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20 Cents from January 2012

2 Cents — Wed, 01 Feb 2012 10:45:21 +0000

So the first month of 2012 is behind us. Did you set any goals for the year? How are they coming along? There were some fantastic financial articles out there last month. Here’s a tiny sample:

1. Farnam Street posted an excerpt from a new study on Willpower & New Year’s Resolutions. Apparently, the key to keeping our resolutions is to make sure we don’t need to call on our willpower too often by minimizing temptations. That’s probably why automating your finances by paying yourself first works.

2. The World Economic Forum takes place in Davos, Switzerland each January. Umair Haque pointed out Ten Things You’re Not Allowed to Say at Davos. Enlightening.

3. Take a look at this interview with Danielle Park at Cambridge House in Vancouver. “Wise investors concerned about the real direction of the economy will learn something here!”

4. At Personal Dividends, Miranda asked Should You Care About European Financial Problems?

5. If you’re concerned about the economic challenges facing Europe and the U.S., you may want to check out this Market Watch article on Living the American Dream – in Canada.

6. Which is better: Tax Free Savings Account or Paying Down Debt? Jim Yih tackled this question at the Retire Happy Blog – and he drew some neat pictures too!

7. Has you financial advisor ever told you that “You’re young so you can afford to take more risk”? If so, you might want to head the other way according to FiGuide. That line was included in their list of The 6 Worst Pieces of Financial Advice.

8. Overheard in the workplace: “Only stupid people give to charity. I give enough with my taxes.” Wealth Informatics posted an interesting analysis of why we give and how to give smartly.

9. Forbes had a really interesting article on 5 Personality Traits That Lose You Money.

10. The Reformed Broker linked to a CBC interview with Seth Godin: It’s a Forever Recession – So Race to the Top. I’m reading Seth Godin’s Linchpin at the moment and loving it. Maybe I’ll post a review when I’m done.

I hope you enjoyed these articles as much as I did. Feel free to comment on any of them here.

20 Cents from November and December 2011

2 Cents — Sun, 01 Jan 2012 13:38:34 +0000

I missed posting the November 2011 edition of 20 Cents due to my short blogging sabbatical, so I’m combining some highlights from November and December here. There are a few bonus links in there too. Enjoy!

1. Let’s get things started with 3 great articles courtesy of Barry Ritholtz at The Big Picture. Barry calls out Cognitive Dissidents, says the U.S. Is a Corporate Monarchy, and highlights 29 Systemically Dangerous Global Banks. All are well worth your time.

2. Million Dollar Journey posted an excellent article on Why Cash Is King. In a volatile marketplace, cash provides a much-needed, if low-yielding, margin of safety.

3. Global investors watched Eurozone leaders make unequivocal statements followed by very equivocal retractions for most of 2011. John Hussman did his best to sort out this economic Hokey Pokey for the rest of us.

4. Charles Hugh Smith (Of Two Minds) was much more direct in his characterization of the Euro debt crisis, and what’s necessary to resolve it: Why Isn’t Anyone Talking about Writing Off 3 Trillion Euros of Bad Debt?

5. I rarely highlight another roundup in my 20 Cents post, but this one from Abnormal Returns is so chock full of worthy articles, I couldn’t resist: Wednesday Links: Healthy Capitalism.

6. Interloper is one of my favourite newcomers to the financial blogosphere in 2011. Check out the article on why the “Highest Risk Tolerance Wins” Investment Era May Be Coming to a Close. While you’re at it, stick around and browse a while. I’m sure you won’t be disappointed.

7. The Oblivious Investor made some excellent points in Asset Allocation: Maximum Tolerable Loss.

8. A friend inspired My Own Advisor to ask What Does Smarter Living Mean to You?

9. Science Daily may have some answers on cognitive dissonance for Barry Ritholtz in the study on Why People Defend Unjust, Inept, and Corrupt Systems.

10. Here’s another collection of great articles from another site I just recently discovered called Farnam Street. Check out all three:

Happy New Year! I wish all of you peace and prosperity in 2012!

Feel free to comment on any of the articles that piqued your interest!

20 Cents from October 2011

2 Cents — Tue, 01 Nov 2011 09:45:38 +0000

It’s hard to believe 2011 is already winding down. Soon we’ll be busy with holiday preparations, year end reviews and goals for 2012. It’s been a beautiful fall in our new city and I look forward to experiencing Christmas here for the first time. Now ~ 1. Where to find a tree? & 2. Where to put it in the new house? Hmmm . . .

While I wrestle with these profound questions, I’ll leave you with a selection of 2 cents from 10 different places. Enjoy!

1. Jonathan Burton of Market Watch wrote an interesting article on Why Geezers Give the Best Investment Advice. ‘Based on the evidence found in the research, anyone between 43 and 63 “is really in their cognitive sweet spot.”’ Woo hoo! I’m almost in my cognitive sweet spot! Wait . . . does that mean I’m almost a geezer?!

2. Brent Arends of Smart Money brings us 10 Bogus Investing ‘Truths’. “In this market, the conventional wisdom no longer holds.”

3. Mark Hulbert of Market Watch shows how Cash Is King – Even in a Bull Market. He profiles a money manager who has beaten the market in spite of carrying a very high cash position since the 80s. He chose a select group of boring blue chips and a big gold miner for his small equity weighting. Interesting approach.

4. Rob Bennett wrote about Investing and Human Emotion, concluding that we are Stock Drunk. Otherwise, why would we pay for overvalued securities?

5. Clark wrote about How Leveraged ETFs Work at Million Dollar Journey. I used to trade the leveraged inverse ETFs before the single inverse versions became available. The leveraged ETFs are too fast for my pace. Handle with care.

6. The Wealthy Barber is back with another book for Canadians. Jim Yih loved the book and wrote a great review at Retire Happy Blog. I haven’t read the book yet myself, but it looks like it’s just as good as the first one.

