What's your opinion worth?

 
http://www.i-say.com/

Here's a great way to make a few extra bucks online. i-Say by Ipsos is a marketing company that tries to understand consumer spending habits by surveying consumers online. Join i-Say and get periodic invites to do online surveys. Each survey you complete is worth a different amount of points, usually the more time it takes the more points it's worth. Once you've accumulated enough points you can exchange them for gift cards and prepaid credit cards (works like cash).

I've tried a few of these sites and i-Say is one of the most legitimate. There are frequent surveys and there are a lot of great prizes to spend your points on. One big bonus is that usually before you qualify to do a survey, there is a pre-survey to get an idea of what demographic you're in. If you qualify you go on to do the rest of the survey to receive your points. If you don't qualify most online survey sites won't reward you with anything, wasting a minute or two of your time. At i-Say you usually still get a few points for doing the pre-survey.

Give it a shot. Finally somebody who's listening to what you have to say and they're willing to pay you for it!

Here is a video about how to avoid scams and make money with online surveys:

Top 3 Personal Finance Books - Setting the Foundation

Happy New Year!

So I bet you've made a bunch of New Year's resolutions and this year you're going to get all your financial ducks in a row, right? There's a myriad of personal finance advice out there, so it can be difficult to sift through he garbage. Fortunately by reading just a few personal finance books you can be way ahead of the pack.

You might be asking yourself, what is personal finance anyways? Personal finance is the very practical subject about how to handle money in your life. There's no escaping it, we all deal with money everyday. We work hard for our money, so wouldn't it be nice to learn how to get your money working harder for you. Personal finance is about enriching your life by doing such that, it's about learning how to handle your money in such a way to become financially free.

 Financial freedom can mean many different things to many different people. There's no one size fits all plan, which is why it's important to tailor your finances to reach your own personal goals. Money should never be an end in itself, but a means to an end, which is why it's so important to set financial goals in the first place.

By understanding the purpose of money in our life we can live a much more meaningful one and truly build wealth. Personal finance isn't about amassing a fortune only to be a miser. It's about having security in knowing that you have enough to weather life's inevitable ups and downs, providing for loved ones, and the freedom of enjoying what life has offer.

The topics covered in these books include:
     - The role of debt (particularly how bad credit card debt is)
     - Setting financial goals
     - Paying yourself first
     - Mortgages
     - Insurance
     - Saving for retirement (RRSP for Canadians, 401K for Americans)
     - Investing

By reading these three books you'll be setting a strong personal financial knowledge base. There will be some repeating themes in these books, but they're each taught in a slightly different way. One author may explain a certain theme that will really get through to you, while another may bore you. So my recommendation is to read them all, eventually something is going to sink in. By doing so you'll gain a clearer picture of what to do with your money so that you can eventually become financially free:

1) The Wealth Barber by David Chilton

 For more information visit:
http://reynold-savemoney.blogspot.ca/2010/06/one-of-best-personal-finance-reads.html


2) The Millionaire Teacher by Andrew Hallam

3) The Automatic Millionaire by David Bach

For more information visit:
http://reynold-savemoney.blogspot.ca/2010/09/whats-your-latte-factor-automatic.html

Here's a short video clip about Andrew Hallam's story and some of his solid financial advice:

Birthday Swag!

Birthdays can be a harsh reminder of our inevitable mortality, but there is a lot to be grateful for. For instance you can take advantage of birthday freebies. Here are two that I learned about the other day.

1) Booster Juice - just mention it's your birthday and you can get a free smoothie (you may have to print out a coupon online, but I was able to just show some ID).

2) Denny's - Ok the food isn't great at Denny's, but in this economy who can turn down a free meal. You can get a free grand slam breakfast there on your birthday, just make sure you bring some valid ID.

I heard also that you can get a free coffee at Starbucks, but I haven't tried that. Apparently you need a Starbucks card of some sort.

If you know of anymore birthday freebies, add it to the comments!

Check this out:

What is behavioural finance?

 

What is behavioural finance anyways? Sounds like overly complicated jargon, but it's actually an interesting subject of study that has come about over the last decade or so. Behavioural finance is the study of how people react to market conditions as a whole and how this reaction in turn effects the markets. It's the study of economic mob mentality and when it comes to your investment portfolio it can be an important factor.

