Monday, I was listening to John Gormley Live in Saskatchewan and heart their guest David Trahair, an accountant who published a book called "Enough Bull". I have the link for the radio interview, but they have segmented this by hours (4th hour), and I thought that was a bit long of a segment to hear. The link I have listed is a video link from the same author. Basically, he thinks far too much time is wasted on setting up early retirement plans while ignoring paying down debt. Totally backward. Any rate, I though this guy was excellent and worthy of a listen. Brad
Wednesday, February 10, 2010
Friday, February 5, 2010
Every little thing is goin’ to be alright:
As parents, you wonder if you are properly impacting your children. It is the secret dread of parents, and although there are lots of chances where you see things that prove you are doing OK, it is the events which oppose your values expressed in your children that come to the front. In fact, these small events usually get talked about (sometimes loudly). These events are the subject of a child’s punishment, or special attention. These events worry a parent into sleepless nights.
Such has been one of my worries. I have over the last few years, due to a variety of circumstances, embraced simplicity and am trying to push excessive materialism out of my world. I am examining much of my world to find what is important and what is of limited value. What I found in this experiment was a value on things that were often free and/or of limited real cost. Value is a characteristic we add to an object.
Right now I am wearing one gold ring. The gold ring was the symbol of my marriage to my lovely wife. I have not weighted it, but since the value of gold has gone up, I imagine the value of that ring has also gone up. However, the real value of that ring is the representation of the marriage which is 18 years old this Spring. That is true regardless whether the price of gold goes up or down.
Of course, this emphasis against materialism is not always easy and I worried about how my children would respond. My daughters responded in kind. They caught our vision right away. The younger boys, to be honest were too young to think things were too different. My eldest son was my major concern. This week, we took a walk around town together to visit. My wife had bought me a new coat, and following the Biblical mandate, I was taking my old coat to a mission in hopes that they could give it to someone in need (John 3:11). I mentioned to him my concern. He and I were almost going in opposite directions. I was trying to de-accumulate while he was accumulating. Again, I am 39, he’s 15, so it’s not a shocker that “cool” plays a larger role in his world, and dressing the part of High School was vital to his existence. Our conversation was not harsh, just observational. It came and it went. I didn’t notice any real impact. My eldest has learned the “poker face”.
This week, I finished a book I was writing and sent it off for peer review, and am working through picking out a publisher. It is on a new design of how to flesh out the church. A significant portion of what I wrote centered on the fact that we have so neglected “the least of these” (Matthew 25). So, as I was putting some material together I found it was amazingly cost efficient to send a poor family in Asia a gift that would change their world. A pair of chickens (hen and rooster) would be as little as $11. This pair can produce up to 40 dozen eggs a year. If they let the eggs grow into chicks they can have a flock that can keep a family well fed for years. Eggs can also be traded. They are good currency to buy other stuff. Also, since an average family lives on $200/year, a couple chickens is generally a luxury that most people really can’t afford. They would have to starve themselves to save enough to buy the chickens
Goats, are another wonderful gift. $60 and you can have a goat sent. They will breed the goats. They normally have 2 babies (kids) a year, but they also produce milk which can be made into cheese. It’s a wonderful gift.
Or you can “have a cow, man!” $375 and you will change their world for years. Lots of milk, they can be bred for a full “cattle industry”, it’s a wonder.
If you remember the old Veggie-tale song “everybody’s got a water buffalo”, it sounded silly at the time, but a water buffalo is quoting from Gospel for Asia’s web site:
A gift of a water buffalo to a poor South Asian family is good news indeed! Transportation, plough animal, cart hauler, milk giver and more-all in one sturdy creature that is often considered a "member of the family."
How much would it take for everyone to have a water buffalo? $475. Maybe Phil Vischer was on to something.
So, I was talking to my children about this and the idea came up that we could pull our change together. Years ago, my family kept a jar out and we threw extra change into it and that became part of our vacation fund. Why not have a fund for “the least of our brethern”? I had a couple dollars in change, so I dumped it into the cup. One of my little boys threw in a “toonie”, which was a lot of money from the little guy. A couple other children threw in some change. We scouted around the house and got $3.50 in returned bottles. I was hoping we might have enough to buy a pair of chickens at the end of the week. We’d do it just before Sabbath, and we have a good deed done to start the day of rest.
My eldest son, grabbed his wallet and dumped a large wad of money in there. My wife and I stood silent. I am not talking a $10 or a $20, but well over $100, and then my second oldest daughter dumped another large sum of money she made. I was so moved I didn’t know what to say.
Later that day, I was alone with my son, and asked him…”what was up with that?” He said, in his usual, casual way, he’d figured he’d bought enough cool clothes and stuff for himself, he figured he could he could give some money to people who needed this just to have enough food to eat.
He’s done many things that have brought me joy, but I have to admit, I don’t think I have ever been so impressed with him as I was that moment. For just a second, I could see that maybe we were getting through. Perhaps, everything will be alright.
What will we do with the money? Right now, we have a decision to make. We might buy a cow (that would change a family and perhaps a village forever), or we might buy something like 30 pairs of chickens and impact 30 families for years, maybe forever. I think we will also spring for a water purifier (they are only $30) and that would turn poisoned water into drinkable water. For us, they are simple gestures, but for the “least of our brethern”, it will change the world.
Such has been one of my worries. I have over the last few years, due to a variety of circumstances, embraced simplicity and am trying to push excessive materialism out of my world. I am examining much of my world to find what is important and what is of limited value. What I found in this experiment was a value on things that were often free and/or of limited real cost. Value is a characteristic we add to an object.
Right now I am wearing one gold ring. The gold ring was the symbol of my marriage to my lovely wife. I have not weighted it, but since the value of gold has gone up, I imagine the value of that ring has also gone up. However, the real value of that ring is the representation of the marriage which is 18 years old this Spring. That is true regardless whether the price of gold goes up or down.