7. My Own Advisor posted a great article on DRIPs (Dividend Reinvestment Plans). Check out his list of DRIPs the DRIPers DRIP.

8. Canadian Finance Blog asks and answers this important question: Will Rising Interest Rates Affect My Variable Rate Mortgage?

9. Mashable had a fascinating infographic on How Recruiters Use Social Networks to Screen Candidates. This is a must-read for anyone hunting for a job, looking to move up the ladder, or simply maintain a professional profile. Note to self: The social media revolution means we are all expressing our character (or lack thereof) on a global stage.

10. Here’s What’s Wrong with the Economy (And How to Fix It). This rather long post by Henry Blodget of Business Insider is well worth a few minutes of your time. Whether you agree with his fix or not, the article does a great job of delineating the rather daunting challenges we currently face on the economic front. There are lots of facts and stats, which are always good food for thought.

Thanks to all of these great authors for sharing their 2 Cents with us this October!

Please share your thoughts on any or all of these selections!

20 Cents from September 2011

2 Cents — Mon, 03 Oct 2011 09:45:14 +0000

This month it was truly difficult to pick only 10 articles to include. I almost had to up the ante to 30 cents! But my goal with these monthly collections is to keep them succinct so readers aren’t overwhelmed with information. Suffice it to say that some really great pieces were left on the proverbial cutting room floor. I hope you are enjoying the beautiful fall weather and I hope you enjoy these articles as much as I did!

1. If You Have Only a Little Money, Should You Invest It? Shelley White from the Globe and Mailed posed the question to Danielle Park and Bruce Sellery. Ms. Park recommended paying down debt first and staying on the sidelines in terms of equities. “[I]n her opinion, you would be better off parking your money in GICs rather than diving into stocks or bonds because of the current volatile investing environment . . . You could have sat out of the stock market entirely for the last 12 years and be further ahead if you’d have just used GICs at your local bank.” Mr. Sellery agreed that those who are stretched should put off investing until their financial basics are well in hand: Those who are living paycheque to paycheque “have bigger fish to fry.”

2. If you’re interested in a detailed discussion of current market conditions you’ll want to read through The Reformed Broker’s Notes from the DoubleLine Lunch with Jeffrey Gundlach. You can also take a look at the full presentation at Business Insider. There are some fantastic perspectives here.

3. I highlighted this gem from The Big Picture in last week’s article on 5 Economic Trends Affecting Your Money, but it’s worth another mention here in case you missed it. The article was entitled Take the Loss and that imperative is repeated throughout the piece as Barry Ritholtz lists the numerous moments when our financial and political leaders have flouted a cardinal trading rule.

4. Andrew Hallam wrote A $$$ Tale of Two Boys and a Super Mom. It’s a really nice piece about his sister and how she’s teaching her two sons to handle money wisely. (If you haven’t already, check out Andrew’s book Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School.)

5. My Own Advisor had a post about his Favourite Canadian Equity ETFs. He’s picked some good ones and noted a few things to be concerned about, especially with regard to HXT. If I had to add a couple of my favourites, I would probably choose HIX (the inverse ETF) and XTR – just for the yield of it! One thing about the XTR, however, is that it’s not strictly an equity ETF. It’s basically an ETF of ETFs that includes some bonds, REITs, and preferred shares. Come to think of it, maybe that’s why it didn’t make the list!

6. Rob Carrick from the Globe and Mail had some interesting news about A Milestone in Low-Cost Investing. Apparently, Scotia iTrade is now offering commission-free online trading on 46 ETFs. Sweet!

7. Barbara Friedberg had a fine article on Wealth and Economics: Community vs. Country Club. Well said Barb, and thanks again for sharing your article Moving Stinks! And I Never Want to Do It Again here in September.

8. Squawk Fox kicked off the back to school season with Healthy Snacks: Make Healthier Lunchables for 32% Less. I’ve never bought Lunchables for my boys and it’s nice to see some math to back up that decision. Way to crunch those numbers Kerry!

9. How Low Can Yields Go? Canadian Mortgage Trends gives a detailed answer. There’s a lot to consider in the land of ZIRP! (That’s Zero Interest Rate Policy for the less nerdy among you .)

10. Doctor Stock came up with a great idea. It’s called The Sunday Stock Exchange. It’s “a forum for investors and those interested in investing to share ideas on their perspectives on investing.” Many of us use Sundays as a day to prepare for the coming week. Head over to Invest In the Markets to see what others are thinking about the current investment environment.

Your comments or questions are always appreciated!

20 Cents from August 2011

2 Cents — Thu, 08 Sep 2011 09:45:20 +0000

I’m quite late with my August collection of articles thanks to a busy couple of weeks moving. I’ll write more about our experiences next week. Thanks to those who wished us well and to those who continued to read/check in/comment at Balance Junkie during my extended absence. We’re still settling in, but I’ll try to get to all of the emails, comments and requests I’ve been neglecting as soon as possible. Thanks for your patience.

In the meantime, I didn’t think it would be fair to deprive you of some of the great reading I discovered in between long hours of packing and unpacking boxes. Consider this belated collection my little contribution to an extended summer that is notably lacking in the weather around here.

1. Jeffrey Sachs, Professor of Economics and Director of the Earth Institute at Columbia University wrote about The Economics of Happiness. He suggests we follow the lead of the Himalayan Kingdom of Bhutan in pursuing “gross national happiness” rather than gross national product: “The relentless pursuit of higher income is leading to unprecedented inequality and anxiety, rather than to greater happiness and life satisfaction.”

