Valu-Mart Student Discount on Tuesday 10% Off, Waterloo Ontario

As of September 2014, the 10% student discount at Valu-Mart in Waterloo, Ontario has changed to Tuesdays.

Tips to save on groceries:

Welcome to the World of Income Investing

 

Yes, You Can Be a Successful Income Investor by Ben Stein and Phil DeMuth is a great introduction to income investing. This book covers the basics income investments available to investors which include:

• Bonds
• Stocks
• Preferred Stocks
• Real Estate Investment Trusts (REITS)
• and Annuities

Armed with this knowledge you can start to build your own income producing portfolio. One of my goals is to completely replace my earned income with passive (portfolio) income. I've estimated that in order to do that I'll need a portfolio worth approximately $800,000. Although this sounds like a lot, reaching this goal will become easier as the portfolio grows. This is because the income the portfolio produces grows as the portfolio grows, accelerating its growth (given that you reinvest all the income that your portfolio produces).

One important thing to note is that as your income portfolio grows you should be investing in lower risk income options, such as bonds. My recommendation would be to invest aggressively at first, when your portfolio is relatively small, then over time as your portfolio grows invest into safer, lower yield investments. As you're closer to reaching your goal it will be more about capital preservation than growth.

Here's some advice from Ben Stein:

The Most Important Thing - Book Review

"The Most Important Thing" by Howard Marks is a bit of a misnomer, it should be entitled the "Most Important Things" since he covers an important investing topic in each chapter. Overall this is a great book for any value investor. Marks does a great job of explaining the philosophy of value investing and understanding investment risk.

The following excerpt succinctly describes value investing:
 "The relationship between price and values holds the ultimate key to investment success. Buying below value is the most dependable route to profit. Paying above value rarely works out as well.

What causes an asset to sell below its value? Outstanding buying opportunities exist primarily because perception understates reality. Whereas high quality can be readily apparent, it takes keen insight to detect cheapness. For this reason, investors often mistake objective merit for investment opportunity. The superior investor never forgets that the goal is to find good buys, not good assets."

And in this paragraph Marks describes investing defensively to minimize risk:
"Risk control and margin for error (when price is below value) should be present in your portfolio at all times. But you must remember that they're "hidden assets." Most years in the markets are good years, but it's only in the bad years-when the tide goes out-that the value of defense becomes evident. Thus, in the good years, defensive investors have to be content with the knowledge that their gains, although perhaps less than maximal, were achieved with risk protection in place...even though it turned out not to be needed."

Here's a brief clip where Marks describes overconfident investing:

Index Fund Investing

There are a lot of options out there when it comes to investing your money. The RRSP deadline has recently passed and those of us who have contributed to our RRSP's were probably bombarded by a ton of choices. Index funds are your best choice when it comes to keeping investment costs and portfolio turnover low, which is the key to investment success.

 A good example of an index fund portfolio is to own three indices:

1. Candian Bond Index
2. TSX Composite Index
3. Dow Jones Industrial Index

The amount you allocate to each will depend on a few factors such as your risk tolerance and your time horizon for your investment. More weight should be towards bonds and less to equities (stocks) if you are risk adverse or if the money is needed relatively soon. A rule of thumb is to use your age as the percent allocated to bonds, i.e. the younger you are the more you should have invested in riskier (potentially more rewarding) equities.

The key is once you've chosen your allocation, you rebalance your portfolio no more than once a year to maintain the same allocation (thus forcing you to buy low and sell high). As your portfolio grows in size it may be advisable to add a few more indices such as a European Index or Japanese Index, this will add another level of diversification to your portfolio and a few more asset classes to rebalance.

Just watch this short video and hopefully you'll agree that index funds are the way to go:

Brown Bag Savings

Hi frugal friends,

sorry I haven't been posting cash saving tips lately. Since finishing school and entering the "real world", I've been trying to climb the corporate ladder.

One bad habit that I've been getting into is eating out. I find that after working a full day it can be difficult to make dinner, let alone prepare something for lunch the next day. However, eating out is one of the biggest expenses and getting into the habit of eating out less can save you tons over your career. I remember living on $30/week of groceries when studying, that's a lot of Kraft Dinner and eating beans out of the can.

I found this great little video on how to save more on brown bag lunches. The girl in this video is easy on the eyes too!