Tempis Fugit & Letting Sleeping Investments Lie

Well, it's been a few months since I posted here! I promised a video, and here I haven't even put the darn thing up!

To be honest, I've been really swamped with schooling (welding, which is going along quite nicely), and keeping up with the social groups I've joined in the last few months. So, lets just get on with one of my favorite topics: Money.

Over the last few months, going to school, I haven't had any money to invest, and I have been hesitant to sell any of my investments as they have been both paying dividends, and rising in value. Don't fix what's not broken, right?

So I come to my point of the day:

If you are comfortable with your investments, or you can't think of a really good reason to sell them, then Do Not Sell Them!

I have made that mistake in the past, feeling so embarrassed that I didn't even mention it in this blog. I lost about $300 (a mere rounding error for some, but a good chuck of money for me!) when I sold low because I was SCARED.

Unfortunately, as in life, the brave and the bold walk away with the prize.

So the moral for today is:
1. Research your investments thoroughly
2. Follow a contentious plan
3. Keep to the course!

Do you have any topics you want me to tackle?
Let me know by dropping a comment below!

So you want to be rich.

So you want to be rich, eh?

Well, this may come as a bit of a shock to the trust-fund babies in the back row, but most of the 'rich' in North America (which I personally define as having over $500,000 in net worth), do not come by their money by ways of inheritance or gifts.

Actually, the largest majority of the rich are working class folks such as your tradesman neighbour.

Ye of little faith, check out 'The millionaire next door'.

Although this book is a little old, having been published in 1998, I personally believe that many of the tenets within have held true.

By working a steady job, earning a decent wage (much like most trades will provide), early in ones life, living below ones means, and investing patiently, I believe that anyone can retire at an earlier date, and with more assets then most.

For example, we can take a person such as myself:

Age: 26
Occupation: I.T. - soon to be Welder
Expected Wages:
   I.T. - ~$40,000 /year
   Welder - ~$45,000 / year + Overtime

I will work hard and make $50,000 take-home, with raises of ~$2000 /year as I gain experience and education.
I will invest as much as comfortable (~$25,000 + $1000 /year)
I will seek investments that are >2% dividend yield.
If I realize a return of ~4% after inflation (~3%), I will see a growth of ~7%.

Over the next 14 years, this investment will grow to over ~$733,000!

This means that when I am 40, I will have 3 quarters of a million dollars to my name.
Does this take into account taxes? No.
Does this take into account large raises or significantly higher wages? No.
Does this take into account market volatility (up or down)? No.
But, it does show that if you have the balls, and some luck, you can be rich before you're 40.

Will it be easy? No.

But it is possible, and as a wise man once said:

"The first hundred-thousand was hard. After that, it got easier."


----

Want to see the math in action? I've posted the results of my spreadsheet calculations below, and also ran them out to the usual '40 year' working period:


Bonus Calculation Chart:

Year	Invested	Rate Of Return	Result
1	25000.00	0.07	26750.00
2	52750.00	0.07	56442.50
3	83442.50	0.07	89283.48
4	117283.48	0.07	125493.32
5	154493.32	0.07	165307.85
6	195307.85	0.07	208979.40
7	239979.40	0.07	256777.96
8	288777.96	0.07	308992.42
9	341992.42	0.07	365931.88
10	399931.88	0.07	427927.12
11	462927.12	0.07	495332.01
12	531332.01	0.07	568525.26
13	605525.26	0.07	647912.02
14	685912.02	0.07	733925.86
15	772925.86	0.07	827030.68
16	867030.68	0.07	927722.82
17	968722.82	0.07	1036533.42
18	1078533.42	0.07	1154030.76
19	1197030.76	0.07	1280822.91
20	1324822.91	0.07	1417560.52
21	1462560.52	0.07	1564939.75
22	1610939.75	0.07	1723705.54
23	1770705.54	0.07	1894654.92
24	1942654.92	0.07	2078640.77
25	2127640.77	0.07	2276575.62
26	2326575.62	0.07	2489435.91
27	2540435.91	0.07	2718266.43
28	2770266.43	0.07	2964185.08
29	3017185.08	0.07	3228388.03
30	3282388.03	0.07	3512155.20
31	3567155.20	0.07	3816856.06
32	3872856.06	0.07	4143955.98
33	4200955.98	0.07	4495022.90
34	4553022.90	0.07	4871734.51
35	4930734.51	0.07	5275885.92
36	5335885.92	0.07	5709397.94
37	5770397.94	0.07	6174325.79
38	6236325.79	0.07	6672868.60
39	6735868.60	0.07	7207379.40
40	7271379.40	0.07	7780375.96

Want to use this spreadsheet for your own calculations? Comment below and I'll e-mail it to you!