2. Jim Yih’s Retire Happy Blog asks How Much Money Will $100 000 Pay You In Retirement? As Jim wisely points out, there are many variables that could affect your individual situation including where your $100K is invested. But don’t let the seeming complexity of the question deter you from asking it. It’s one of the most important aspects of your retirement plan. You don’t have to get the amount of the return exactly right to make this exercise useful. Jim has lots of good advice on how to arrive at a reasonable estimate. Personally, I use a variety of the methods Jim talks about and I occasionally take a look at what various annuities are paying on $100 000 of invested money, bearing in mind that the returns when I retire may look very different.

3. Staying with the topic of retirement planning, Million Dollar Journey looked at the Top 5 Pension Myths. This article clears up some common misconceptions about pensions. I learned a lot about issues I hadn’t really considered before.

4. Boomer and Echo asked another great pension question: Should You Make RRSP Contributions If You Have a Pension?

5. Given yesterday’s Bank of Canada decision to hold rates steady and signal that they will remain low for some time, the 2011 – 2012 Canadian Interest Rate Predictions from Beating the Index may seem pretty logical. At the time the article was posted in early August, however, there were still some pundits warning of an inevitable rise in interest rates. Instead, Mich pointed out the weakening U.S. economy and employment picture as key reasons rates on both sides of the border are liable to remain low for at least the next couple of years. (We put our money where our mouth is on this as well by choosing a variable rate for our new mortgage.)

6. Financial Highway had an interesting article on how Absolute Return Bond Funds Shake Up Fixed Income Investing.

7. Rob Bennett, writing at Out of Your Rut, explains why Buy-and-Hold Is Either the Best Strategy of All Time or the Worst. Intriguing as always!

8. Rob Carrick, having written about personal finance for more than a decade, was still able to come up with a slide show depicting 20 Things I Don’t Understand about Personal Finance. It’s worth a look.

9. Preet Banerjee, another Globe and Mail columnist, offered some good advice for anyone who’s just starting out with personal finance or struggling to stick with it: Forget the Spreadsheet – Just Start Saving.

10. My Own Advisor explained why he drives an 11-year-old car. It may seem rather simple, but maintaining your possessions is an excellent savings strategy. Both of our current vehicles are about 5 years old now, so we’re starting to get the itch to replace one. Thanks to Mark for reminding me of all of the benefits of owning a vehicle that well-maintained – and paid off! (Bonus: You can now follow Mark on Twitter @myownadvisor.)

Well, it felt good to exercise these slightly flabby typing fingers. I hope you enjoyed these articles and I look forward to writing about some of the things I learned during our recent adventures in relocation. Your comments are always welcome.

20 Cents from July 2011

2 Cents — Mon, 01 Aug 2011 09:45:46 +0000

Here come the Dog Days! It’s time to savour every last moment of summer. Unfortunately, our Dog Days will begin with another surgery for my son. Things aren’t quite going according to plan, so he needs a day surgery to (hopefully) fix that. At the same time, our move out of town is less than two weeks away. As a result, posts in August will be exceptionally sporadic as will email and comment responses. Thanks for your patience!

I’ve got a really nice mix of articles for you here from July. Enjoy!

1. Tony Schwartz presents Ten Principles to Live by in Fiercely Complex Times. There’s some great food for thought here.

2. Bret from Hope to Prosper reminds us that He Who Dies With the Most Toys Is Dead. There are some fine tips here on saving for the future without living like a pauper in the present.

3. Umair Haque wonders aloud Is “Finance” a Cult? He suggests that today’s financial industry “has little to nothing to do with (real) economics. Where economics is about creating authentic value, igniting positive sum games, discovering pathways to prosperity, finance is (or has become) about reshuffling yesterday’s value, extracting the lion’s share in zero sum games.” It’s a fascinating read.

4. According to an article on Business Insider, Shanghai Is Looking More And More Like Japan’s Great Bear Market. There’s an interesting chart there that compares the performance of China’s Shanghai index (from 2007 to present) to Japan’s Nikkei 225 (from 1989 to present). The inference is that China’s market may be embarking on an extended bear market, much like the one Japan has endured for over 20 years – and counting.

5. Frugal Trader over at Million Dollar Journey explains Why We Switched Our Cell Phone from Rogers to PC Mobile. We’ll be in the market for a couple of new cell phone plans soon. Truly, the options are dizzying. But this article offered some good ideas on what to watch.

6. Few Investors Enjoy a Lifetime Stock Return As High as the Average Stock Return. Rob Bennett reminds investors that buying and holding is not always a very effective investment strategy. We need to consider valuations when we buy or sell equities.

7. You Are Not an Equation. Well, that’s a relief. The Big Think made this seemingly obvious observation, taking it a step further to point out how our current reliance on mathematical models to predict just about everything – including human behaviour – can lead us astray: “In finance, people built models that use mathematics to describe markets and to describe people and the participants in the markets. And it becomes tempting for them to believe that the mathematics is a theory and forget that it’s actually an analogy [i.e. model] that only has limited extension.”

8. The ongoing debt crisis in Europe has raised more doubts about the utility of credit default swaps (CDS) as a hedging tool. The most recent deal involving Greece involved a partial default such that the CDS were not triggered. What good are CDS if they don’t pay off when the bonds they’re supposed to insure don’t pay out? The Wall Street Journal covered this in an article on what to do when A Hedging Tool Loses Its Edge. This is just another example of how our financial system has become a Ponzi scheme.

9. On his Retire Happy Blog Jim Yih asked What Rate of Return Should You Assume for Your Retirement Plan? Planning for retirement is not as easy as entering a certain rate of return in a retirement calculator and sitting back to watch that return materialize. Jim provides a good look at why that’s the case and some reasonable ideas on how to plan for a range of returns.

10. This last article is actually from May, but I just discovered it via Advisor Analyst. It offers 12 Common Causes and Proven Cures for Unhappiness – something to ponder during a quiet moment.