Of course, this emphasis against materialism is not always easy and I worried about how my children would respond. My daughters responded in kind. They caught our vision right away. The younger boys, to be honest were too young to think things were too different. My eldest son was my major concern. This week, we took a walk around town together to visit. My wife had bought me a new coat, and following the Biblical mandate, I was taking my old coat to a mission in hopes that they could give it to someone in need (John 3:11). I mentioned to him my concern. He and I were almost going in opposite directions. I was trying to de-accumulate while he was accumulating. Again, I am 39, he’s 15, so it’s not a shocker that “cool” plays a larger role in his world, and dressing the part of High School was vital to his existence. Our conversation was not harsh, just observational. It came and it went. I didn’t notice any real impact. My eldest has learned the “poker face”.
This week, I finished a book I was writing and sent it off for peer review, and am working through picking out a publisher. It is on a new design of how to flesh out the church. A significant portion of what I wrote centered on the fact that we have so neglected “the least of these” (Matthew 25). So, as I was putting some material together I found it was amazingly cost efficient to send a poor family in Asia a gift that would change their world. A pair of chickens (hen and rooster) would be as little as $11. This pair can produce up to 40 dozen eggs a year. If they let the eggs grow into chicks they can have a flock that can keep a family well fed for years. Eggs can also be traded. They are good currency to buy other stuff. Also, since an average family lives on $200/year, a couple chickens is generally a luxury that most people really can’t afford. They would have to starve themselves to save enough to buy the chickens
Goats, are another wonderful gift. $60 and you can have a goat sent. They will breed the goats. They normally have 2 babies (kids) a year, but they also produce milk which can be made into cheese. It’s a wonderful gift.
Or you can “have a cow, man!” $375 and you will change their world for years. Lots of milk, they can be bred for a full “cattle industry”, it’s a wonder.
If you remember the old Veggie-tale song “everybody’s got a water buffalo”, it sounded silly at the time, but a water buffalo is quoting from Gospel for Asia’s web site:
A gift of a water buffalo to a poor South Asian family is good news indeed! Transportation, plough animal, cart hauler, milk giver and more-all in one sturdy creature that is often considered a "member of the family."
How much would it take for everyone to have a water buffalo? $475. Maybe Phil Vischer was on to something.
So, I was talking to my children about this and the idea came up that we could pull our change together. Years ago, my family kept a jar out and we threw extra change into it and that became part of our vacation fund. Why not have a fund for “the least of our brethern”? I had a couple dollars in change, so I dumped it into the cup. One of my little boys threw in a “toonie”, which was a lot of money from the little guy. A couple other children threw in some change. We scouted around the house and got $3.50 in returned bottles. I was hoping we might have enough to buy a pair of chickens at the end of the week. We’d do it just before Sabbath, and we have a good deed done to start the day of rest.
My eldest son, grabbed his wallet and dumped a large wad of money in there. My wife and I stood silent. I am not talking a $10 or a $20, but well over $100, and then my second oldest daughter dumped another large sum of money she made. I was so moved I didn’t know what to say.
Later that day, I was alone with my son, and asked him…”what was up with that?” He said, in his usual, casual way, he’d figured he’d bought enough cool clothes and stuff for himself, he figured he could he could give some money to people who needed this just to have enough food to eat.
He’s done many things that have brought me joy, but I have to admit, I don’t think I have ever been so impressed with him as I was that moment. For just a second, I could see that maybe we were getting through. Perhaps, everything will be alright.
What will we do with the money? Right now, we have a decision to make. We might buy a cow (that would change a family and perhaps a village forever), or we might buy something like 30 pairs of chickens and impact 30 families for years, maybe forever. I think we will also spring for a water purifier (they are only $30) and that would turn poisoned water into drinkable water. For us, they are simple gestures, but for the “least of our brethern”, it will change the world.
Wednesday, January 6, 2010
A Childrren's book worth the read
A children’s book that may surprise you:
As I have mentioned before. I have 7 children, and in fact, as of just a couple days ago I now have 8. It’s amazing. Our newest addition is Josiah Ephraim. His name means “the Lord is my help” and Ephraim means “double blessing”. Certainly, he is that, as all the children are. Yet, that is not what I wanted to write about. I wanted to recommend a children’s book. My little boys (Noah, Shamus and Shimone and even Shemiel) love listening to me read stories. I have a bit of the actor flare, and they gather around like I was the best television show going. Years ago, my daughters started to read Barbara Parks book “Junie B. Jones” I overheard one on a book on tape and thought the concept was cute. Last week I started to read one of these books a day to the boys. They loved it.
Yesterday, I read Junie B. Jones is a Party Animal. Which is the 10th in that series. I would encourage anyone to read it. It will take about ½ an hour read at roughly Junie B.‘s communication speed. I was hoping I could find a book review that captures what I read, but I am afraid that seems to be difficult. Too many people talk about Barbara Park’s writing style (which is very creative) or general information about the story, but so far almost no one seems to center on the point.
In summary: Junie B. has a friend named Lucille. She lives with her wealthy Nanna. Lucille is self center, and not always a lot of fun, but she is one of Junie B.’s best friends. Junie B convinces Lucille that if she invites her and another friend over for a slumber party they could all help beg the rich Nanna for a poodle for Lucille. Lucille finds this will work.
The house and home is amazing, from “castle-like gate” to crystal and china, and flowers and silk. However, Junie realizes that the “shows” of wealth are in a world that is almost unliveable for her. She breaks a crystal glass, and stains the linen. She doesn’t understand that the amazing stuffed animals are just for looks. You can’t sit on a bed with a silk bedspread.
There are many things to make Lucille a “princess”, but this world makes Junie B. miserable. In the end, she goes and has breakfast of blueberry pancakes with her own Nanna’s house (who isn’t a “Richie Nanna”, and who was described by Junie B. earlier as a “dud”).