I'm going to try Welding as a career.

I'd like to pardon the break I've been having - I've been particularly busy, and my health has begun to suffer with the colder weather.

I had mentioned previously that I am taking a part-time welding course at a local school.

Well, over the last six weeks, it has peaked my interest, and now I have signed up to take the foundation levels course, which is 7 months long, full-time.

The province of BC, where I live, has recently received a very large, $8 billion dollar contract to build non-combat support ships (boats) for the federal government's navy. This means that there will be alot of work for trades people (especially iron workers, welders, millwrights, et al).

Between getting all of my ducks in a row to apply for the university level course to learn how to be a level C welder (the most basic, and often used level of techniques), I have been incredibly stressed and anxious. My health has been slowly getting poorer due to this and the chill that recently cut through our area.

I planned on having a long-term income for my investing, such as what I have at my current workplace. But the lure of making over $25/hour, and being eligible for overtime has made me see that I could make over double what I make at my current job if I go into a trade and upgrade my education in that trade as I go along.

My current job makes $35800 a year, gross (before taxes).
A C-level welder can make $42,000 gross at $25/hour (40 hours/week, no overtime, before taxes)

My current job has told me that will provide a $5000 raise every year (based on performance, and not guaranteed).

After 1 year total experience as a C-Level welder, (7 months of school + 5 months of work), you gain a C-Level sticker in your 'trades book'. This means that you have the possibility of asking for a higher wage, as you are an 'accredited' C-Level at that point.

Then, you can take the B-Level testing, which is 5 months. After 1 year total experience as a b-Level (5 months of school and 7 months of work) you can get the accreditation as a 'B'-Level, which means, again more job eligibility. There as also more accreditation down the road that can add more to your 'trade book', and offer additional opportunities.

So basically, by going to school for 7 months, I would have to move back in with the parents, which I had hoped to avoid, as I want to allow them to have more money to save for retirement.

But, I don't see much other choice, as it would be very tough for me to somehow make enough money (be it on the markets or elsewhere) to pay for the rent for me, and my girlfriend, in our current residence.

So, I am looking for decent exit points for most of my investments, so that I have a surplus of cash available for all of the expenses that will come up when I am going to school.

I have yet to tell my work that I am leaving though. They are a small business, and frankly, I think the business owner would become very, very agitated that I am leaving (he is Italian, and very, very irritable).

I just finished the last of the tests and entry requirements for the course last week. I am pegged to go at the start of March or April 2012 at the earliest, depending on if people drop out of the March course, and let me go earlier.

The primary work for the big ship-building contract start late 2012, so if I get in early enough, I can try to apply directly for that work. Otherwise, there will be many shops and companies that lose their welders to that large contract at the docks, and I can apply for those openings as well.

I just hope to hell that this works out. Maybe there won't even be any work for me to do - Maybe this schooling will be worthless, and an entirely futile exercise.

We'll see.

Being Addicted to Investing

Now that I have started investing in companies through the Toronto Stock Exchange (The TSX), I have begun to constantly wish that I had more to invest.

If I only had more, I would be able to take advantage of the growth and passive income opportunities of the market!

But then again, I have to live my life, pay my rent, buy groceries, pay bills, and all the other 'fun' things that people do these days.



How do you know you're investing too much, let alone too much in a single company?

I believe that if you put more then 50% of your income into stocks, you are either crazy, or absolutely driven. Both of these states are very risky, and you can lose control very easily.
I'd like to make it clear that I am currently one of these 'crazy or driven' people.

Some of the things that 'driven' investors may do:

• Take a loan to invest.
• Sell low value objects to secure funds for investment.
• Bypass low-cost opportunities that may enrich their lives in non-financial ways.
• Lower their cost of living to sub-poverty levels to free up funds.
• Take a second job for that 'little bit extra'.

All of these habits are similar to what someone with a substance abuse problem would do to secure funds for their next 'fix'.

Investing is a positive thing. Taking a Tylenol for pain occasionally is also a positive thing. They both improve quality of life.

