About a week ago I wrote in my blog “What to do when the sun comes up in the West”. Essentially, you bail, put your money is cash and sit tight. In the last week, for reasons that I have not been able to understand, the commodity markets have collapsed. So intense has this collapse been that I do not feel as if I should be directing anyone with regards to investing and/or finances at this point in time. For this reason, I am suspending entries into my blog and reducing my own corporate investing to more modest pieces until I see some level of stability. I am sincerely sorry, but I feel a great burden for anyone that I am trying to move ahead financially. I am uncertain whether I can actually see clear enough to help at this point in time.
Prov. 8:17 -20 I love them that love me; and those that seek me early shall find me.
Riches and honour are with me; yea, durable riches and righteousness.
My fruit is better than gold, yea, than fine gold; and my revenue than choice silver.
I lead in the way of righteousness, in the midst of the paths of judgment:
Wednesday, May 4, 2011
Wednesday, April 27, 2011
Laying some ground work on Options trading
I make a lot of assumptions about one's knowledge of trading, and sometimes it is helpful to get a primer. I have found this program (FREE) to be helpful. Either download it to an IPOD or MP3 player, or you can play it on line. There are a total of 100 episodes (as of writing this). You don't have to listen to all of them, but they sure can help explain certain techniques I use. I don't use all of this...and in fact, you may find only one or two that you like. If so, then enjoy. Use them, and know them cold. It's your money.
http://www.podbean.com/podcast-detail?pid=17574
http://www.podbean.com/podcast-detail?pid=17574
Monday, April 25, 2011
When the sun comes up in the West
There is nothing in the world like enjoying a nice cup of coffee and watching the sun coming up over the ridge of the Western horizon…until you say. Hold it! The sun doesn’t come up in the west!
Such was my day today. I woke as I do early and read through some articles about the state of the US economy, trade, dollar values etc.
http://news.xinhuanet.com/english2010/china/2011-04/23/c_13842843.htm
I was particularly struck by an article that talked about the amount of US dollar debt China has purchased and their desire to trim it down by 2/3 and add diversification to their monetary portfolio. I was thinking about this as I poured myself a cup of coffee.
If China did this suddenly (or if they were perceived to do this suddenly) it could drop the perceived value of the US dollar. Could it (in theory) crash the dollar? It seemed possible, although I doubted that China would take such an action at least very quickly…but. I kept thinking.
I am sitting on cash (sure would be nice to have some hard assets. Silver had been moving up and I checked the pre-market orders lots of buys (very few sells) which meant should see a surge at the opening bell. I did what I don’t like doing (put in an order as soon as the market opens at “the best price I could get”). This type of trade is called a Market order. I tend to like buying “limit orders”, which means only buying if something goes on sale. However, silver in particular kept going up and never filling my market order, so I thought I would try a market order instead. Not a good idea.
Market opened with a surge. I bought 400 units of the trust SLV at a price of 47.00. I had a cup of coffee with my wife and breakfast and then decided to see what happened. Wow, didn’t see that coming. Silver unexpectedly tumbled. I was down $200 and I only had the unit’s a few minutes. I thought…well, that can happen. My general direction is up, I may have to keep this holding longer before I pull a profit. It took another dramatic tumble. Now I am backwards almost $300 dollars, I still hadn’t waited an hour. Wow, if I was working a job making -$300/hour, I couldn’t afford that job long.
I chose a stop loss. I bailed at a loss of almost $300. I looked at my gold which was now losing money for the day (still profitable from when I bought it), so I bailed (took my profits, and ran). I wish I could say I didn’t enter Silver again, but it levelled (sometimes called a “sucker rally”) I bought again, and took another $80 loss. I had a order on oil if it ever dropped low enough, so it bought and kept dropping. I decided I didn’t want to risk this one on a day like today. I sold (actually made just a couple dollars there). In a short time, I was all in cash. I had to accept a total loss for the day of $285.12. Not my favourite situation.
Are there lessons to learn? Yes. First, if you buy anything for investments you need both a point where you are leaving (taking your profits and running) and you need a stop loss (a point where you say…hey, that’s all the pain I am willing to take). Any trading without those is sloppy at best and will force one to pay some “stupid tax”.
Next, flexibility is a wonderful thing. Today I dumped everything and am sitting in cash. If the world is crazy I don’t want to suffer along. Look for a morning when the sun comes up in the East and sets in the West. Not a day like today. If I had some holding with a broker, I would likely find him/her unavailable on a day like today. It’s Easter Monday, the banks and brokerage houses I worked for were closed. Most people perceive the markets as closed here in Canada. Also, unless I was watching this I would have dropped by and found out I took a huge loss with no real way to get out.
Mutual funds don’t trade moment by moment. If you want to sell, you have to put in the trade and the sale happens at the end of a day. This would make sure that you took the losses that happened that day. Not very flexible.
Any rate, I am not telling this to show how smart I am. In fact, the opposite is more true, but I hope you might be able to learn from my mistakes.
We are stewards of these resources, we need to do the best we can with them.
Monday, April 18, 2011
Inflation not a problem?
This video from Jim Grant gives a "real sense" of why we care about inflation and why we are leaning on hard assets, as opposed to fixed income.