Junie B wants a plastic cup, and perhaps a plastic cereal bowl, but it’s not available. Lucille thrills at the wealth and has lived to survive in that environment. Junie B. (the character that we love and embrace) find herself standing away from the table alone eating a banana because that is all that she finds “safe”.
Silly children’s story, a bit like Aesop’s fable about the city mouse and country mouse. Yet, the truth is embedded there. If we choose to amass the images of wealth, we may have conversation pieces. We may have the admiration of some. We may even feel a bit better about our “comfort” with these images of wealth, but what do we really have?
Let’s pretend, I have an original Van Gogh oil painting in my house. It’s hung in the living room and a conversation piece for people. Can the children play in that room? Of course not! They might damage the painting. Do I have to get an incredible security system and extra insurance to protect my fine work of art? Absolutely! I may have to repaint or redesign the living room for my fabulous work of art, and if that happens I should do the same for the rest of the house. It doesn’t take too long before one can see that I am no longer the Master who owns a fine work of art. In fact, I am a servant to a painting from a dead guy. It’s worse then that, the painting (like almost all Van Gogh’s) had almost no value while he was alive. Van Gogh lived in poverty. Sometimes his friends might buy a painting just to make sure he had some money to live on. I didn’t even say whether the “van Gogh” was a painting that was “nice or good”. The value was perceived from others. Amazing… just pause to think. The painting (which could be in fact ugly) has taken me as it’s slave and forced me to live to serve it, and I willingly ran to embrace it.
It’s even scarier then that. This is true of art. It is true of almost all collections. We amass for comfort. We amass for the admiration of others. We buy Curio cabinets to show off our collections. We protect, and encase these dear precious things.
This last month, I heard of a man I knew who has lost his family (and why did they leave?) for many reasons, but one of the items that came out was there really was no room for his wife and his children and his DVD collection.
Jesus (Yeshua) said:
“Lay not up for yourselves treasures upon the earth, where moth and rust consume, and where thieves break through and steal: but lay up for yourselves treasures in heaven, where neither moth nor rust doth consume, and where thieves do not break through nor steal:for where thy treasure is, there will thy heart be also.”
John the Baptist took the idea further:
“And he answered and said unto them, He that hath two coats, let him impart to him that hath none; and he that hath food, let him do likewise.”
The idea is foreign to our world, but we might just find that it is necessary for the salvation of our very soul. Not your normal wealth concept, I know, but I think it might be one that was worthy to share.
As I have mentioned before. I have 7 children, and in fact, as of just a couple days ago I now have 8. It’s amazing. Our newest addition is Josiah Ephraim. His name means “the Lord is my help” and Ephraim means “double blessing”. Certainly, he is that, as all the children are. Yet, that is not what I wanted to write about. I wanted to recommend a children’s book. My little boys (Noah, Shamus and Shimone and even Shemiel) love listening to me read stories. I have a bit of the actor flare, and they gather around like I was the best television show going. Years ago, my daughters started to read Barbara Parks book “Junie B. Jones” I overheard one on a book on tape and thought the concept was cute. Last week I started to read one of these books a day to the boys. They loved it.
Yesterday, I read Junie B. Jones is a Party Animal. Which is the 10th in that series. I would encourage anyone to read it. It will take about ½ an hour read at roughly Junie B.‘s communication speed. I was hoping I could find a book review that captures what I read, but I am afraid that seems to be difficult. Too many people talk about Barbara Park’s writing style (which is very creative) or general information about the story, but so far almost no one seems to center on the point.
In summary: Junie B. has a friend named Lucille. She lives with her wealthy Nanna. Lucille is self center, and not always a lot of fun, but she is one of Junie B.’s best friends. Junie B convinces Lucille that if she invites her and another friend over for a slumber party they could all help beg the rich Nanna for a poodle for Lucille. Lucille finds this will work.
The house and home is amazing, from “castle-like gate” to crystal and china, and flowers and silk. However, Junie realizes that the “shows” of wealth are in a world that is almost unliveable for her. She breaks a crystal glass, and stains the linen. She doesn’t understand that the amazing stuffed animals are just for looks. You can’t sit on a bed with a silk bedspread.
There are many things to make Lucille a “princess”, but this world makes Junie B. miserable. In the end, she goes and has breakfast of blueberry pancakes with her own Nanna’s house (who isn’t a “Richie Nanna”, and who was described by Junie B. earlier as a “dud”).
Junie B wants a plastic cup, and perhaps a plastic cereal bowl, but it’s not available. Lucille thrills at the wealth and has lived to survive in that environment. Junie B. (the character that we love and embrace) find herself standing away from the table alone eating a banana because that is all that she finds “safe”.
Silly children’s story, a bit like Aesop’s fable about the city mouse and country mouse. Yet, the truth is embedded there. If we choose to amass the images of wealth, we may have conversation pieces. We may have the admiration of some. We may even feel a bit better about our “comfort” with these images of wealth, but what do we really have?
Let’s pretend, I have an original Van Gogh oil painting in my house. It’s hung in the living room and a conversation piece for people. Can the children play in that room? Of course not! They might damage the painting. Do I have to get an incredible security system and extra insurance to protect my fine work of art? Absolutely! I may have to repaint or redesign the living room for my fabulous work of art, and if that happens I should do the same for the rest of the house. It doesn’t take too long before one can see that I am no longer the Master who owns a fine work of art. In fact, I am a servant to a painting from a dead guy. It’s worse then that, the painting (like almost all Van Gogh’s) had almost no value while he was alive. Van Gogh lived in poverty. Sometimes his friends might buy a painting just to make sure he had some money to live on. I didn’t even say whether the “van Gogh” was a painting that was “nice or good”. The value was perceived from others. Amazing… just pause to think. The painting (which could be in fact ugly) has taken me as it’s slave and forced me to live to serve it, and I willingly ran to embrace it.
