This is a book review by Mrs. James who I thought might better understand the emotional side of money and whether this book might actually help people with money troubles, not that she's necessarily nice to people who handle money poorly. The book Financial Recovery by Karen McCall makes a link between our relationship with money and how that relationship affects how we make money, how we spend money and how we save money. This book does a good job explaining some of the behaviours I have seen in friends and colleagues concerning how they handle their money and what decisions they make that seem to an outsider to be completely self destructive with respect to their finances but are an undeniable pattern. The wife who buys herself something expensive just because her husband went out with the boys is likely substituting an object for the attention she feels she is not getting from her husband. The person who knows that they don’t have enough to pay the bills so they simply s...

A post over at Boomer & Echo made me realize that the terms “active” and “passive” have multiple definitions when it comes to investing. This can lead to confusion. The most technical definition of active/passive relates to investor goals for returns: Defintion 1. Active Investor: One who seeks to outperform the market averages. This is usually done by either attempting to make better short-term trades or by trying to choose better stocks for the long term. Most active investors fail to beat the market, but each year some succeed. Passive Investor: One who chooses to own one or more indexes of stocks, bonds, or other assets. This type of investor usually seeks to minimize costs to get returns as close as possible to market averages. Another definition relates to how frequently an investor makes trades. Definition 2. Active Investor: One who makes frequent equity trades. Passive Investor: One who trades equities infrequently. A third definition relat...

Vanguard has made a formal announcement that they will be entering the Canadian investment market, but here are few details yet on what ETF or mutual fund products will be available. This announcement is initially disappointing because “Vanguard’s initial focus in Canada will be to offer investment products to Canadian investors through investment advisors.” While some investors prefer to get advice from an investment advisor, many of us prefer to save the added cost and make our own choices. Vanguard’s offerings are unlikely to be of much interest to me until I can purchase ETFs directly on a stock exchange. On the other hand, Vanguard’s U.S. products have been so beneficial to American investors that the prospect of having them do the same for Canada is very exciting. If I were an American, I would likely have all my long-term savings invested in a small number of Vanguard broad index ETFs. Canadians can buy the American version of these ETFs, but this creates two potential ...

A quote I saw in a recent covered call article got me thinking. Rob Carrick quoted Eden Rahim, who was speaking about a particular Horizons covered call ETF product: “If you’re a super bull and think the market is going to advance vertically, this product is not for you ... If you think the market is going to do something other than advance vertically, as it has in the past couple of years, then this is something to consider.” This way of thinking about investing feeds two types of magical thinking. (And to be clear, I’m not accusing either Carrick or Rahim of magical thinking.) The first is more obviously silly when exposed: the market can only have one outcome at a time. It can’t “advance vertically” for me but do something else for other people. If two people have opposite market guesses, at least one will be wrong. The second type of magical thinking is that we can somehow know what the market will do with certainty. The market will rise, drop, or stay the same with s...

Rob Carrick is drumming up support for the Ombudsman for Banking Services and Investments (OBSI). The big banks are gearing up to do away with the OBSI which may be reason enough for consumers to oppose such a change. OBSI provides a no-cost place to resolve disputes with the financial industry and even if it isn ’ t perfect, it may be worth saving. Preet Banerjee explains that almost anyone can call themselves a financial planner in Canada. Big Cajun Man takes an interesting romp through his life to explain why he ’ s not rich. Retire Happy Blog explains the “ retirement sweet spot ” when it comes to income taxes. Million Dollar Journey marches ever closer to the end of the journey. I look forward to the name change: “ Ten Million Dollar Journey ” .

Despite the fact that we are in a world of electronic payments, I find I still write some paper cheques. Occasionally I've had to stop payment on a cheque or someone sending me a cheque has stopped payment. However, these stops don’t always work. My wife did a little research and found that stopping a cheque isn’t cheap: $25 at TD, $10 online at RBC, $15 in a branch at RBC, and $10 at ING (with one free stop per year). These costs won’t break the bank, but for this money you’d think that the service would work. Over the years my wife and I have been involved in several cases where either we tried to stop payment on a cheque or someone else stopped payment on a cheque sent to us. In 3 of these cases an attempt was made to cash the cheque and the stop worked for only one of the 3 cheques. This is a very small sample, but 1 out of 3 isn’t a good success rate. I’d be interested to know whether readers have had experience with stopping cheques and whether the stops actually w...

Most people cannot handle irregular pay and expenses very well. They have a strong need for smooth, predictable incoming and outgoing cash flow and they pay a high price for this predictability. This need is apparent with car purchases, once per year expenses, employer supplemental health insurance, and other areas. Cars The best way to buy a car in most cases is for cash, but few people do this. Even car loans don’t smooth out the costs enough for many car buyers because the monthly payments last for only the first 3-6 years of the car’s life. Car leases offer a way to reduce periodic payments now and defer part of the car’s cost until years later. Car leases are sufficiently complicated that few people really know how much they pay for a leased car. When the customer doesn’t understand the numbers, this gives dealerships a big negotiating edge. We pay a high price for low lease payments. Yearly Expenses For many types of yearly expenses like property taxes and car and...