General principles
More general principles:
I figured I can write what I am doing, but sometimes it is helpful to lay out some foundational considerations so everyone understands the basic why. Hopefully, if this is the case, then one can see the how more clearly.
Hard Assets:
Most of the trading I have done recently has been in three area Gold, Oil and Silver. Just to get the visual on this, Gold is selling for 1405.00 and ounce. Silver is selling for 41.84 an ounce, and Oil is selling for WTI at 108.30 per barrel.
The first question might be asked…why these three?
I am not an expert in any one of these industries and in fact I have found those who call themselves “experts” to be unreliable. Some of the work for companies who’s job is to sell you their product. Some are just optimistic and are part of a circle of people who continue to affirm what they already believe. Some in the industry call this “drinking your own bath water“.
The reasons I choose these three is they are the most watched, tend to move the most and can be easily followed. I also have reasons why I think a direction one way or another is likely. In the end, that’s about all I really have to go by.
The third reason I choose these over company ownership (but I do own companies all the time), is that these materials don’t have a human element. If I own XYZ company, they have a president, and usually many levels of officers. They have products, and industries. Their product could be proven to have a fatal design flaw. Someone in the executive could be lying about the company. They could loose everything they have in a costly lawsuit. There are so many factors which come into play.
Materials, don’t have any of those items. There can be (and always are) external influencers that effect the price, but it’s not the company itself. This doesn’t take out all the risk, but it does limit some possible risks.
Do I actually have Gold, Oil and Silver sitting around the house?
No, not anymore then anyone else. Yet, I will trade 50 to 100 or more barrels of oil regularly. I trade Gold in 1/10 of an ounce bites (and usually trade 5-30k) every time. Silver I trade by the ounce, generally 100 to 400oz at a time. However, I have no interest in finding secure storage for chunks of gold and silver, of shipping barrels of oil. There are people who do, but since I am simply using this for income flow, I have no interest in the underlying asset. So, how do I do this?
Exchange Traded funds (ETF). These are trust units which mirror the value of the underlying asset. They are very cheap to own, and can be traded every week day like a stock. Most specifically, I trade the following codes.
GLD- an ETF for the price of Gold 1/10 oz
SLV - an ETF for the price of silver 1 oz.
USL - an ETF for US price of oil in ½ barrel units.
With respect to these holding you need some system to watch them. I have several. Some I pay for and some I do not. Just for the sake of argument, let’s use Yahoo. If you go to Yahoo.ca on the left side of the page you will find a tab that says “finance”. If you click on that you will enter a sub-site, which provides a lot of good information. If you have a yahoo e-mail account, they will even remember which holdings you tend to watch and will post those every time you log in.
http://ca.finance.yahoo.com/
It pays to get familiar with this site, of which ever site you choose. The tool I use most often with regards to this site is the charts. So, let’s find the chart for GLD.
Under “get quote” (if you are doing this the first time) type GLD, and you should get to a cover page for the Standard and poor’s ETF on Gold in 1/10 units.
http://ca.finance.yahoo.com/q?s=GLD
The chart I am referring to is on the right side of the page. I think mine shows a 1 day return on yesterday’s close. But I can set it to show what it’s been doing for today, 1 week, one month, three months, 6 months, etc. The first thing I am looking for is what direction the chart is going. I just want to know in the most general sense is this asset going up, down or no where. If you load a 1 year number (back up enough to see) you will see Gold is certainly going up. This won’t always be the case, but it is right now.
If a holding is going up we can but it and sell it (hopefully at a higher price). If it is going down (we can lock in a sell price and then sell the contract to people who have the gold and want to sell at a better deal…more advanced, let’s not worry about it for now.). If it’s going no where (flat), I want to look closely (day by day basis or even hour by hour). If it goes up and down a lot everyday then there is a possibility to get in and out in a single day (or a couple days). That would be my favourite situation, but to be honest it is tough to find. Yet, over this last year I have found times where that was the case in all three of my favourite indexes.
So, just looking at gold, I find it’s opened up for the day. My hope is never to buy things while they are high. I am trying to get a deal and then sell as it moves up. In my case, I wish I was in before the positive move, but life is like that. So, I look back over the chart and try to find a point where the price was down (a dip). Often times, a moving asset will hit those old lows and bounce. In fact, one of the thing I have noticed is that these three investments generally “miss” the old dip, but come close, so I set up my computer to buy if we get “close” to that old low. A purist would set the price AT the old level, but like I said my experience is I hate being close and missing the new dip. So, if I am looking to make a trade on Gold, I would say the bottom of the last dip was 141.61 which was hit on April 12. One week ago. To be honest, I am not confident it will hit that mark again, so I am putting a Buy in if the price of gold 144.50 (Price it was at late Friday). There is some flexibility, but if I had bought it on Friday I would have been up over $100 in the first hour of trading. I of course wasn’t, but that is what I am thinking as I am reading the charts. If I see Gold suddenly drop, I might cancel my order and see where it levels off. If it goes no where near my price, then I will have to look at the price again and see if I can make some money.
The principle is looking for a deal, and then taking a small move (I generally use $200) and then trying to look for the next entry point. At some point I might find that these three are not looking as well, and I will pick other items, but I don’t lose money when I have cash (in a general sense). I also try not to fall in love with my own ideas. If something doesn’t work and I am SURE it should…give it up. The market is always right. I am just looking at ways to move in and out and make some cash in the process.