It’s even scarier then that. This is true of art. It is true of almost all collections. We amass for comfort. We amass for the admiration of others. We buy Curio cabinets to show off our collections. We protect, and encase these dear precious things.
This last month, I heard of a man I knew who has lost his family (and why did they leave?) for many reasons, but one of the items that came out was there really was no room for his wife and his children and his DVD collection.
Jesus (Yeshua) said:
“Lay not up for yourselves treasures upon the earth, where moth and rust consume, and where thieves break through and steal: but lay up for yourselves treasures in heaven, where neither moth nor rust doth consume, and where thieves do not break through nor steal:for where thy treasure is, there will thy heart be also.”
John the Baptist took the idea further:
“And he answered and said unto them, He that hath two coats, let him impart to him that hath none; and he that hath food, let him do likewise.”
The idea is foreign to our world, but we might just find that it is necessary for the salvation of our very soul. Not your normal wealth concept, I know, but I think it might be one that was worthy to share.
Monday, November 30, 2009
So, does money have any real value?
I was in a bit of a difficult conversation yesterday. We had some friends in the area and they had heard an interview with someone who was saying that the US economy was doomed. I get about 2 of these though e-mails a day. I am sure you have seen these as well, but I usually can just avoid the whole conversation (an e-mail doesn’t automatically require a reply). But this question was coming from friends, and I had to admit some of the most difficult realities for a financial planners. Money: national currency is a representative economy. It is backed by the faith of the government that prints the currency, and as time has gone by, the governments have not proved as strong as people suspect.
I have never been a precious metal trader. I have only owned precious metals as a bit jewellery, but today we are talking more then ever before about gold (and silver). This is outside my field.
The US dollar was tied to hard metals up until 1974. This meant that the US government actually had metal (either gold or silver) to cover the value of the money they were printing. This would be a classic representative economy. The printed dollar represented the metal behind it. In 1974, this standard was removed. Today’s US (and other national currencies) dollar is back only be the faith of the government. This allows the government to print as much money as is necessary.
However, for 35 years, this has been the case. Why is there so much talk about precious metals today? First, the value of both of these metal have grow substantially. The second reason, is that metals are not subject to inflation and/or exchange rate problems. It become a true international currency. This second reason is really “The” reason for most watchers. The US has significantly increased it’s national debt in the bail out of so many companies. The value of the US dollar doesn’t have the same strength as before as people are starting to not hold it as the “great international currency”. In my present home of Canada, we have certainly see the Canadian dollar function very well in light of this US weakness.
Of course, the final nuts and bolts question, is “what should one do?” Should we all run out and buy gold or silver? Gold is about 1200/oz. Silver is 18.25/oz. If someone wants to buy gold, the Canadian bank “Bank of Nova Scotia” has made this very easy. You can order it on line from 8am to 5pm EST on any weekday. Most of your other banks also offer it but they generally do a manual system. (meaning- you walk into the branch and they fill out some forms and you drop by in a few days to pick up the metal). 1oz silver bars at BNS are running about $23.51 silver coins (minted by the Canadian gov’t) are running a bit more. Some have preferred a gold and silver note, although this is a lot easier if you want to trade gold and silver, in the event of an economic meltdown the note is likely to be to cumbersome to work with. Another problem with the metals is how do you trade with them? If you showed up at a grocery store with a sack of gold, who would accept it? What rate would you get? Would would even be able to tell you it’s real?
Back as a financial planner, a man came into our branch with a silver brick and set it on the desk of my receptionist. We all stared at it. He asked “so, how much is it worth?” We all stared. We had no idea. Was it really silver? It looked heavy. It was grey and shiny. He told us he paid $1000 for the brick back a decade ago when he thought the world economy would collapse. It didn’t collapse, so he decided to bring it back. We sent the brick away to Toronto to our precious metals depository and they assessed the value as $1000.53 (or something like that). Not his best economic decision.
Let’s pretend you had the gold bars…where would you put it to keep it safe until you needed it? That’s difficult. For the present, a safe deposit box would make sense, but again, if we were in an economic meltdown and the banks closed, you would find it difficult to get back into a branch to get the gold. Do you keep it in your house? You could, but gold could be subject to loss of theft. I have had 2 total loss house-fires. We never did find any “jewellery” in the ash heap.
I guess when you come down to it, although we all want to do the best to plan for the future, planning for a complete economic meltdown would be very difficult. One financial planner and I were talking about this idea a few months back and he mentioned that when Hurricane Katrina hit, we actually found an economy where the dollar didn’t matter much at all. Batteries were the best thing to have or fresh drinking water. There was no one (as far as I know) trying to trade silver or gold. My friend, said for him “chickens” would be the best item to have around, and I tend to agree.
So, will there come a time when we can not rely on the government?…I think so. The Bible predicts a time when there would be one government and this government would be hostile to believers. In fact, it says no one could buy or trade without a mark of the “Beast”. I am confident that will someday become a reality, but for most of us, until we start to see those “end of the age signs” we might do well to not bring a bag of gold or silver to Walmart. Have a good day, Brad
I have never been a precious metal trader. I have only owned precious metals as a bit jewellery, but today we are talking more then ever before about gold (and silver). This is outside my field.
The US dollar was tied to hard metals up until 1974. This meant that the US government actually had metal (either gold or silver) to cover the value of the money they were printing. This would be a classic representative economy. The printed dollar represented the metal behind it. In 1974, this standard was removed. Today’s US (and other national currencies) dollar is back only be the faith of the government. This allows the government to print as much money as is necessary.