I hope you enjoyed this month’s reading. Feel free to comment on any of the articles below!

20 Cents from June 2011

2 Cents — Fri, 01 Jul 2011 09:35:12 +0000

It’s been a busy couple of weeks as my son had a significant surgery on his leg last week. Caring for him afterwards has been a round-the-clock job. I hope to be able to jump back into writing a little more in the coming weeks, although we have our big move looming as well. I’ll do my best to keep up with my one post a week minimum and add in a few bonus articles when I can. In the meantime, I did manage to find some good thought-provoking articles from around the web this June. Enjoy!

1. In an article published in the Washington Post, Barry Ritholtz of The Big Picture blog shared 7 Life Lessons from the Very Wealthy. This one is well worth a few minutes of your time.

2. What If 8% Is Really 0%? This is the question posed in an article posted at Advisor Analyst. It reviews the thoughts of Mebane Faber on the realities faced (or not being faced) by large pension funds. They are underfunded even if they do achieve the 8% annual returns they need, which is highly unlikely. This is another great read.

3. Josh Brown of The Reformed Broker writes about Bloggers as the Conscience of Wall Street. As much as many of us (myself included) decry crony capitalism and unfair financial practices, there are many financial blogger/practitioners out there (Josh included) who do their best to give the rest of us a peek behind the curtain. I, for one, am very grateful that they take the time to do so.

4. Every so often I discover a blog that I wish I had found earlier. Frances Coppola writes about finance and many other topics out of the UK from the perspective of an ex-banker. Check out her post on The Hole in the Fence, and while you’re at it, explore some of the other great articles at Coppola Comment. This blog proves that you can miss out on some great writing if you get hung up on rankings that depend on mindless keywords and meritless link-counting rather than thoughtful commentary.

5. Thoughtful commentary doesn’t always have to be very wordy. Sometimes a picture really is worth a thousand words. Thanks to Joe Taxpayer for sharing a cartoon about our Sisyphean Economy. For those who are a little rusty on Greek Mythology, Sisyphus was the king who was punished by being compelled to roll a huge boulder up a hill only to watch it fall to the bottom again. He was condemned to repeat this pointless task for eternity. Hmmmm.

6. While we’re on the topic of insurmountable debt, you might want to take a look at Jim Yih’s post on How Much Debt Is Too Much? over at his Retire Happy Blog.

7. The Financial Post had an interesting article on Canada Missing Out on Commodity Boom. Apparently, our GDP doesn’t get the same boost when the bulk of commodity demand is coming out of emerging markets rather than the U.S.. Interesting.

8. Kevin from Invest It Wisely offered up 3 Reasons Why I Squirrel Away My Money. These are some great reasons to save and the cute picture of the squirrel is a bonus!

9. Sustainable Personal Finance shared some savings specifics on How Menu Planning Saves Time and Money. I can vouch for that!

10. Cullen Roche at Pragmatic Capitalism shared a video of Randall Wray talking about Why the Crisis Is Not Over. I would concur with his views about “how the banking crisis is far from over, why the bailouts solved nothing, why the US economy remains at great risk of another crisis and why no real economic change (and recovery) will likely occur until after another crisis occurs.”

I hope everyone is enjoying a wonderful Canada Day. For kicks, you might want to check out my post from last year on A Dozen Good Reasons to Move to Canada. Have a great weekend!

As always, your comments are welcome.

20 Cents from May 2011

2 Cents — Wed, 01 Jun 2011 09:45:07 +0000

Another month has flown by and it’s time once again to point out a few choice pieces writing from the web for May of 2011. Finally, some nicer weather has arrived here and I hope some of it has made its way to where you are too! This month’s selection of articles is as eclectic as always. Enjoy!

1. Most of us like to look on the bright side. Although this Optimism Bias may not always be rational, it can be quite adaptive. Take a few minutes to read this fascinating article by Tali Sharot courtesy of Time.

2. Staying on the brighter side, how about taking a look at 50 Creative Questions to Create the Life You Really Want. Tiny Buddha shares some excellent food for thought in this article by Lynn Zavaro. I love the opening quote: “If you focus on results, you will never change. If you focus on change, you will get results.” ~Jack Dixon

3. Do ‘C’ Students Deserve ‘A’ Lifestyles? Financial Samurai posed this provocative question in May. Read the article and weigh in. What do you think?

4. Robb Engen of Boomer and Echo had some great ideas on how to Balance Your Savings and Investments While Raising a Family. This was one of Robb’s first posts at Canadian Finance and it offers some great tips for 30-somethings who are struggling to figure out how to make ends meet and still save for education and retirement.

5. Squirrelers wrote about The Recency Bias and Investing. Can you think of a time when the recent movements of the markets have coloured your investment choices? (I’m trying to think of a time when they didn’t. Doh!)

6. Continuing in a similar vein, Michael James on Money offered a review of Robert Koppel’s book on Investing and the Irrational Mind. I guess there are many ways our brains can lead us to poor investment choices. Understanding how it happens can be a good first step toward controlling these tendencies.

7. If you don’t trust your brain to make the best investment choices, you might want to incorporate a little technical analysis into your repertoire. Clark wrote a couple of articles at Million Dollar Journey that looked at Stock Chart Continuation Patterns – Triangles and Channels as well as Stock Chart Reversal Patterns – Head and Shoulders. The latter article also took a look at double tops and double bottoms.

8. Thicken My Wallet had an interesting article on The Problem with Too Much Cash. These days, many investors feel like “the proverbial deer in the headlights.” Equity markets are still very volatile, yet interest rates on cash deposits aren’t even keeping up with inflation. In a world awash with debt and negative real rates, safe investment options are murky at best.

9. Intelligent Speculator also wondered about the best investments in the current environment, asking What to Do When Everything Is Overpriced? Many think Microsoft overpaid for Skype, but others have been complaining for years that the company needed to put some of its huge cash hoard to work. While this is a bit of a dilemma, I guess too much cash is a nice problem to have.