Although I think I have said this before, but I am using Gold and Silver because I do not trust the world economies. I think the value of many world currencies is going down. Many people seem to think the same which is why we see Gold and silver moving up. People want these to protect against a devaluing dollar.
Oil, is going up (I think) because the mid-east is going crazy. As long as oil shipment doesn’t appear safe, it is expected that the price of oil will continue to go up. There is a point where people will simply quit using oil, but we have yet to see that. As long as I am telling my own conspiracy theories…I think large oil companies are helping create volatility in the oil market. I also see a target (sometime in the future of $200 or maybe even $300 a barrel for oil.
So what happened to my holdings as of the close last week?
As expected Silver sold. This made me a profit but in the option and in the selling of the silver. That was a win.
USL (oil) did not close about the strike point so the option expired worthless. This is a fancy way of saying I got someone to pay me to hold onto my own stock and wait for the price to move up. So, my holding (oil) went down and I still made money. (just so you know, oil is down further today, so I may put in a trade if I see the price level off). It is suddenly becoming a “good deal”, even better then when I bought it last). I will keep you posted.
I have one company CVX (Chevron) which I sold an option on. I chose this simply because I had too much money in cash. I made money on the option, but the stock itself is down from when I bought it, so I will hold onto it until it becomes profitable. If I get to about mid April (God forbid) and I am still holding this stock I will sell another option on it and use the same trick I did the month before.
So, it’s not pretty, but that is the way things rolled for me today.
I figured I can write what I am doing, but sometimes it is helpful to lay out some foundational considerations so everyone understands the basic why. Hopefully, if this is the case, then one can see the how more clearly.
Hard Assets:
Most of the trading I have done recently has been in three area Gold, Oil and Silver. Just to get the visual on this, Gold is selling for 1405.00 and ounce. Silver is selling for 41.84 an ounce, and Oil is selling for WTI at 108.30 per barrel.
The first question might be asked…why these three?
I am not an expert in any one of these industries and in fact I have found those who call themselves “experts” to be unreliable. Some of the work for companies who’s job is to sell you their product. Some are just optimistic and are part of a circle of people who continue to affirm what they already believe. Some in the industry call this “drinking your own bath water“.
The reasons I choose these three is they are the most watched, tend to move the most and can be easily followed. I also have reasons why I think a direction one way or another is likely. In the end, that’s about all I really have to go by.
The third reason I choose these over company ownership (but I do own companies all the time), is that these materials don’t have a human element. If I own XYZ company, they have a president, and usually many levels of officers. They have products, and industries. Their product could be proven to have a fatal design flaw. Someone in the executive could be lying about the company. They could loose everything they have in a costly lawsuit. There are so many factors which come into play.
Materials, don’t have any of those items. There can be (and always are) external influencers that effect the price, but it’s not the company itself. This doesn’t take out all the risk, but it does limit some possible risks.
Do I actually have Gold, Oil and Silver sitting around the house?
No, not anymore then anyone else. Yet, I will trade 50 to 100 or more barrels of oil regularly. I trade Gold in 1/10 of an ounce bites (and usually trade 5-30k) every time. Silver I trade by the ounce, generally 100 to 400oz at a time. However, I have no interest in finding secure storage for chunks of gold and silver, of shipping barrels of oil. There are people who do, but since I am simply using this for income flow, I have no interest in the underlying asset. So, how do I do this?
Exchange Traded funds (ETF). These are trust units which mirror the value of the underlying asset. They are very cheap to own, and can be traded every week day like a stock. Most specifically, I trade the following codes.
GLD- an ETF for the price of Gold 1/10 oz
SLV - an ETF for the price of silver 1 oz.
USL - an ETF for US price of oil in ½ barrel units.
With respect to these holding you need some system to watch them. I have several. Some I pay for and some I do not. Just for the sake of argument, let’s use Yahoo. If you go to Yahoo.ca on the left side of the page you will find a tab that says “finance”. If you click on that you will enter a sub-site, which provides a lot of good information. If you have a yahoo e-mail account, they will even remember which holdings you tend to watch and will post those every time you log in.
http://ca.finance.yahoo.com/
It pays to get familiar with this site, of which ever site you choose. The tool I use most often with regards to this site is the charts. So, let’s find the chart for GLD.
Under “get quote” (if you are doing this the first time) type GLD, and you should get to a cover page for the Standard and poor’s ETF on Gold in 1/10 units.
http://ca.finance.yahoo.com/q?s=GLD
The chart I am referring to is on the right side of the page. I think mine shows a 1 day return on yesterday’s close. But I can set it to show what it’s been doing for today, 1 week, one month, three months, 6 months, etc. The first thing I am looking for is what direction the chart is going. I just want to know in the most general sense is this asset going up, down or no where. If you load a 1 year number (back up enough to see) you will see Gold is certainly going up. This won’t always be the case, but it is right now.
If a holding is going up we can but it and sell it (hopefully at a higher price). If it is going down (we can lock in a sell price and then sell the contract to people who have the gold and want to sell at a better deal…more advanced, let’s not worry about it for now.). If it’s going no where (flat), I want to look closely (day by day basis or even hour by hour). If it goes up and down a lot everyday then there is a possibility to get in and out in a single day (or a couple days). That would be my favourite situation, but to be honest it is tough to find. Yet, over this last year I have found times where that was the case in all three of my favourite indexes.