But if you need to invest, and it drives you like a burning craving in your soul, perhaps it is time to step back and take a look at your plan. Does it really make a difference if you sell the $10 coffee gift card you received for your birthday just to buy one more share of EXE.UN ?

I guarantee you there are a few investors who would say yes.

And I would like to say right now, that there are more important things then having that one more share.

• Go outside.
• Walk to the library, and read a novel.
• Meet for coffee with an old friend.
• Paint a picture.
• Have a family member over for dinner.

Make the most of your life, and enjoy the low-cost activities that are available to you.

After all, that share may eventually help pay for your work-free lifestyle, but it will never bring back the people, places, and experiences that you are able to have today.



EJ

Rent or Buy in Vancouver, BC

I received a comment on my previous post, and I wanted to write a bit on it today.

Anna said...

I am currently renting and want to buy a home of my own. The housing market where I live is very expensive - Vancouver, B.C. Would I be better off investing my money and waiting longer or should I save as much as I can and jumping into the real estate game as soon as possible?? Thanks. Anna.

Should I Rent and Invest, or Buy in Vancouver B.C, Jack?

This is a bit of a loaded question because I don't have the whole picture. There are quite a few questions that would be needed to be answered for me to make any sort of recommendation.

How much does she make in a year?
Is she in a sustainable industry?
Does she have any dependents?
Does she have to remain in Vancouver for her job?
How much does she have saved up for a down-payment?

I'm going to dig deep and make up some numbers here.



Anna Version 1
Age: 25
Annual Income: $42000 (Gross)
Job Industry: Stable
Job requires remaining in city: Yes
Dependents: None
Down-payment Saved: $32000

For this Anna, she could survive by renting a postage stamp apartment, without much room, and have still have a bit left over at the end of the month. If she expects to be able to live in style, she is sorely mistaken.

In my search for rental apartments in Vancouver I was unable to find hardly anything to rent for less then $1500 a month. And that is a small, 1 bedroom apartment in the rougher part of town.

To purchase, the costs are in the range of ~$200000 for a 'dumpy', old apartment on the wrong side of town. She would be able to swing this, and maybe even ~$225000, and still be under the ~38% maximum percentage of income mortgage payment.

What would she have in the ~20-25 years it takes her to pay off the mortgage?

A dumpy, old, smelly apartment on the wrong side of town.

I would rent for the moment, invest any largely spare money into stable, long term, passive income investments, and try to go for a promotion. If she purchases in Vancouver's core, in a few years, I don't believe she'll be happy with the results.

After she has some more saved up, and perhaps a small passive income stream to help her along, I would move out of the city, and secure a house at a fraction of the cost. She could get a part time job, and start enjoying her life instead of living a hand-to-mouth existence in the city.



Anna Version 2
Age:31
Annual Income: $75000 (Gross)
Job Industry:Unstable
Job requires remaining in city: No
Dependents: 1 Child, Single Parent

Down-payment Saved: $12000

This Anna was blessed with a child earlier in her life, at 23. She had finished school, and now works as a sales rep for a pharmaceutical company that sells a newer, untested drug for good profit. She will be the first to get fired if the profits stop flowing, but she makes good money at the moment.

She doesn't have enough money saved up to even think about buying in the city.

She needs a little more space, and would prefer to be nearer schools for her child.

The 'husband' disappeared a long time ago.

I believe that she should consider moving out of the city. I feel this way because I don't believe that the city is the best place to raise a child, especially when you work full-time and don't have any help from a spouse.

She may even be able to work out a tele-commuting agreement with her current employer, and the locational-leeway would allow her to pick a place that has some space for her child,  as well be nearer to schools and other family oriented activities (parks, playgrounds, cinemas, etc).



Anna Version 3
Age: 27
Annual Income: $38000 (Gross)
Job Industry: Stable
Job requires remaining in city: Yes
Dependents: None

Down-payment Saved: $52000

This Anna has a sizable down-payment saved. Perhaps it was inherited, because her job certainly doesn't allow for that amount of savings.

She could get a mortgage for a place up to around ~$250000, but that still isn't much better then a slummy apartment.

She has to stay in the city for her job, but her job is pretty poor income for a city-living person. It's likely that she could move out of the city, and put that down payment to far better use on a house outside of the city.

There are even tracks of land in the 'boonies' that are less then ~$100000. She could own a few acres on the outskirts of civilization in a few years, take a few more to set up a long-term passive income stream, and raise her child in the peace and quiet of the country.

