything we do we try to make things simple, eventually myths come up and for those outside the industry, it is accepted as truth. Sometimes the myths are not correct, in some ways they are not necessarily wrong, but conventional wisdom is not always perfect. Doug Hoyles is co-founder of a large personal insolvency firm and wrote a book called Straight Talk on Your Money published by Milner and Associates, Toronto, 2017.  Mr. Hoyles is reflecting on his years of practice and offers advice on how the system is structured.

Myth 12   Bankruptcy is the Easy Way Out

If you go back before WW II, most people had little access to credit. The banks were often reluctant to give out credit, there was no credit cards and the biggest credit was at the country store or convenience store where the merchant gave credit to farmers for he knew it would take a few months before the farm community received income to pay back the loans. It was not surprising the idea was if you borrow you need to pay back.

The first reality is if you do not have debt, you have more options. In Mr. Hoyles’ book he refers to a survey his firm does to determine the average person – they have $53,000 in unsecured debt that does not include car and mortgage payments. If you have that much debt, the likelihood of paying it all off is remote. Most people Mr. Hoyle works with have jobs, they just do not earn enough. They may be able to come up with extra money in one month, but every month for 4 years? just a little too much to ask for. Bankruptcy is an option.

Myth 13   A House is a Great Investment

A great investment is either one that gives you regular income and/or has good potential to increase in value. For most people, a house does not do that. Unless you rent out some of the house (which tends to be the exception) the house cost money and does not generate it. A house may not increase in value, it depends on many factors.

For the average person, the house should be considered as a liability – it will likely have mortgage payments, need repairs or renovation over the years. It is nice if it goes up in value and you are willing to sell. Remember if you sell, you have to move somewhere.

Myth 14   Owning a House Gives You Stability

It can be remember what used to happen is people went to work for one company and stayed there till they retired. In your workplace  – consider how many people are doing that or have they had more than one job? The answer tends to be more. Although it is possible to rent out your house, sometimes people do not want to move.

Myth 15  The Bigger the Mortgage, The Better

This myth concerns leverage. If you want to keep up with “the Jones” then buying a bigger house than you need and can afford is a great idea. For most people, buying less is better, because the reason you bought was to live in the house for a number of years not necessarily to sell. It is wonderful when you are ready to sell and the price has gone up, but real estate markets go up and down and you may not be ready to sell.

A larger house tends to mean more stuff in the house and it may or may not be the stuff you can afford. If the mortgage costs is 35% of your budget, then add car expenses and house maintenance, child expenses. The house can be too much for your budget, when you buy ensure your eyes are open to all the other expenses and lifestyle choices when you buy. If your neighbors are travelling to cottages, vacations, you will be pressured to do the same.

Linking to dividend paying stocks, these stocks have an income attached to the purchase, if the companies are not profitable and not paying a dividend you do not own them. There are many choices in the stock market, the idea of not losing your money which is the first rule of investing is to ensure there are easy methods to determine when to get out. If you buy a dividend stock and the dividend goes down, that is very good signal to move. A recent example is GE, it was good but is not restructuring. You may like it, but watch it for a time as it produces results then you consider buying again.

There are more questions than answers, till the next time – to raising questions.

If everything we do we try to make things simple, eventually myths come up and for those outside the industry, it is accepted as truth. Sometimes the myths are not correct, in some ways they are not necessarily wrong, but conventional wisdom is not always perfect. Doug Hoyles is co-founder of a large personal insolvency firm and wrote a book called Straight Talk on Your Money published by Milner and Associates, Toronto, 2017.  Mr. Hoyles is reflecting on his years of practice and offers advice on how the system is structured.

Myth 8  Pay your small debts first. It will give you a feeling of accomplishment and then you can pay the larger ones

Better

The highest priority would be the debts with the highest interest rates

The next is callable or secured debt.

The interest rates imply the rule of 72, pay the highest off and you save money. Callable debt is a demand debt such as a line of credit. Remember all financial institutions does a soft credit check on their borrowing customers quarterly and with more artificial intelligence and use of big data, many more often.

Myth 9   Cash in your Registered  Money to Pay off your Debts

If you have assets in registered funds for your retirement they are locked in and unless your income has fallen because there are income tax considerations to take into affect when taking money out of registered money, it may be better to leave it. The collection agencies can not get the courts to unlock your registered money to pay the bills.

What a bankruptcy court can take is

Tax free savings accounts

Registered education savings plans

Investor accounts

Bank accounts

Contributions to your registered accounts in the last year.

If you went into bankruptcy, you need to know what accounts can be and cannot be touched. If you are going to lose them, take the money and pay down the debt. If not perhaps the answer is to wait.

Myth 10  Payday Loans are a short-term fix for a temporary problem

Other than a loan shark (who will break your legs if you do not pay), a payday loan is the most expensive form of borrowing there is. A charge of $18 per $100 borrowed for a year cost 468%. The conventional wisdom is a payday loan to tie you over to payday, but the reality is 83% had other outstanding loans and are repeat customers. The real issue is high debt being carried by many people so they have very little option except to go to payday loans.

Myth 11   There is Good Debt and Bad Debt

The truth – debt is neither good nor bad, debt is a tool.

Linking to dividend paying stocks, unlike debt which people can make moral judgements about, dividend payments means the company is profitable and shares its earnings with its shareholders. There is no morality there, it is better to invest in profitable companies and if those companies stay profitable for a number of years your investments based on share price and dividends (total return) will be secure and be good. The more you receive the more options you have to do what you think is right.

There are more questions than answers, till the next time – to raising questions.