So, just looking at gold, I find it’s opened up for the day. My hope is never to buy things while they are high. I am trying to get a deal and then sell as it moves up. In my case, I wish I was in before the positive move, but life is like that. So, I look back over the chart and try to find a point where the price was down (a dip). Often times, a moving asset will hit those old lows and bounce. In fact, one of the thing I have noticed is that these three investments generally “miss” the old dip, but come close, so I set up my computer to buy if we get “close” to that old low. A purist would set the price AT the old level, but like I said my experience is I hate being close and missing the new dip. So, if I am looking to make a trade on Gold, I would say the bottom of the last dip was 141.61 which was hit on April 12. One week ago. To be honest, I am not confident it will hit that mark again, so I am putting a Buy in if the price of gold 144.50 (Price it was at late Friday). There is some flexibility, but if I had bought it on Friday I would have been up over $100 in the first hour of trading. I of course wasn’t, but that is what I am thinking as I am reading the charts. If I see Gold suddenly drop, I might cancel my order and see where it levels off. If it goes no where near my price, then I will have to look at the price again and see if I can make some money.
The principle is looking for a deal, and then taking a small move (I generally use $200) and then trying to look for the next entry point. At some point I might find that these three are not looking as well, and I will pick other items, but I don’t lose money when I have cash (in a general sense). I also try not to fall in love with my own ideas. If something doesn’t work and I am SURE it should…give it up. The market is always right. I am just looking at ways to move in and out and make some cash in the process.
Although I think I have said this before, but I am using Gold and Silver because I do not trust the world economies. I think the value of many world currencies is going down. Many people seem to think the same which is why we see Gold and silver moving up. People want these to protect against a devaluing dollar.
Oil, is going up (I think) because the mid-east is going crazy. As long as oil shipment doesn’t appear safe, it is expected that the price of oil will continue to go up. There is a point where people will simply quit using oil, but we have yet to see that. As long as I am telling my own conspiracy theories…I think large oil companies are helping create volatility in the oil market. I also see a target (sometime in the future of $200 or maybe even $300 a barrel for oil.
So what happened to my holdings as of the close last week?
As expected Silver sold. This made me a profit but in the option and in the selling of the silver. That was a win.
USL (oil) did not close about the strike point so the option expired worthless. This is a fancy way of saying I got someone to pay me to hold onto my own stock and wait for the price to move up. So, my holding (oil) went down and I still made money. (just so you know, oil is down further today, so I may put in a trade if I see the price level off). It is suddenly becoming a “good deal”, even better then when I bought it last). I will keep you posted.
I have one company CVX (Chevron) which I sold an option on. I chose this simply because I had too much money in cash. I made money on the option, but the stock itself is down from when I bought it, so I will hold onto it until it becomes profitable. If I get to about mid April (God forbid) and I am still holding this stock I will sell another option on it and use the same trick I did the month before.
So, it’s not pretty, but that is the way things rolled for me today.
Friday, April 15, 2011
Excellent Article by Kathleen Peddicord
5 Places to Retire for Under $500 per Month
Kathleen Peddicord, On Monday April 11, 2011, 4:07 pm EDT
Housing is likely to be one of your biggest retirement expenses. One way to approach your search for the ideal overseas retirement haven is to focus on retire-overseas choices where housing is cheap.
It's important to note that, for these bargain rents, you won't be getting a palatial or luxurious abode. I'm limiting my picks to places where you could rent something modest and cozy but reasonably outfitted from a North American's perspective. Here are five places where you could rent for as little as $500 per month.
Leon, Nicaragua. Nicaragua has suffered serious bad press as a result of its troubled past and current President. Those unfortunate realities aside, this beautiful land of lakes and volcanoes has a great deal to offer the would-be retiree, including a new program of special benefits for resident retirees. There is also a growing and welcoming community of expats from around the world, top-notch health care in Managua thanks to the international-standard Vivan Pellas Hospital Metropolitano, and bargain-priced rentals.
Leon is the second of this country's two colonial cities, and generally less developed and recognized than its sister city, Granada. In many ways, Leon is preferable. It's a university town with museums and theater that sits less than a half-hour from the coast. Because it's been largely ignored until recently, it's also a more affordable place to rent than higher-profile Granada. You could rent a two- or three-bedroom colonial house here for as little as $500 or $600 per month.
Medellin, Colombia. The downside to Leon is the climate. Mornings and evenings can be pleasant, but midday temperatures are often brutal. If that bothers you, consider the mountain city of Medellin instead. This pretty city built almost entirely of red brick boasts a spring-like climate year-round. Like Leon, Medellin is an emerging retirement haven, meaning the existing expat community is small but growing and the costs of living and of renting are temptingly low. One friend is renting a small studio in a non-central neighborhood for the equivalent of $210 per month. You can rent a two-bedroom apartment in a new building at a central address for $700 or $800 per month.
Las Tablas, Panama. My top recommendation for a beachfront retirement where the cost of renting is low enough to accommodate almost anyone's budget is Las Tablas, a city on the Pacific coast of Panama's Azuero Peninsula. Panama has first-class and affordable medical care and facilities, a pensionado program of special benefits for foreign retirees, and well-established expat communities. The city also has a developed infrastructure, many user-friendly options for establishing foreign residency, and can be a tax-haven for those wishing to minimize their taxes.