However, for 35 years, this has been the case. Why is there so much talk about precious metals today? First, the value of both of these metal have grow substantially. The second reason, is that metals are not subject to inflation and/or exchange rate problems. It become a true international currency. This second reason is really “The” reason for most watchers. The US has significantly increased it’s national debt in the bail out of so many companies. The value of the US dollar doesn’t have the same strength as before as people are starting to not hold it as the “great international currency”. In my present home of Canada, we have certainly see the Canadian dollar function very well in light of this US weakness.
Of course, the final nuts and bolts question, is “what should one do?” Should we all run out and buy gold or silver? Gold is about 1200/oz. Silver is 18.25/oz. If someone wants to buy gold, the Canadian bank “Bank of Nova Scotia” has made this very easy. You can order it on line from 8am to 5pm EST on any weekday. Most of your other banks also offer it but they generally do a manual system. (meaning- you walk into the branch and they fill out some forms and you drop by in a few days to pick up the metal). 1oz silver bars at BNS are running about $23.51 silver coins (minted by the Canadian gov’t) are running a bit more. Some have preferred a gold and silver note, although this is a lot easier if you want to trade gold and silver, in the event of an economic meltdown the note is likely to be to cumbersome to work with. Another problem with the metals is how do you trade with them? If you showed up at a grocery store with a sack of gold, who would accept it? What rate would you get? Would would even be able to tell you it’s real?
Back as a financial planner, a man came into our branch with a silver brick and set it on the desk of my receptionist. We all stared at it. He asked “so, how much is it worth?” We all stared. We had no idea. Was it really silver? It looked heavy. It was grey and shiny. He told us he paid $1000 for the brick back a decade ago when he thought the world economy would collapse. It didn’t collapse, so he decided to bring it back. We sent the brick away to Toronto to our precious metals depository and they assessed the value as $1000.53 (or something like that). Not his best economic decision.
Let’s pretend you had the gold bars…where would you put it to keep it safe until you needed it? That’s difficult. For the present, a safe deposit box would make sense, but again, if we were in an economic meltdown and the banks closed, you would find it difficult to get back into a branch to get the gold. Do you keep it in your house? You could, but gold could be subject to loss of theft. I have had 2 total loss house-fires. We never did find any “jewellery” in the ash heap.
I guess when you come down to it, although we all want to do the best to plan for the future, planning for a complete economic meltdown would be very difficult. One financial planner and I were talking about this idea a few months back and he mentioned that when Hurricane Katrina hit, we actually found an economy where the dollar didn’t matter much at all. Batteries were the best thing to have or fresh drinking water. There was no one (as far as I know) trying to trade silver or gold. My friend, said for him “chickens” would be the best item to have around, and I tend to agree.
So, will there come a time when we can not rely on the government?…I think so. The Bible predicts a time when there would be one government and this government would be hostile to believers. In fact, it says no one could buy or trade without a mark of the “Beast”. I am confident that will someday become a reality, but for most of us, until we start to see those “end of the age signs” we might do well to not bring a bag of gold or silver to Walmart. Have a good day, Brad
Friday, November 27, 2009
Smith Maneuver
When I worked as a Financial Planner, this was one consideration when trying to expand someone's wealth. This is not for everyone, but I think anyone can benefit from understanding the concept. I always thought this was certainly creative.
Fraser View House Debt as Positive
By Ellen Roseman Personal Finance Colulmnist
Published On Wed Jan 24 2007
Fraser Smith has written a bestselling book on personal finance by telling Canadians not to pay off their mortgages.
He wants people to convert bad debt (a mortgage) to good debt (an investment loan) by swapping one for the other.
By using something called a "readvanceable mortgage," you can get a tax deduction for the interest paid on a mortgage (which is generally not tax-deductible).
The strategy to convert a negative to a positive is called the Smith Manoeuvre.
Here's how it works: (1) Make your regular mortgage payments. (2) Borrow back the principal reduction that occurs as you make each payment. (3) Create an investment loan that is tax-deductible.
After the first year, you will get a big tax refund. Use this money to make an extra payment against your mortgage, then immediately borrow back and invest the same amount.
What's interesting about the Smith Manoeuvre is that you never reduce your debt. Borrow $250,000 to buy a house and pay off that loan over 25 years. Guess what? You still owe $250,000 at the end.
But now you have investments that are worth more than $250,000 – or so you hope. You can sell these investments to discharge the loan.
What about the time-honoured strategy of contributing to a registered retirement savings plan? Doesn't that offer a hefty tax saving?
In many cases, Smith says, you would do better to cash the RRSP, pay the tax and use the money to make a lump-sum reduction of the first mortgage. Then, you immediately borrow back that money and invest it outside the RRSP.
Only after converting all non-deductible mortgage debt to tax-deductible investment debt should you resume your RRSP contributions.
As you might expect, you won't hear much about RRSP alternatives from your friendly banker or investment dealer.
They're too busy asking you which mutual fund you want to buy before March 1, the deadline to invest in an RRSP and save taxes on your 2006 return.
Despite a lack of support from mainstream financial institutions, the Smith Manoeuvre has taken off through word-of-mouth and vigorous debate at online discussion forums.
"I've passed 30,000 books sold and I'm printing 10,000 more this week," he told me about his The Smith Manoeuvre: Is Your Mortgage Tax-Deductible?
These are amazing sales figures for a self-published book, not terribly user-friendly, that first came out in 2002. I picked up a copy of the seventh printing recently at a Costco warehouse store for $12.99 (half the cover price).
So, who is Fraser Smith? As a financial adviser in Vancouver, he came up with the idea in 1984 and pitched it to Canada's largest credit union.
The Vancity credit union attracted many new customers by working with them to make their mortgages tax-deductible and helped secure a dominant position in the B.C. market.
Smith, now retired and living in Victoria, has been working with partners to start a new company, Smith Manoeuvre Financial Corp. They opened an office last month on Bay St. in downtown Toronto and set up a website, www.smfc.com.