10. Bye QE2, Hello QE3? It seems the idea of QE3 came as a bit of a surprise to Larry MacDonald of Canadian Business. Many feel another round of quantitative easing has been preordained by the one-two punch of weakening economic fundamentals and the debt crisis that just won’t go away. QE3 would not surprise me at all. In fact, a few pundits have put forth the idea of QEn – where n is the number of times central banks use QE to pull the economy back from the precipice without the markets calling their bluff. Perhaps one of the biggest problems facing investors today is solving for n. Anyone care to take a shot at that one? n = ?

Thanks to all of these great authors for sharing your 2 cents this May!

Feel free to comment on any of these fine articles below!

20 Cents from April 2011

2 Cents — Wed, 04 May 2011 09:45:44 +0000

I’ve been pretty distracted lately with the whole house-hunting/moving to a new city thing, so I haven’t been able to follow the financial world as closely as usual. In spite of being out of town and preoccupied a fair bit in April, I was able to dig up some real gems for this month’s round-up. I hope you enjoy them!

1. Regular readers will recognize David Stockman’s name as I’ve referred to his writing a few times. He has some very strong views on the U.S. fiscal situation and the role of the Federal Reserve in the economy and the markets. He expressed those views again last month in a New York Times Op-Ed on The Bipartisan March to Fiscal Madness. Whether you agree with all of Mr. Stockman’s analysis or not, it’s nice to read some straightforward give-your-head-a-shake prose that’s not oozing with partisan salesmanship.

2. I don’t believe in luck. I think we make our own luck, but I’m not sure I could ever capture what exactly I mean by that the way Erik Calonius did in a guest post on the Jonathan Fields blog. I’d be really interested to hear your thoughts on What Lucky People Do Differently.

3. Squawkfox kicked off the month with an article highlighting some of the well-deserved media attention she’s gathered recently. In April’s Fool, she somehow managed to produce a witty summary of a number of articles that are well worth your time. She was even kind enough to mention yours truly. Thanks Kerry!

4. Linsey from Financial Highway offered a few things to watch out for in order to avoid become an April fool (or a fool in any other month) in 4 Ways a Sale May Not Be a Bargain.

5. Tom from Canadian Finance Blog wrote about Insurance You Can Do Without – Long Term Care Insurance.

6. Rob Bennett wrote about the contrast between magical thinking and the Reality Principle at Out of Your Rut: The Real Reason for Investment Bubbles: Bubble Logic.

7. Mark from My Own Advisor offered a Spring Update on his 2011 Personal Finance and Investing Goals. Well done Mark!

8. What if you needed to cash in some of your investments for some reason? Which ones should you choose? Boomer (of Boomer and Echo) offers some good suggestions in When You Need Cash from Your Investments.

9. Barry Ritholtz of The Big Picture highlighted a Business Week article in which economist Hernando de Soto discussed The Destruction of Economic Facts. Here’s a taste:

“The very systems that could have provided markets and governments with the means to understand the global financial crisis—and to prevent another one—are being eroded. Governments have allowed shadow markets to develop and reach a size beyond comprehension. Mortgages have been granted and recorded with such inattention that homeowners and banks often don’t know and can’t prove who owns their homes. In a few short decades the West undercut 150 years of legal reforms that made the global economy possible.“

10. On a similar theme, Danielle Park of Juggling Dynamite commented on a recent article by Tony Crescenzi: The End of QEII: It’s Time to Make Donuts.

If you follow me on Twitter (@BalanceJunkie), you know that we finally bought a home on Monday night. We’ll be moving in August, and I’ll write more about it next week. I hope you enjoyed this month’s edition of 20 Cents. Thanks to the great authors who put out consistently great content and thanks to you for reading!

Feel free to comment on your favourite articles!

20 Cents from March 2011

2 Cents — Fri, 01 Apr 2011 09:45:49 +0000

So March has come to an end, and with it, the first quarter of 2011. This month brought plenty of earth-moving events for the economy, the markets, and for me personally. We’ve had several long-standing governments fall, as well as upheaval in many others.

We watched our Japanese friends struggle with a mammoth earthquake, tsunami, and ongoing nuclear disaster. Political discourse seems to hit new lows around the globe each day. And yet life goes on and those of us who are lucky enough not to have been directly affected by these events feel just a little luckier, and hopefully, very thankful to be out of the fray.

As always, the ten servings of two cents I’ve compiled this month are quite varied and completely inadequate in capturing of all of the great articles out there. Nonetheless, I detect a sort of “think outside the box” theme here that seems appropriate given that we have pretty much thrown out “the box” at my house this past month. Enjoy!

1. Big Cajun Man, fresh off a risk management course, asks the question mothers have been asking for eons: “If everyone else jumped off a bridge . . . ” Well, you know the rest. Following the Crowd is Safe? Safety Is Relative cautions us to do what’s right for us no matter what the crowd is doing – good advice for investing and for life.

2. Rob Bennett wrote about Retirement Planning as if Valuations Mattered (Hint: They do.) at Jim Yih’s Retire Happy Blog. It’s hard to believe some of these concepts aren’t more mainstream. I hope that changes soon.

3. Miss T. took a look at the Anatomy of the Financially Savvy Brain over at Prairie Eco Thrifter and discovered that we can train our brains to break bad habits and function a little better.

4. “[P]eople believe what they want to believe and, in believing it, create the very markets that they expect to occur. Only when the evidence is overwhelming will they change their opinion and in doing so their confidence may be so shaken it never recovers.” That’s what the Psy-Fi Blog had to say about Market Confidence, Tricks and Placebos. Being a contrarian investor requires thinking outside the box, but knowing when to bet money against the trend is much easier said than done. Optimism and pessimism can both last a lot longer than we think.