Not all of Panama qualifies as bargain-priced. As this country has become increasingly favored by retirees and investors, the costs of both living and of real estate have been rising, particularly in discovered areas such as Panama City. But Panama offers a number of appealing lifestyle possibilities beyond its capital city, including Las Tablas. The downside to Las Tablas is its distance from Panama City. It's about a four-hour drive away. However, the cost of living can be half that of Panama City and you can rent a small house within walking distance of the beach for $300 or $400 per month.
Chiang Mai, Thailand. I know of a single American man who lives in Chiang Mai on $200 a month, with half that going for rent. He gets around on a bicycle and eats at low-cost noodle stalls or for free when a temple offers lunch. He makes a sport of spending as little as possible. I also know a Thai American woman who bought an apartment in a small town 15 kilometers from Chiang Mai. She manages on $600 a month from Social Security and, as she is Thai and over 60, she enjoys free government health care. It wouldn't cost you very much more to live and rent in Chiang Mai. House and apartment rentals in Chiang Mai can vary dramatically, from perhaps $150 per month for a small home and garden in the country to $400 or $500 monthly for a larger, newer place in town.
Languedoc-Roussillon, France. If you're willing to look beyond Paris, the southwest of this country can be highly affordable. Cessenon-sur-Orb, in the Languedoc-Roussillon region of southwestern France, is colorful, eclectic, and very open to retirees. The village dates from prehistoric times, but the feel is medieval, with the church dominating the center and the tower of Le Donjon looking down from above.
Here in this quintessentially French country corner, you'll find many expats of several nationalities. They've sought out this unsung region because it offers everything you need for a comfortable life, yet boasts a small, charming, typically French village atmosphere, with centuries of history and lots to do and see. As a result, this town is growing and attracting both more French people and expats. Perhaps the most appealing part is that the cost of renting in this picture-postcard corner of France can be modest, certainly relative to Continental Europe in general. A monthly rental of 400 to 600 euro is realistic.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas--Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
Kathleen Peddicord, On Monday April 11, 2011, 4:07 pm EDT
Housing is likely to be one of your biggest retirement expenses. One way to approach your search for the ideal overseas retirement haven is to focus on retire-overseas choices where housing is cheap.
It's important to note that, for these bargain rents, you won't be getting a palatial or luxurious abode. I'm limiting my picks to places where you could rent something modest and cozy but reasonably outfitted from a North American's perspective. Here are five places where you could rent for as little as $500 per month.
Leon, Nicaragua. Nicaragua has suffered serious bad press as a result of its troubled past and current President. Those unfortunate realities aside, this beautiful land of lakes and volcanoes has a great deal to offer the would-be retiree, including a new program of special benefits for resident retirees. There is also a growing and welcoming community of expats from around the world, top-notch health care in Managua thanks to the international-standard Vivan Pellas Hospital Metropolitano, and bargain-priced rentals.
Leon is the second of this country's two colonial cities, and generally less developed and recognized than its sister city, Granada. In many ways, Leon is preferable. It's a university town with museums and theater that sits less than a half-hour from the coast. Because it's been largely ignored until recently, it's also a more affordable place to rent than higher-profile Granada. You could rent a two- or three-bedroom colonial house here for as little as $500 or $600 per month.
Medellin, Colombia. The downside to Leon is the climate. Mornings and evenings can be pleasant, but midday temperatures are often brutal. If that bothers you, consider the mountain city of Medellin instead. This pretty city built almost entirely of red brick boasts a spring-like climate year-round. Like Leon, Medellin is an emerging retirement haven, meaning the existing expat community is small but growing and the costs of living and of renting are temptingly low. One friend is renting a small studio in a non-central neighborhood for the equivalent of $210 per month. You can rent a two-bedroom apartment in a new building at a central address for $700 or $800 per month.
Las Tablas, Panama. My top recommendation for a beachfront retirement where the cost of renting is low enough to accommodate almost anyone's budget is Las Tablas, a city on the Pacific coast of Panama's Azuero Peninsula. Panama has first-class and affordable medical care and facilities, a pensionado program of special benefits for foreign retirees, and well-established expat communities. The city also has a developed infrastructure, many user-friendly options for establishing foreign residency, and can be a tax-haven for those wishing to minimize their taxes.
Not all of Panama qualifies as bargain-priced. As this country has become increasingly favored by retirees and investors, the costs of both living and of real estate have been rising, particularly in discovered areas such as Panama City. But Panama offers a number of appealing lifestyle possibilities beyond its capital city, including Las Tablas. The downside to Las Tablas is its distance from Panama City. It's about a four-hour drive away. However, the cost of living can be half that of Panama City and you can rent a small house within walking distance of the beach for $300 or $400 per month.
Chiang Mai, Thailand. I know of a single American man who lives in Chiang Mai on $200 a month, with half that going for rent. He gets around on a bicycle and eats at low-cost noodle stalls or for free when a temple offers lunch. He makes a sport of spending as little as possible. I also know a Thai American woman who bought an apartment in a small town 15 kilometers from Chiang Mai. She manages on $600 a month from Social Security and, as she is Thai and over 60, she enjoys free government health care. It wouldn't cost you very much more to live and rent in Chiang Mai. House and apartment rentals in Chiang Mai can vary dramatically, from perhaps $150 per month for a small home and garden in the country to $400 or $500 monthly for a larger, newer place in town.