He has names and numbers of about 450 financial planners and mortgage brokers who can help put the plan into action.
"It's a great strategy, but it's not for everyone. You have to consider your risk tolerance," says Elisseos Iriotakis, a certified financial planner and vice-president of mortgages for Safebridge Financial Group in Toronto.
He finds clients are split. Half welcome the idea of swapping bad debt for good debt, while the other half worry about borrowing to invest and possibly losing money.
"It's not good for the average person. Most of my clients wouldn't understand it because it's very complex," says Gary Newby, a certified financial planner in Toronto.
Newby took a course on the Smith Manoeuvre, which explains why his name is on the list of advisers who endorse the strategy. But he says his request to remove his name was not honoured.
David Trahair, a Toronto chartered accountant, wrote a book urging Canadians not to invest in RRSPs before paying off mortgages and other non-deductible debt. He disapproves of swapping one loan for another.
"I recommend the total opposite, paying off your principal residence and not borrowing against it," he says.
"It's a high-risk strategy because you're betting the farm that some investment adviser can do better than you can. You have a guaranteed return from getting rid of the mortgage."
Love it or hate it, the Smith Manoeuvre is a runaway success. It appeals to those who want the best of both worlds, paying off a mortgage while building an investment portfolio at the same time.
Ellen Roseman's column appears Wednesday, Saturday and Sunday. You can reach her by writing Business c/o Toronto Star, 1 Yonge St., Toronto M5E 1E6; by phone at 416-945-8687; by fax at 416-865-3630; or at eroseman@thestar.ca by email.
Fraser View House Debt as Positive
By Ellen Roseman Personal Finance Colulmnist
Published On Wed Jan 24 2007
Fraser Smith has written a bestselling book on personal finance by telling Canadians not to pay off their mortgages.
He wants people to convert bad debt (a mortgage) to good debt (an investment loan) by swapping one for the other.
By using something called a "readvanceable mortgage," you can get a tax deduction for the interest paid on a mortgage (which is generally not tax-deductible).
The strategy to convert a negative to a positive is called the Smith Manoeuvre.
Here's how it works: (1) Make your regular mortgage payments. (2) Borrow back the principal reduction that occurs as you make each payment. (3) Create an investment loan that is tax-deductible.
After the first year, you will get a big tax refund. Use this money to make an extra payment against your mortgage, then immediately borrow back and invest the same amount.
What's interesting about the Smith Manoeuvre is that you never reduce your debt. Borrow $250,000 to buy a house and pay off that loan over 25 years. Guess what? You still owe $250,000 at the end.
But now you have investments that are worth more than $250,000 – or so you hope. You can sell these investments to discharge the loan.
What about the time-honoured strategy of contributing to a registered retirement savings plan? Doesn't that offer a hefty tax saving?
In many cases, Smith says, you would do better to cash the RRSP, pay the tax and use the money to make a lump-sum reduction of the first mortgage. Then, you immediately borrow back that money and invest it outside the RRSP.
Only after converting all non-deductible mortgage debt to tax-deductible investment debt should you resume your RRSP contributions.
As you might expect, you won't hear much about RRSP alternatives from your friendly banker or investment dealer.
They're too busy asking you which mutual fund you want to buy before March 1, the deadline to invest in an RRSP and save taxes on your 2006 return.
Despite a lack of support from mainstream financial institutions, the Smith Manoeuvre has taken off through word-of-mouth and vigorous debate at online discussion forums.
"I've passed 30,000 books sold and I'm printing 10,000 more this week," he told me about his The Smith Manoeuvre: Is Your Mortgage Tax-Deductible?
These are amazing sales figures for a self-published book, not terribly user-friendly, that first came out in 2002. I picked up a copy of the seventh printing recently at a Costco warehouse store for $12.99 (half the cover price).
So, who is Fraser Smith? As a financial adviser in Vancouver, he came up with the idea in 1984 and pitched it to Canada's largest credit union.
The Vancity credit union attracted many new customers by working with them to make their mortgages tax-deductible and helped secure a dominant position in the B.C. market.
Smith, now retired and living in Victoria, has been working with partners to start a new company, Smith Manoeuvre Financial Corp. They opened an office last month on Bay St. in downtown Toronto and set up a website, www.smfc.com.
He has names and numbers of about 450 financial planners and mortgage brokers who can help put the plan into action.
"It's a great strategy, but it's not for everyone. You have to consider your risk tolerance," says Elisseos Iriotakis, a certified financial planner and vice-president of mortgages for Safebridge Financial Group in Toronto.
He finds clients are split. Half welcome the idea of swapping bad debt for good debt, while the other half worry about borrowing to invest and possibly losing money.
"It's not good for the average person. Most of my clients wouldn't understand it because it's very complex," says Gary Newby, a certified financial planner in Toronto.
Newby took a course on the Smith Manoeuvre, which explains why his name is on the list of advisers who endorse the strategy. But he says his request to remove his name was not honoured.
David Trahair, a Toronto chartered accountant, wrote a book urging Canadians not to invest in RRSPs before paying off mortgages and other non-deductible debt. He disapproves of swapping one loan for another.
"I recommend the total opposite, paying off your principal residence and not borrowing against it," he says.
"It's a high-risk strategy because you're betting the farm that some investment adviser can do better than you can. You have a guaranteed return from getting rid of the mortgage."
Love it or hate it, the Smith Manoeuvre is a runaway success. It appeals to those who want the best of both worlds, paying off a mortgage while building an investment portfolio at the same time.
Ellen Roseman's column appears Wednesday, Saturday and Sunday. You can reach her by writing Business c/o Toronto Star, 1 Yonge St., Toronto M5E 1E6; by phone at 416-945-8687; by fax at 416-865-3630; or at eroseman@thestar.ca by email.