5. Rob Carrick had a great article in The Globe and Mail about how The Most Rational Choice Isn’t Always the Easiest to Live With. Most of us know that we’re supposed to buy stocks when markets tank, but sometimes we sell instead. The reverse is true as well. If you’ve tried to make the “rational” choice but repeatedly lost money, maybe it’s time to reduce your overall market exposure. Sometimes it’s better to make the choice that’s easiest to live with. You “may end up being more comfortable with [your] investments, and thus more likely to stay on track.”

6. Apparently, Boomer and Echo agree with Mr. Carrick. Boomer wrote about how it’s important to Know Yourself Before You Invest. I couldn’t agree more.

7. Tom at the Canadian Finance Blog announced that Stupid Cents Is Back! He’s helping to revive this dormant personal finance blog with the previous owner and some new writers. Check it out.

8. Bruce Sellery has a new personal finance book out called Moolala: Why Smart People Do Dumb Things with Their Money – and What You Can Do About It. Million Dollar Journey posted a Book Review and Giveaway. This looks like a book I definitely wouldn’t mind reading!

9. There are some folks who either can’t or won’t think outside the box. They are simply more comfortable repeating the thoughts of the crowd. If you frequent a lot of personal finance blogs, you’ll notice a lot of repetitive themes and topics. Many people talk about pursuing their “passion” and almost everything under the sun has been described as “awesome” at some point. Let’s face it. There are very few things in this world that are truly awesome. Scarcity is at least part of the reason they’re awesome. Rick wrote about his distaste for these two dead horses in My Awesome Passion Blah Blah Blah. Well said Rick.

10. If you’re getting the feeling inflation is on the rise but have been relying on reported core inflation readings to locate it, you’re out of luck. Core CPI readings have been relatively tame in North America. And yet you still have the sinking feeling that you’re getting less for the same price. Inflation has got to be here somewhere! Well, Len Penzo has found it: Looking for Inflation? It’s Hiding in Smaller Package Sizes. Hmmm. The box is shrinking. Does that mean it’ll be easier to think outside it? Let’s hope so. A few more passionate free thinkers would be awesome.

That’s all for this month. Thanks to all the great authors who shared their thoughts in March!

Did one or more of these articles make you think? Your comments are always welcome.

20 Cents from February 2011

2 Cents — Wed, 02 Mar 2011 10:45:43 +0000

I don’t know whether it’s some kind of recency bias or just a coincidence, but I found many of the articles in today’s roundup on the last day of February. Maybe everyone was saving their best for last. Either way, I hope you find the articles in today’s collection as informative and thought-provoking as I did!

1. Let’s start today with a wonderful article from my hometown newspaper. Anne Jarvis of The Windsor Star has some thoughtful insights on the cultural shifts that have led to many of us Living Beyond Our Means.

2. Miranda Marquit of All Business asked Has Personal Debt Really Been Going Down? This is based on U.S. credit card stats, but considering that the Canadian savings rate is now below that of our neighbours to the south, I’m sure we can draw similar conclusions north of the 42nd parallel.

3. How Are You Faring in the Jobless Recovery? Kevin from Out of Your Rut senses a sea change in the economy as the middle class is increasingly getting squeezed. He’s got 6 steps you can take to make sure your personal economy doesn’t suffer because of the macroeconomy.

4. Over at Million Dollar Journey, Frugal Trader questions Yield Chasing as an Investment Strategy. Should you buy the securities with those juicy 15%+ yields?

5. I’m a “never say never” kind of girl, but I have to agree with everything on Andrew Hallam’s List of What Investors Should Never Do.

6. Canadian Dream: Free at 45 has some advice that’s even more basic: Clueless on Investing? Then Don’t Use Stocks. I agree. You need to read the instruction manual before you handle a new tool. Did you hear that Mr. Cents?

7. Mark from My Own Advisor is clearly not clueless on investing and he’s pretty happy that he Just Bought Another Dull and Boring Stock. This one’s on my shopping list too.

8. If you’re looking for a few names to add to your own shopping list, you might want to check out 9 Sectors, 9 Great Dividend Stock Picks by The Dividend Guy.

9. For a bigger picture view of retirement savings, check out Boomer’s post on Wealth Based vs. Income Based Portfolios at Boomer and Echo.

10. As the rising price of oil continues to roil global markets, Beating the Index offers a fine explanation on Why the Middle East Is a Breeding Ground for Black Swan Events.

There were so many more great articles I could have included today. I highlight quite a few each day on Twitter. You can see my Twitter feed in the right sidebar or follow me on Twitter @BalanceJunkie.

20 Cents from January 2011

2 Cents — Wed, 02 Feb 2011 10:45:51 +0000

So the first month of 2011 is already over. How are those 2011 goals coming along? Are you still on track? I’ve had a couple of setbacks myself, but I’m not taking it lying down. I’m taking some corrective actions and I hope to be able to report that they worked!

Without further delay, here are a few of my favourite articles from January of 2011. This is a mere sampling of the great information out there. I highlight lots of other articles each day on Twitter. You can follow me @BalanceJunkie.

1. At Today’s Economy Blog, Kevin Press wrote about Muskoka Chairs and Unanswerable Questions. The article captured the retirement anxiety many of us feel at this time of year as financial services firms “pose virtually unanswerable questions about how much you need to save for retirement that leave people feeling like they haven’t done enough.” He suggests a new marketing strategy is needed.

2. Ian Brennan offered two interesting posts. The first drew some provocative conclusions about Timing the Market from the recently released FCIC report on the financial crisis. The second shared an Economic Forecast from Craig Alexander of TD Bank.

3. Is Budgeting about Freedom or Confinement? Ponder that for a moment. Thanks to Craig at Money Help for Christians for asking the question.