Languedoc-Roussillon, France. If you're willing to look beyond Paris, the southwest of this country can be highly affordable. Cessenon-sur-Orb, in the Languedoc-Roussillon region of southwestern France, is colorful, eclectic, and very open to retirees. The village dates from prehistoric times, but the feel is medieval, with the church dominating the center and the tower of Le Donjon looking down from above.
Here in this quintessentially French country corner, you'll find many expats of several nationalities. They've sought out this unsung region because it offers everything you need for a comfortable life, yet boasts a small, charming, typically French village atmosphere, with centuries of history and lots to do and see. As a result, this town is growing and attracting both more French people and expats. Perhaps the most appealing part is that the cost of renting in this picture-postcard corner of France can be modest, certainly relative to Continental Europe in general. A monthly rental of 400 to 600 euro is realistic.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas--Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.
Fresh Start
In the last couple months:
I have been stunned by the level of interest in what I have been doing financially. In fact, I am a bit embarrassed by the level of interest. So, I am dusting off this blog again and setting up the general instructions for those who want to follow what I do.
A few disclaimers (sort of). Normally, I am very careful. I don’t like recommending anything. The reason is two-fold. On the one hand, it is lousy to say I am looking to buy something and then the next day you find reasons to believe it’s a dog. That happens. It looks bad on me. But, more importantly, my second is that fear someone might take an action and then find out it was a poor choice. However, I can’t see a way to lay this out without using real life examples. Please note: when I write that down, I am telling what I am looking at and why. Things may change. If the circumstances change substantially, then play with caution. Sometimes, the circumstances even get better, if so that’s great. If I say XYZ company looks like a deal at $49 and then it falls to $48...simply put, that’s an even better deal (unless something substantial has changed in the company. I will explain more about this later.
Second, I can’t be held legally responsible for a recommendation. My blog was based on “coffee chat”, the idea that happens all over the world where one guy says, they are buying oil and another guy says they are thinking about buying Research in Motion (RIM). No person attacks someone for what they were doing and if it’s helpful another person might use they “free tip”. I have no system to sell. I have no book to write. I make not a dime out of anything I am putting forward here. I have worked in the past as a broker and financial planner and am aware that certain recommendations may not match one’s level of risk, experience, tax considerations, and income needs.
So, here goes:
Back when I was in grade 5, I used to love watching illusionists. They would do cool slight of hand tricks, and I would stand amazed. In fact, as the years went on I would drop by local magic shops, and buy little pocket tricks. Each trick would have some sort of “gimmick”, a magnet, a lever, a hidden switch, a lead weight or something which would make the action lead to what would not be the normal result. If I practiced the “system”, I could make the flow create the illusion. It was fun. It’s still fun today.
However, as time went on, there would be other illusionists who would like to “talk shop” about a trick and I would show them the “gimmick”. The illusion is over. The mystery is done, but now they know how to pull off the trick.
In short, that is what I am going to try to accomplish here. I will show “The trick”, and when you see it, you are likely not to be impressed. It isn’t magic…sometimes it’s not even interesting.
Hint 1: Debt
“I owe, I owe so off to work I go”
Cute bumper stick, but in reality, that is what we do. We go to work because we have bills to pay. We have to supply the basics of life, but more then that we often are trying for much more then that. We aren’t just living, we are trying to have a lifestyle that we enjoy.
Again, I mentioned that I was a financial planner. As I would sit down with clients, I would find the people on the other side of the desk were vastly different people. Some seniors would own their house, family nearby, don’t like to travel, good health and modest needs. These people would live very comfortably on the money they received on Old Age security (OAS), Guaranteed Income Supplement (GIS) and Canada Pension Plan (CPP). In fact, some people would actually get more money each month then they needed. They were savers, and lived modest.
On the other side, I had clients who lived large. They were elderly people who had to remain doctors and lawyers, and business owners long after they have lost their heart for it. They could easily retire but their lifestyle was such that they needed more income. These people couldn’t even “squeak” by on $10,000 a month. They just couldn’t handle such a lifestyle cutback.
I am not making an condemnation on either one. However, if we have debt, we have to increase our income to afford the debt.
If you make mortgage payments of $1000 a month (I know that’s not a very high mortgage payment), but we have to make that much money (after taxes) just to have a home. The name mortgage even implies a lifetime burden: mort- “death“, gage- “contract”
So, my first step in “doing the trick” is being debt free. If you want to retire, it is very difficult to do so with debt. Make radical efforts to get rid of debt. If you have a mortgage, talk to your lender about ways that are set into the system to pay off early without penalty. Generally, there are ways to be rid of a mortgage early, but most people don’t understand how to do it.
Do you have unsecured debt (Visa, Mastercard, Company cards, etc.) move heaven and Earth to make that disappear. There is almost no benefit from it and more often then not these are purchases on assets which go down in value (toys).
The advice is simple…perhaps a bit too simple. It’s the kind of advice our grandparents would give, but the truth is still good for today.