Wednesday, November 18, 2009
Encouragement from a friend
One of the best pieces of advice that I have taken was from a friend. He (is/was) a very successful investment dealer with his own company in Saskatoon, Saskatchewan. He urged me at one point in time to enter the industry from my days selling life insurance, and mutual funds. I became a stock broker, and my world continued to change from those days onward.
Any rate, Ron (not his real name) and I were walking with another stock broker and Ron turned to me and said "you know, Brad, you have one important item which will likely make you more successful then me". Now, that was a real turn of events. He had a swank office on the River in Saskatoon, and I was working out of my basement in Aberdeen, Saskatchewan at the end of two unmarked dirt roads. What would I have over Ron?
"You have only had one wife."
Simple.
Ron said, "I threw away my first million to my first wife. I have child support payments and spousal support payments, plus I am married with my new wife and daughter. In spite of everything I do, to cut costs in my world, I still can't cut costs there. In fact, if I make more, I am likely to have my payments adjusted for my ex."
One wife...can save you a million.
I pondered this, and in fact, this is not really true. A million is a bit low. By being married one time to the right person will save you no end of trouble. There is this economic benefit, but there is also great strain for a man and woman relationally if they do not "marry well". A good wife will help you as you make important decisions. They can encourage you when you need it. They can urge you to do better when you need it. Marriage is rarely perfect and marriages are often a mystery within every home. Some marriages are a "business relationship". Some marriages are very intensely emotionally connected. People will have their own dynamics, but certainly there is something said to "marrying well". I would love to write more about this, but it is a bit outside the scope of this blog, but think about it. It could save you a million. -Brad
Just as a side note: the other stock broker we were with, did not heed this counsel. He burried himself in his business success and now runs a very successful office (or so, he told me) unfortunately he also lost his loving wife and children. They were sacrificed for the 'cause'. A sad conclusion for a intensely spiritual Christian husband. It still makes me sad.
Any rate, Ron (not his real name) and I were walking with another stock broker and Ron turned to me and said "you know, Brad, you have one important item which will likely make you more successful then me". Now, that was a real turn of events. He had a swank office on the River in Saskatoon, and I was working out of my basement in Aberdeen, Saskatchewan at the end of two unmarked dirt roads. What would I have over Ron?
"You have only had one wife."
Simple.
Ron said, "I threw away my first million to my first wife. I have child support payments and spousal support payments, plus I am married with my new wife and daughter. In spite of everything I do, to cut costs in my world, I still can't cut costs there. In fact, if I make more, I am likely to have my payments adjusted for my ex."
One wife...can save you a million.
I pondered this, and in fact, this is not really true. A million is a bit low. By being married one time to the right person will save you no end of trouble. There is this economic benefit, but there is also great strain for a man and woman relationally if they do not "marry well". A good wife will help you as you make important decisions. They can encourage you when you need it. They can urge you to do better when you need it. Marriage is rarely perfect and marriages are often a mystery within every home. Some marriages are a "business relationship". Some marriages are very intensely emotionally connected. People will have their own dynamics, but certainly there is something said to "marrying well". I would love to write more about this, but it is a bit outside the scope of this blog, but think about it. It could save you a million. -Brad
Just as a side note: the other stock broker we were with, did not heed this counsel. He burried himself in his business success and now runs a very successful office (or so, he told me) unfortunately he also lost his loving wife and children. They were sacrificed for the 'cause'. A sad conclusion for a intensely spiritual Christian husband. It still makes me sad.
Interest rate trap
I get many e-mails a day from different financial planners. Some are great, some are less then that. Some repeat what I think, and some do exactly what I think would be crazy. I need to have these to "keep me in check", so that I don't get convinving myself that I know it all. This one I got in my e-mail box today, and thought that this is exactly the way I see the investment industry going. I took out the advertisements for the company, but wanted to keep the body of their insight. If you want to subscripe to this newsletter they are called Invester's Daily Edge, and I like I said, they are generally pretty good. Hope you enjoy. -Brad
Andrew Gordon Reporting: Baltimore, MD. Tuesday November 17, 2009
A False Sense Of Security
I had just called my favorite uncle, Al, in NYC to thank him for inviting me up for Christmas dinner. (His wife, Rosa, has been making this special family meal for the past four decades.)
As usual, Uncle Al brought up the subject of his investments. “Don’t worry,” he said, “I’ve gone much more conservative since last time we talked. The interest I’m getting isn’t much. But my broker says if the market goes down, I’ll be protected from bad losses.”
“That’s great,” I said. I didn’t want to worry my uncle. But as I hung up, I made a note to myself to have a heart-to-heart with him when I see him over the holidays.
His so-called protection from “bad losses” sounds reassuring. But when push comes to shove, it won’t be able to do the job.
25 Years Later...
One of the most dangerous traps in the investment world is about to be sprung on investors. It wasn’t intentionally set. But it’s still going to catch millions of investors by surprise... and not just any ol’ investors...
The ones who are going to be hurt the most are the same ones who are most convinced that they are well-protected.
How do I know this?
I’ve seen it before...
In 1994, the Fed instituted the first of eight rate hikes to control inflation. I watched as all kinds of bond funds dropped 30% or more. Investors kept waiting for the storm to pass and for their bonds to recover. They never did.
The government will put off raising rates as long as possible. How can they not? They know the second they begin, borrowing (to fund the purchase of new homes and start or expand small businesses) will go down. Spending will go down. And the markets, too, will drop.
And whatever progress the economy had been making up to that point will stop.
It’s already November. The government won’t raise rates this year. It’ll probably happen in 2010, though.
And even if the government puts it off a little longer, the fear of rates going higher will fester.
Perception is reality. Beginning next year, that fear will dominate the market until, well, the government actually does the dirty deed.
In other words, next year is the perfect set up for a repeat performance of 1994 and what followed.