4. Mark from My Own Advisor shared his method of achieving Organized Cash Flow with Dividends. Different companies pay out their dividends at different times. He has a spreadsheet that tracks his dividend cash flow. Nice.

5. Well our friend Big Cajun Man over at the Canadian Personal Finance Blog turned 50 this month, and he shared a great article On Turning 50 in which he highlighted some of the financial changes and milestones we’ve experienced over the past 50 years. Happy birthday again BCM!

6. Boomer and Echo kicked off a great series on How to Invest Your Money. Part One tackled Psychology and Part Two was about Getting Started, which is sometimes the hardest part. Whether you’re a novice investor or you’ve been saving for years, there are some great rules of thumb here.

7. Speaking of useful tips for beginners and veterans alike, Miranda offered 5 Tips to Build a Strong Financial Foundation at Financial Highway. There are a couple of things in there that might not have occurred to you.

8. Don’t Fail to Plan. Sage advice from Jessica at MomVesting. When it comes to retirement planning, “the sooner you start the better — but better late than never.”

9. If you want to have a little extra money to invest, you might want to read 10 Ways to $ave Energy Comfortably at Prairie EcoThrifter. There are some great ideas here. You can help the environment and save some money at the same time!

10. Early in the New Year Larry MacDonald was wondering Where to Invest Now? He found a stock broker who offered a surprising solution. (Hint: He didn’t recommend loading up on stocks.)

Any comments on these fine articles would be appreciated.

20 Cents from December 2010

2 Cents — Fri, 31 Dec 2010 10:45:21 +0000

I hope you have all been enjoying a relaxing holiday season. I’ve been keeping a much lighter writing schedule over the past couple of weeks, but I’ll be back at it by Monday. In the meantime, I did take a break from festivities long enough to put together this great collection of articles from the final month of 2010. Enjoy!

1. The Oblivious Investor had a great post on Annuity Payouts: Why Are They Higher Than Bond Rates? Annuities are one of the elements of financial planning that I don’t know a great deal about, but I intend to learn a lot more this year, and this article was a good start.

2. Jim Yih asked Is Understanding Economics Important to Personal Finance? Of course, I think a basic understanding of the economic climate is a good idea, but like Jim, I think it’s even more important to understand what you can control and work on those factors. Economics can provide the context, but only you can control how much you earn, save and spend.

3. Minyanville linked to Lloyd’s Wall of Worry. That’s Lloyd Khaner’s graphic on 18 things investors are currently worried about. Will the market get cheaper because of these worries, or will it continue to climb the wall of worry?

4. Boomer and Echo offered 20 Simple Steps to Improve Your Finances Next Year. These steps are so important for all of us and they’re particularly relevant as we begin a new calendar year.

5. The Intelligent Speculator had some great suggestions for What to Include in Your Passive Income Portfolio. Like it or not, each of us will essentially have to live on passive income someday. Why not start building your portfolio today?

6. I think we can all empathize a little with Andrew Hallam when he writes about Where I Was Dumb, But Perhaps a Little Less So Now. We all tend to reflect on past mistakes and what we’ve learned from them at this time of year. In this post, Andrew laments a lack of Canadian content in his portfolio and decides he’d rather own individual stock components rather than pay the fees for a dividend index.

7. Investor Junkie wrote about a study that linked Financial Literacy and Mortgage Delinquency. Apparently, people who do not have a good grasp of financial matters are more likely to default on their mortgages as well as spending too much and saving too little. One of the suggestions is to incorporate some type of financial literacy measure along with credit scores into the mortgage approval process.

8. Kevin at Invest It Wisely had 3 Unconventional Investing Moves to Make in 2011. Thinking outside the box doesn’t always guarantee investment success, but it’s always helpful to have a few more options to think about!

9. How Banks Are Fleecing You with a Smile is an article that reminds us to watch out for investment fees. If you invest with a financial institution, Mich at Beating the Index recommends that you pay close attention to the MERs (Management Expense Ratios). If you can pay less investing with ETFs (Exchange Traded Funds), why not give them a try?

10. My Own Advisor posted a fantastic Interview with Derek Foster, who retired at the age of 34. Mr. Foster, known as “Canada’s youngest retiree”, has written several books on how he retired on dividend-paying investments. He took a lot of heat, however, for selling out of his investments early in 2009. He has a new book out (The Idiot Millionaire), which explains his updated approach to investing.

I hope you find these articles as informative as I did and I wish you all the best for a happy, healthy and prosperous New Year. Enjoy what remains of the holidays and of 2010!

Your comments, as always, are most welcome.

20 Cents from November 2010: BJ First Anniversary Edition

2 Cents — Wed, 01 Dec 2010 10:45:34 +0000

This is a special edition of our monthly 20 Cents roundup. Balance Junkie was born one year ago today. It’s been a pretty eventful year in the financial world, and I’m grateful to everyone who has shared their thoughts here over the past 12 months.

I hope to continue to grow our community in the coming year as well, but I’ve been told I need to be a little more forceful with self-promotion. It’s not something I’m terribly comfortable with, so if you know anyone who is interested in personal finance, economics, and life balance, please don’t be shy about mentioning BJ or forwarding articles you find particularly interesting. If you want to suggest anything you’d like to see more of on BJ, go ahead and send me an email.

I’d like send out a special note of thanks to Balance Junkie readers and to my fellow bloggers. So many of you have been so kind and encouraging in your comments, links, Tweets, Stumbles and Tips that I can’t possibly mention everyone here. Rest assured, however, that your thoughtfulness is greatly appreciated.

I’m always honoured to receive compliments on the quality of my writing, and it seems to happen more often than I deserve. I’ve had several requests to write for other blogs this year. You can find some BJ content syndicated on Seeking Alpha. More recently I’ve become a contributing writer at both Money Crashers and Financial Highway. So if you want to subject yourself to more of my ramblings, you can find me (and some other really good writers) at these two online publications.