In my world, when I finally had no debt and a paid for house, I realized that I no longer needed to be a financial planner. My last job (Financial Planner at Bank of Montreal) averaged for people in that role about $100,000 a year. No mortgage, no debt…I could take a job at ¼ my salary, no stress and still have almost no problem making ends meet. It wasn’t a full solution, but it sure made my world a lot easier. I urge you to look at your world and see what you can do to build yourself the same freedom.
Proverbs 22:7 The rich ruleth over the poor, and the borrower is servant to the lender.
Couple other quick hits:
What’s in my portfolio right at this moment:
Symbol: Name
SLV- iShares Silver Trust 400units
CVX- Chevron Corporation USL 200 shares
USO- United States 12 Month Oil Fund, LP 200 units
Cash: $4,763.25
Why: I bought the silver first because there is momentum in the market. If you look at a chart of what’s happen with silver it’s tough not to see it as a positive movement. I also thought the silver market might turn on me, so I sold a Call option on it that will expire this weekend. The Call option paid me when I sold it and the Silver will be taken away from me at a profit this weekend. The Call served to insulate me in case of a swift market down turn. Not perfect plan, but it worked.
Why is silver moving up? Generally hard assets move when the faith in fiat paper is diminished. Simply put, the US govt is unstable and people are looking for stability. This is the story for gold and silver…perhaps other metals like copper as well, but I don’t trade that because the public doesn’t care much about the other metals.
Why CVX? I wanted something other then just hard assets. I traded stocks for years and still have a soft place for that. I chose Chevron because oil was doing well. Also, I was sitting on too much cash and wanted to make even a modest return on my “sitting money”, so I bought CVX and then sold a call that was near the money. The call gave me money when I sold it, but Chevron went down a bit. So, my call will likely expire worthless. (That’s great). I got paid to do nothing. I will likely hold CVX until it becomes profitable ($200 profit) and sell it. If we get within a week of the May expiration date, I may sell another Call. We’ll see. No reason yet to sell for a loss.
USO- is oil and been rising constantly. This is based on volatility in the mid-east. I am looking eventually at a target of oil near $200 a barrel, so unless there is massive peace in the mid-east, or some major change I will buy oil when it drops a little and sell it when it goes up. I take small bites ($200). Also sold an option on oil, it’s out of the money, but could move “in the money” if today is a big day for oil. The Call was just free money on holdings I already had, so I don’t care what happens for this call. Best case would be selling off the oil and then, a good drop on Monday so I could buy it back.
Final remark:
The classic date is dinner and a movie. If a husband learns to cook, and can rent a movie from the local video store, this turns the whole system into a very affordable adventure.
Here’s my breakdown:
Dinner for Julie and I at -2nd Ave grill, Saskatoon without wine $35 plus
tip. (wine add $10-25 more)
Movie at local theatre, Galaxy 2nd Ave- Saskatoon $11.25 each ($22.50 plus treats $10-15)
Parking: $4.00 after 6:00pm
Babysitting: I have teens, so I would generally pay $15 much less then a
regular babysitter.
Total: aprox. $94...again, we can choose a different restaurant, or go to
dollar theatre, but you can see a $100 is no surprised for a date.
I can do the same supper and watch a movie I rent from the local store on our DVD player in our room after the kids go to bed. The whole thing is done for less then $20. Just keep that in mind.
I have been stunned by the level of interest in what I have been doing financially. In fact, I am a bit embarrassed by the level of interest. So, I am dusting off this blog again and setting up the general instructions for those who want to follow what I do.
A few disclaimers (sort of). Normally, I am very careful. I don’t like recommending anything. The reason is two-fold. On the one hand, it is lousy to say I am looking to buy something and then the next day you find reasons to believe it’s a dog. That happens. It looks bad on me. But, more importantly, my second is that fear someone might take an action and then find out it was a poor choice. However, I can’t see a way to lay this out without using real life examples. Please note: when I write that down, I am telling what I am looking at and why. Things may change. If the circumstances change substantially, then play with caution. Sometimes, the circumstances even get better, if so that’s great. If I say XYZ company looks like a deal at $49 and then it falls to $48...simply put, that’s an even better deal (unless something substantial has changed in the company. I will explain more about this later.
Second, I can’t be held legally responsible for a recommendation. My blog was based on “coffee chat”, the idea that happens all over the world where one guy says, they are buying oil and another guy says they are thinking about buying Research in Motion (RIM). No person attacks someone for what they were doing and if it’s helpful another person might use they “free tip”. I have no system to sell. I have no book to write. I make not a dime out of anything I am putting forward here. I have worked in the past as a broker and financial planner and am aware that certain recommendations may not match one’s level of risk, experience, tax considerations, and income needs.
So, here goes:
Back when I was in grade 5, I used to love watching illusionists. They would do cool slight of hand tricks, and I would stand amazed. In fact, as the years went on I would drop by local magic shops, and buy little pocket tricks. Each trick would have some sort of “gimmick”, a magnet, a lever, a hidden switch, a lead weight or something which would make the action lead to what would not be the normal result. If I practiced the “system”, I could make the flow create the illusion. It was fun. It’s still fun today.
However, as time went on, there would be other illusionists who would like to “talk shop” about a trick and I would show them the “gimmick”. The illusion is over. The mystery is done, but now they know how to pull off the trick.
In short, that is what I am going to try to accomplish here. I will show “The trick”, and when you see it, you are likely not to be impressed. It isn’t magic…sometimes it’s not even interesting.