Maybe she would even have the time to teach her child the value of hard work and having a good savings and investing plan.



Jack, you obviously don't like the city! What if I want to live in the city, and buy a scummy apartment for a small fortune?

All the more power to you.

Just don't say I didn't warn you when you're gaining on 45 and you don't have anything to your name but a mortgage for a scummy apartment on the wrong side of the tracks, with a gorgeous view of a brick wall and the cringe-worthy stench of the docks.

Making mistakes at work

Well, today I made some mistakes at work. One small, the other... not so small.

Strike One

I was speaking with my boss, whom also happens to be the head of the company (small company), and he was telling me to contact a product manufacturer and deal with an issue one of our customer was having.

At the end of the conversation, he pulled the file folder out of my hands, and said, "You don't really understand any of this, do you? I better make the call myself."

I couldn't help but stand there, staring at him in surprise - It's not that often that someone out and out tells me that I am particularly ignorant or stupid, but my boss does a pretty good job doing it.

Anyways, I said I would be fine, and held out my hand for the file; he reluctantly handed it to me.

Now, I understand if he was trying to manipulate me into performing the tast by saying I wasn't good enough to perform it, making the man inside me say 'Hey, of course I can do that! Let me show you!"

But I was going to perform the task anyways, and I never said that I didn't want to do it.

Him and I both knew I was going to perform the task.

So I was upset.


Strike Two

The second (and much larger) mistake I made today was shipping a control board to a customer that didn't have a certain piece of hardware on it, when our company always includes this piece of hardware for free.

And of course this customer was in dire need of this board, in fully working condition, with this hardware - and I was the one responsible for packing, testing and sending this board away.

I felt so utterly saturated in fail that I was confident I was going to get fired.

I went home for lunch, and packed up all my company branded clothes (because you know they like to have their shirts back).

Coming back to work, I was almost crying I was so sad.
If I lost this job, I would really have nothing. - No investing, No house, and No future.

So you can understand why I was so utterly devastated.

But I returned, and it was like it all blew over. I don't really know why. I spoke with my boss, twice, and he didn't seem mad at all. Which makes me feel much better.

Or, he has a much more sinister plan in store. Which seems alot more likely.

My job performance is pretty decent - I do a good job most of the time, so I guess this is why he wasn't very angry at me.


Strike Three, and I'm still in

When you believe you are going to get fired, weight the positives of your performance, as well as the negatives.

And if at all possible, don't quit.

Just like selling stock for less then you bought them for,
You are effectively locking in your losses by quitting your job.

And now a-days, it's better to work at a tough job that pays decent for a while then to bounce between lower paying jobs that you really can't get into.

Even though you would like nothing more then to walk out the door and never, ever come back.

:(.

Why I hate my job

I hate my job.

I have to get up early. I have to dress a specific way. I have to deal with big stressful issues. I have to speak with my boss that looks at me like an expense on his balance sheet. I am demeaned.

I hate my job.

But if I step back, and look at my problems with 'this job', the issues are really central to most jobs.

1) Time demands - Jobs require you to sacrifice time for money.
2) Appearance demands - You have to wear uniforms or suits or special 'gear'.
3) Stress demands - You have to deal with problems, and often, solve them with your own ingenuity.
4) Sub-ordinance demands - You have to answer to someone, and do what they say.

For me, the subordinate demands are what get me.
I don't like being under anyone's thumb, be it a boss, or a co-worker. I strongly disagree with being demeaned and put to meaningless tasks.

But almost every job has 'bosses'. Even with my self-employment business, the customers are my bosses, commanding me to perform.

Some days I feel up to the tasks, heck, even revel in the challenge. But most days, I am tired. Worn out. I simply don't want to be told what to do by anyone.

This is why I work so hard - to escape from this vicious cycle.

This is why I can't understand people that spend to 'get away' from their job stresses. To get away from your job stresses, you have to get away from your job, not the 'stress' of the job.

By spending money, you are in-debting yourself to your work even more, forcing yourself to work for the things you never needed in the first place.

Save your money - Invest it smartly - Make your money work for you - Retire early - Work when you want, not when others do.

And most of all - Don't spend money to get away from your job stress. Work towards getting away from your job!




(I actually Googled 'Make money work for you' to find a suitable link, but the first twenty links were sales pitches for mutual funds. *sad-face*)