During my morning commute I passed a gas station advertising a price of $1.30 per litre. This may not be the peak in my area, but it is quite high. You'd think that this would drive more people to take the bus or to carpool. Looking around I saw little difference in the density of cars, vans, trucks, and SUVs clogging the roads. In a minute of scanning, I didn't see any vehicles holding more than one person. This brings up the question, are high gas prices changing the way people drive? I hear no shortage of complaints, but my small sample indicates that people are just paying the extra money and going about their business as usual (with some extra complaining). If gas prices continue their climb there will have to be noticeable changes in how much people drive, but for now I'm not seeing it.

BC’s vote to scrap the HST brings up the question of what happens to the $1.6 billion the federal government gave BC to implement the HST. It seems natural that the money has to be returned, but apparently the NDP disagree. This willingness to hand out money so freely makes me wonder if politicians should have to pass some sort of financial savvy test. You might point out that politicians understand financial matters just fine and they act out of self-interest. This is likely true much of the time, but I wonder if sometimes politicians genuinely don’t understand basic financial facts. Here is a simple essay question that intelligent adults should be able to answer correctly to have any hope of running a government: Explain why having the government give every Canadian ten million dollars wouldn’t make us all rich. If that one proves too difficult, maybe the following question is a little easier: Suppose that ten people are adrift on a life boat. The only food they have is...

Scott Adams has a funny article on financial conspiracies that ends with "If you want to screw the rich, buy stocks in the broad market indexes and just hold them forever. They hate that." Preet Banerjee says that the primary consideration for whether you get a gym membership or buy your own exercise equipment should be your likelihood of sticking with your workout plan rather than the cost of each alternative. I agree, but I would add that you need to beware of initial bursts of enthusiasm. We need enthusiasm to get us started, but it can also lead to buying expensive equipment and clothing that gets little use. Channel enthusiasm into planning workouts rather than buying things. Once you prove to yourself that you'll stick with a plan, it makes sense to start acquiring the things you need to make the workouts better. Retire Happy Blog has a story of an advisor who abused Deferred Sales Charges (DSCs) to the detriment of his clients. Big Cajun Man says it...

Years ago I was buying a piece of furniture and was offered a "don't pay for one year" deal. I innocently asked whether I could get a discount if I paid right away. The answer was a firm no and my attempts to continue negotiating failed to lower the price. It wasn't until years later that I learned why. If you fail to pay the full amount on time, you get hit with high retroactive interest back to your purchase date. If enough people fail to pay on time, the zero interest for a year deal can actually be profitable for the finance company. To make things a little more concrete, I looked up a major retailer's don't pay for a year deal. At this store, if you pay on time, there is no interest and no extra fees of any kind for a year. If you are short one penny when the year is up, you pay 12 months of 2.4% interest (32.9% for the year after compounding) on the entire purchase. If the retailer just offered regular financing, let's say that the intere...

Vanguard announced yesterday that they will open 6 Canadian-domiciled ETFs. Two of these ETFs cover indexes of U.S. and international stocks. Unfortunately, they also incorporate currency hedging back to Canadian dollars. This takes away the risk protection that I’m looking for, as I’ll explain. Here are the 6 ETFs Vanguard announced: – Vanguard MSCI Canada Index ETF – Vanguard Canadian Aggregate Bond Index ETF – Vanguard Canadian Short-Term Bond Index ETF – Vanguard MSCI U.S. Broad Market Index ETF (CAD-hedged) – Vanguard MSCI EAFE Index ETF (CAD-hedged) – Vanguard MSCI Emerging Markets Index ETF One of the risks we face as Canadians is that the Canadian economy will falter and fall behind the rest of the world. As a proud and confident Canadian, I don’t think this will happen. But when I think through the many possibilities, a faltering Canadian economy would cause us big financial trouble. Imagine that at some point in the near future the world stops buying our oil...

I have a family full of students whose student fees include a health insurance plan. You might think that the school would see to it that students are offered a sensible plan at a reasonable cost. The plan description I got to see didn’t look very sensible to me. Flipping open the cover to the first two pages, my eyes were drawn to the giant dismemberments table. The funniest entry (if discussing dismemberment can be funny) is the loss of “One or More Entire Toes” for $50. In what possible way can $50 compensate for a lost toe? The purpose of insurance is to cover large costs of low probability events. Losing a toe has low probability, but $50? The top end of the table is $25,000 for losing any two of six things: your eyes, hands, and feet. Again, $25,000 is very low compensation for such devastating losses. The rest of the document is a long string of caps of $100, $1000, $2000, etc. on various mishaps. Real insurance would make you pay the first $100 and cover all of th...

Jonathan Chevreau says that Nick Barisheff is about to publish a book titled $10,000 Gold: Will it happen sooner than you think? (see the middle of the article). The article also included an opinion about gold being overvalued, which creates some balance, but I’d prefer to stay away from these predictions altogether. My first reaction to seeing “$10,000 gold” was to remember the 1999 book DOW 36,000 by authors who would rather remain nameless. Apparently, everyone had to pile into stocks or miss the 3-5 year ride on the DOW from around 11,000 in 1999 to 36,000. It’s now 12 years later and the DOW is still at around 11,000. The only reason a book like DOW 36,000 made it to print with some likelihood of success is that in 1999 stocks had been on a terrific tear, and people wanted to believe that the party would continue. The same is true for a book today about gold reaching $10,000. Apparently, Barisheff believes that a $10,000 gold price “could be justified.” I have little d...