Hint 1: Debt
“I owe, I owe so off to work I go”
Cute bumper stick, but in reality, that is what we do. We go to work because we have bills to pay. We have to supply the basics of life, but more then that we often are trying for much more then that. We aren’t just living, we are trying to have a lifestyle that we enjoy.
Again, I mentioned that I was a financial planner. As I would sit down with clients, I would find the people on the other side of the desk were vastly different people. Some seniors would own their house, family nearby, don’t like to travel, good health and modest needs. These people would live very comfortably on the money they received on Old Age security (OAS), Guaranteed Income Supplement (GIS) and Canada Pension Plan (CPP). In fact, some people would actually get more money each month then they needed. They were savers, and lived modest.
On the other side, I had clients who lived large. They were elderly people who had to remain doctors and lawyers, and business owners long after they have lost their heart for it. They could easily retire but their lifestyle was such that they needed more income. These people couldn’t even “squeak” by on $10,000 a month. They just couldn’t handle such a lifestyle cutback.
I am not making an condemnation on either one. However, if we have debt, we have to increase our income to afford the debt.
If you make mortgage payments of $1000 a month (I know that’s not a very high mortgage payment), but we have to make that much money (after taxes) just to have a home. The name mortgage even implies a lifetime burden: mort- “death“, gage- “contract”
So, my first step in “doing the trick” is being debt free. If you want to retire, it is very difficult to do so with debt. Make radical efforts to get rid of debt. If you have a mortgage, talk to your lender about ways that are set into the system to pay off early without penalty. Generally, there are ways to be rid of a mortgage early, but most people don’t understand how to do it.
Do you have unsecured debt (Visa, Mastercard, Company cards, etc.) move heaven and Earth to make that disappear. There is almost no benefit from it and more often then not these are purchases on assets which go down in value (toys).
The advice is simple…perhaps a bit too simple. It’s the kind of advice our grandparents would give, but the truth is still good for today.
In my world, when I finally had no debt and a paid for house, I realized that I no longer needed to be a financial planner. My last job (Financial Planner at Bank of Montreal) averaged for people in that role about $100,000 a year. No mortgage, no debt…I could take a job at ¼ my salary, no stress and still have almost no problem making ends meet. It wasn’t a full solution, but it sure made my world a lot easier. I urge you to look at your world and see what you can do to build yourself the same freedom.
Proverbs 22:7 The rich ruleth over the poor, and the borrower is servant to the lender.
Couple other quick hits:
What’s in my portfolio right at this moment:
Symbol: Name
SLV- iShares Silver Trust 400units
CVX- Chevron Corporation USL 200 shares
USO- United States 12 Month Oil Fund, LP 200 units
Cash: $4,763.25
Why: I bought the silver first because there is momentum in the market. If you look at a chart of what’s happen with silver it’s tough not to see it as a positive movement. I also thought the silver market might turn on me, so I sold a Call option on it that will expire this weekend. The Call option paid me when I sold it and the Silver will be taken away from me at a profit this weekend. The Call served to insulate me in case of a swift market down turn. Not perfect plan, but it worked.
Why is silver moving up? Generally hard assets move when the faith in fiat paper is diminished. Simply put, the US govt is unstable and people are looking for stability. This is the story for gold and silver…perhaps other metals like copper as well, but I don’t trade that because the public doesn’t care much about the other metals.
Why CVX? I wanted something other then just hard assets. I traded stocks for years and still have a soft place for that. I chose Chevron because oil was doing well. Also, I was sitting on too much cash and wanted to make even a modest return on my “sitting money”, so I bought CVX and then sold a call that was near the money. The call gave me money when I sold it, but Chevron went down a bit. So, my call will likely expire worthless. (That’s great). I got paid to do nothing. I will likely hold CVX until it becomes profitable ($200 profit) and sell it. If we get within a week of the May expiration date, I may sell another Call. We’ll see. No reason yet to sell for a loss.
USO- is oil and been rising constantly. This is based on volatility in the mid-east. I am looking eventually at a target of oil near $200 a barrel, so unless there is massive peace in the mid-east, or some major change I will buy oil when it drops a little and sell it when it goes up. I take small bites ($200). Also sold an option on oil, it’s out of the money, but could move “in the money” if today is a big day for oil. The Call was just free money on holdings I already had, so I don’t care what happens for this call. Best case would be selling off the oil and then, a good drop on Monday so I could buy it back.
Final remark:
The classic date is dinner and a movie. If a husband learns to cook, and can rent a movie from the local video store, this turns the whole system into a very affordable adventure.
Here’s my breakdown:
Dinner for Julie and I at -2nd Ave grill, Saskatoon without wine $35 plus
tip. (wine add $10-25 more)
Movie at local theatre, Galaxy 2nd Ave- Saskatoon $11.25 each ($22.50 plus treats $10-15)
Parking: $4.00 after 6:00pm
Babysitting: I have teens, so I would generally pay $15 much less then a
regular babysitter.
Total: aprox. $94...again, we can choose a different restaurant, or go to
dollar theatre, but you can see a $100 is no surprised for a date.
I can do the same supper and watch a movie I rent from the local store on our DVD player in our room after the kids go to bed. The whole thing is done for less then $20. Just keep that in mind.
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