Understanding the psychology of how we make financial decisions is critical for our long term financial health. We would like to believe that all our financial decisions are well thought out and calculated, adjusting for risk and maximizing the returns. In reality a lot of our decision making is irrational, driven by two main emotions. Fear and greed. Like a recovering alcoholic, the path to recovery is to acknowledge that you have a problem and take steps to mitigate the problem.

In Carl Richards' "The Behavior Gap", the topic of behavioural finance is discussed with emphasis on how understanding the role of money in one's life can lead to a healthier wealthier one. Here are three important lessons from this book:

1) There's a difference between investment return and investor return. Investment return is the amount your investments will earn over the lifetime of the investment, given that you do not make any adjustments to the investment. Investor return is the actual return you receive, which in most cases is lower. This is caused by jumping in and out of the investment as a result of the fear (when the markets perform poorly) and greed (vice versa). The difference is what Carl calls the behavior gap.

2) The more you make, the happier you'll be (only to a certain point). There is a point when extra income won't make you any happier. There was a recent study by Noble Prize winning economist Daniel Kahneman that showed there is little increase in happiness after earning more than about $75,000 a year. It's hard to quantitatively measure happiness, but the idea is that once your basic needs are met and you have some extra to travel and have a few perks, you may meet a plateau of happiness with earnings. Also, the extra earnings may not be worth the extra stress it comes with.

3) Financial plans are worthless. Since most are based on assumptions and try to extrapolate out to decades into the future, financial plans need to be flexible. Having an idea of where you want to be financial is good, however the idea of having a rigid financial plan is useless. Life has many unexpected bumps that can lead you way off course from your financial plan. Instead its best to have guiding principles that help you make financial decisions that are in line with your long term goals.

Here's a video where Carl explains the "Behavior Gap":

Looking for Passive Income?

The two main way to meet personal financial goals is to save more by cutting expenses. The other way is to increase your income. There are only so many hours in the day to work and quite frankly working every waking hour may not be much of a life at all. One way to increase your income is by increasing it passively through investments. One of the best sources of passive income is through dividend paying stocks.

In Charles Carlson's "Little Book of Big Dividends", he goes through the basics of investing in dividend paying stocks. Given that you already know how to go about purchasing stocks, this book focusing on the process in which to choose solid companies that will likely be safe and will continually pay you through dividends.

So what are some of these important criteria that a stock must meet in order for it to provide big safe dividends. One concern is the dividend payout ratio. When a company makes money through sales it has to subtract costs to obtain its earnings. These earnings (if the company is making money at all) can either be reinvested into the company or paid out to shareholders as dividends. The percentage of the earnings that is paid out as dividends is known as the dividend payout ratio. For instance, if a company earns 1 dollar per share in earnings and pays 50 cents at the end of the year per share, than the payout ratio is 50% (0.5 divided by 50).

Carlson says for the dividend to be safe the payout ratio should be no more than 60%. That way some of the earning is kept within the business to allow for its growth.

Another main consideration is if the company has a history of raising dividends over time. This is critical because growing dividends helps your income keep pace with the increased cost of living (known as inflation). An additional screen would be to find companies that have consistently grown there dividends over the years. Inflation averages out to be about 3 to 4% per year, so dividend growth that exceeds that would be optimal.

A final word of caution is not to chase exceedingly high dividend yields. A dividend yield is calculated by dividing the dividend by the stock price. Say the dividend per share is 10 cents a year and the stock is trading at 1 dollar share. In this case the dividend yield would be 10% (10 cents divided by 1 dollar). That's a pretty sweet yield. Chasing high yields is tempting, but it can also be a sign of trouble. It is difficult for companies to sustain high dividend yields, therefore exceedingly high yields could mean that there is going to be cut in dividends in the future or that the company is in dire financial trouble.Historically, safe dividend yields can range from 1-6%, anything greater should be investigated with caution.

For more information I would recommend borrowing this book from the library. It's a really quick read and gives you the basic foundation for dividend investing. Good luck and keep saving!

Why dividend stocks?