In honour of Balance Junkie’s first anniversary, I thought I would highlight two posts from each site instead of just one. So I guess you could say we’re offering 40 cents from November 2010 today. I know it’s not fancy, but I hope you enjoy these articles as much as I did, and I hope you continue to read and enjoy Balance Junkie!

1. The Dividend Guy suggested that buying a good dividend stock might be the Best Black Friday Deal. He’s got a couple of specific suggestions for you too. He also wrote about SRI – Socially Responsible Investing and asked whether you can make good money investing this way.

2. Have you started your RECP (Retirement Emotional Circle Plan)? Larry MacDonald suggests that we should Attend Charm School Before Retirement in his review of Lyndsay Green’s book You Could Live a Long Time: Are You Ready? He also continued his informative series on What the Scholars Are Saying.

3. Tom wrote about a whole bunch of different Ways to Save Money at Canadian Finance. With today’s uncertain job market and less-than-stable pension system, Jim Yih writes that Despite the Challenges of Retirement Planning a happy retirement is achievable. He’s got some great ideas on what you need to know to get there.

4. Frugal Trader wrote about Succession Planning for the Family CFO at Million Dollar Journey. He also made some of us a little jealous in How We Paid Off Our Mortgage in 3 Years. Way to go FT!

5. Thoughts I Always Keep With Me – for Happiness was posted by Daniel at Personal Dividends. Find out the two key thoughts he focuses on each day. Meanwhile, Miranda wrote Productivity: Could Working Less Really Help You Get More Done? This article makes a lot of great points on how going full throttle 24-7 doesn’t always produce the best results. I’ve learned that the hard way – more than once.

6. Bret at Hope to Prosper asks us to Imagine a Life without Debt. Doesn’t that sound amazing? I can’t wait. Given his contempt for debt, I guess it’s not surprising that Bret’s not exactly a member of the Federal Reserve fan club. He’s got some pretty good reasons for it too, and he spells them out in The Federal Reserve Plunders America.

7. Kevin from Invest It Wisely wrote about Challenging Your Thoughts and Beliefs and suggested 3 Unconventional Investment Moves to Make in 2011. I love the idea of challenging our core assumptions, and stretching outside the box.

8. Squirrelers had a couple of good articles in November that made me think. First, there were 10 Tips to Improve Productivity. I’m working on my “not-to-do” list. Then, there was a touching post on Lessons from a 7-Year-Old and a 97-Year-Old. Just read it. You’ll be glad you did.

9. Young and Thrifty is another Canadian financial blog that recently celebrated its first anniversary. A couple of my favourite articles from November were a book review of The Intelligent Investor and a thoughtful piece that wondered If I Were a Boy . . .

10. Out of Your Rut featured an interesting article by Rob Bennett that asked Am I Crazy for Being Out of the Stock Market for 14 Years? More recently, Kevin asked Where Are You Investing Your Money Right Now? He suggests that we shouldn’t forget to include investing in ourselves (through our businesses or careers) when we’re looking at our asset allocation – great advice.

As usual, there were more great posts this month than room to write about them. I hope you enjoyed this small sample. Thanks again for reading over the past year. I’ve learned a lot from all of you, and I’m looking forward to learning more over the next year too!

Your comments are always welcome. You can add your thoughts on one of these fine articles, or you can share a favourite BJ post or comment from the past year. The floor is yours.

20 Cents from October 2010

2 Cents — Mon, 01 Nov 2010 09:45:04 +0000

I hope everyone had fun on Halloween. (I’ll probably be living with a sugar hangover for the next couple of days.) There were too many great articles this month for me to include even a fraction of them here, so I tried to choose a selection that included some new sites that you might not be familiar with yet, as well as some continuing favourites.

As always, if you want to know more about what I’m reading, you can follow me on Twitter @BalanceJunkie. Enjoy this month’s collection!

1. Jackie from Money Crush had some sage Advice from Yoda as part of her 31 Days to a Better Bank Balance project. I wasn’t into Star Wars at all until my 3 boys came along, but now I’m very fluent in all things related to the saga. Yoda is without a doubt my favourite character!

2. Big Cajun Man broached the topic of Financial Discretion on the Canadian Personal Finance Blog. In the age of social media, how much should you reveal about your finances?

3. Jim Yih offered 10 Things You Need to Know about RRIFs at Wealth Web Gurus. Many Canadians (including me) don’t know a whole lot about how RRIFs work. This is a great resource for all of us!

4. Mike from a new site about retirement planning called Do Not Wait had a guest post at Million Dollar Journey that warned about 4 Critical Mistakes in Retirement Planning.

5. Larry MacDonald told the story of A Lady with No Fixed Address on his Canadian Business blog. This woman got out of the rat race and is living life on her own terms. Check out her story to see how she did it!

6. Mich at Beating the Index asks What Will It Take to Fire Up Natural Gas Prices? Here’s hoping for a cold winter for all the nat gas investors out there!

7. Investing Thesis summarized an interesting report on Dealing with the $1.41 Trillion Burden Of Household Debt On Canadians. That’s a pretty deep hole. Yikes.

8. According to The Dividend Guy, Canadian Banks are Expected to Raise Their Dividends.

9. Let the Flood Waters Stop! That was Boomer’s plaintive cry over at Boomer and Echo. She tells the story of how their basement flooded last year and offers some valuable tips on home insurance.

10. In case you hadn’t noticed yet, there’s a new finance blog out there called MomVesting. Have a look and enjoy this great post on Compound Interest. You just can’t beat the basics!

That’s all for this month’s edition. I hope you learned as much from these folks as I did!

Feel free to comment on any articles that caught your eye.