A Horrible Investment Trap
As I said, the trap has already been set. The culprit? Today’s low interest rates. IDE’s Steve McDonald explains:
"The Wall Street Journal recently reported that 78% of money market rates are below 0.3%. Problem is, no one can live on that.
"So hundreds of billions of dollars are pouring out of money markets into higher-risk investments like junk bonds and certain bond funds – in search of returns that people can actually live on.
"As interest rates move up the trap is sprung. These higher-yielding bonds drop in value and shaken investors begin dumping their junk bonds and bond funds to try and limit their losses.
“But it’s too late...
"All it does is drive down these bond funds more quickly."
The Hidden Risks of Investment-Grade Bond Funds
Aptly named “junk” bonds are high risk.
But Steve says that investment-grade bond funds also carry risks... risks that the average investor is completely unaware of. The two big problems...
Investment-grade bond funds use leverage. They borrow money against the bonds they hold to buy more bonds. It’s like taking out a second mortgage on your home to buy another house. The extra bonds paid for with borrowed money add to the interest you get.
But when interest rates go up, the interest payment on the loan the fund took to pay you the higher interest rate also goes up. At the same time, the value of the bonds the fund holds drop. It’s a double whammy.
Bond funds generally buy bonds with very long maturities – because the longer the maturity date, the higher the interest paid. But the longer the maturity, the more the value of the bond drops when interest rates go up. So bond funds get killed when rates go higher.
What can we learn from this?
First lesson is that bond funds require just as much scrutiny as stocks and stock funds...
Second lesson is that bonds hate rising rates.
Andrew Gordon
Investor's Daily Edge
FINANCIAL ADVISORY BOARD
Bob Irish - Investment Director
Andy Gordon - Editor
Jon Herring - Editorial Contributor
Ted Peroulakis - Editorial Contributor Christian Hill - Managing Editor
Dr. Russell McDougal - Editorial Contributor
Steve McDonald - Editorial Contributor
Michael Masterson - Consulting Editor
Andrew Gordon Reporting: Baltimore, MD. Tuesday November 17, 2009
A False Sense Of Security
I had just called my favorite uncle, Al, in NYC to thank him for inviting me up for Christmas dinner. (His wife, Rosa, has been making this special family meal for the past four decades.)
As usual, Uncle Al brought up the subject of his investments. “Don’t worry,” he said, “I’ve gone much more conservative since last time we talked. The interest I’m getting isn’t much. But my broker says if the market goes down, I’ll be protected from bad losses.”
“That’s great,” I said. I didn’t want to worry my uncle. But as I hung up, I made a note to myself to have a heart-to-heart with him when I see him over the holidays.
His so-called protection from “bad losses” sounds reassuring. But when push comes to shove, it won’t be able to do the job.
25 Years Later...
One of the most dangerous traps in the investment world is about to be sprung on investors. It wasn’t intentionally set. But it’s still going to catch millions of investors by surprise... and not just any ol’ investors...
The ones who are going to be hurt the most are the same ones who are most convinced that they are well-protected.
How do I know this?
I’ve seen it before...
In 1994, the Fed instituted the first of eight rate hikes to control inflation. I watched as all kinds of bond funds dropped 30% or more. Investors kept waiting for the storm to pass and for their bonds to recover. They never did.
The government will put off raising rates as long as possible. How can they not? They know the second they begin, borrowing (to fund the purchase of new homes and start or expand small businesses) will go down. Spending will go down. And the markets, too, will drop.
And whatever progress the economy had been making up to that point will stop.
It’s already November. The government won’t raise rates this year. It’ll probably happen in 2010, though.
And even if the government puts it off a little longer, the fear of rates going higher will fester.
Perception is reality. Beginning next year, that fear will dominate the market until, well, the government actually does the dirty deed.
In other words, next year is the perfect set up for a repeat performance of 1994 and what followed.
A Horrible Investment Trap
As I said, the trap has already been set. The culprit? Today’s low interest rates. IDE’s Steve McDonald explains:
"The Wall Street Journal recently reported that 78% of money market rates are below 0.3%. Problem is, no one can live on that.
"So hundreds of billions of dollars are pouring out of money markets into higher-risk investments like junk bonds and certain bond funds – in search of returns that people can actually live on.
"As interest rates move up the trap is sprung. These higher-yielding bonds drop in value and shaken investors begin dumping their junk bonds and bond funds to try and limit their losses.
“But it’s too late...
"All it does is drive down these bond funds more quickly."
The Hidden Risks of Investment-Grade Bond Funds
Aptly named “junk” bonds are high risk.
But Steve says that investment-grade bond funds also carry risks... risks that the average investor is completely unaware of. The two big problems...
Investment-grade bond funds use leverage. They borrow money against the bonds they hold to buy more bonds. It’s like taking out a second mortgage on your home to buy another house. The extra bonds paid for with borrowed money add to the interest you get.
But when interest rates go up, the interest payment on the loan the fund took to pay you the higher interest rate also goes up. At the same time, the value of the bonds the fund holds drop. It’s a double whammy.
Bond funds generally buy bonds with very long maturities – because the longer the maturity date, the higher the interest paid. But the longer the maturity, the more the value of the bond drops when interest rates go up. So bond funds get killed when rates go higher.
What can we learn from this?
First lesson is that bond funds require just as much scrutiny as stocks and stock funds...
Second lesson is that bonds hate rising rates.
Andrew Gordon
Investor's Daily Edge
FINANCIAL ADVISORY BOARD
Bob Irish - Investment Director
Andy Gordon - Editor
Jon Herring - Editorial Contributor
Ted Peroulakis - Editorial Contributor Christian Hill - Managing Editor
Dr. Russell McDougal - Editorial Contributor
Steve McDonald - Editorial Contributor
Michael Masterson - Consulting Editor
Subscribe to:
Posts (Atom)