Financial Solution News

Most of us have a job where hard work is expected and necessary.  We offer our knowledge and/or labor to the company we work for in order to get recognition, satisfaction and compensation in return.  Although this is the way most people make money, the minute we stop working, the income stops.
On the other hand, a popular idea that floats around the internet is passive income.  The idea of it is that money is being earned with or without our involvement.  Once it’s set up, the recurring income will come continuously.
Anyone can quickly see why this idea is popular.  Here are three extremely good advantages:
Provides Freedom
If your passive income is higher than your living expenses, then you free yourself from the daily grind of working for someone at least 8 hours a day.  You can enjoy your life and do what you want, while earning enough money to sustain your […]

Original post by MoneyNing

Would there be any benefits if I thought of saving money as a source of income?  The similarities are not exactly obvious between the two but there are actually a few advantages of doing so.  Let’s think together here and see what we come up with.
Why It Makes Sense to Think Of Saving Money as Making Money

Although you can argue on which is more effective to building wealth, saving money is really just the same as making money.  If I have to buy a TV and I get a good deal by saving $400.  Mathematically, it works out the same as getting a $400 windfall.
Doing so forces you to focus on what is most important, the bottom line.  It doesn’t matter whether you saved money, made money or spent money because all you care about is incoming and outgoing of wealth.
It puts a higher emphasis on saving money because people […]

Original post by MoneyNing

Once in a while in personal finance literature, we will come across an article about the advantages of saving money.  The phrase “a dollar saved is two dollars earned” or something similar often comes up since it’s so catchy.  After all, the savings are after taxes, and it’s always about how much you can keep and not about how much you earn right?
While many of those articles are true that savings is certainly very important, I feel that it underplays the importance of earning money.  People seem to forget that in order to save, we need to earn the money first.
Earning money is about giving us choices.  With money earned, we have freedom.  We could spend it if we really like, but if we care about our future, we should save it.  Saving a dollar is probably equivalent to earning two dollars, but if we don’t earn it, where is […]

Original post by MoneyNing

I just received my notice about how much I will receive on my economic stimulus payment. That’s right, I got the actual economic stimulus payment before the notice of how much I will receive. In a way, it’s funny because it makes the notice totally useless but in another way, it’s just sad. Has this happened to any of you?
Seriously though, perhaps a more important question is whether you’ve received the stimulus check.
Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.
Whether it came from direct deposit or check, you should have received it by now so if you haven’t, you can call 1-866-234-2942 (I got this number from the notice so it should be safe) to find out why.
Since we are on this subject, how are you using the money that you’ve received? I’ve […]

Original post by MoneyNing

Conventional wisdom jibes with the notion that bonds cannot outperform stocks over a distant horizon unless you’re toying with junk bonds. But there’s much more beneath the surface. I feel very fortunate to have Paul Gaylord, a securities broker from Houston-based Tri-Star Financial, who promises to debunk this investment myth, but he’ll first warm us up with some background information on a special type of bonds that large institutions and the ultra wealthy invest in, namely Collateralized Mortgage Obligations (CMO.) This article is technical and lengthy, but fascinating. Paul is available for questions if you’re interested to learn more about CMO. Emphases in the article are mine.
Most of the world’s investors believe the myth that they can’t get a high yield on bonds unless they invest in Junk bonds. They take the risk of losing their initial investment if the issuer goes into default […]

Original post by Financial Jungle Guy

This is the fifth post on the Dividend Increases series.
It has only been 3 weeks since my previous dividend increases post, but I feel compelled to hurry one in as Boralex Power Income Fund just announced a distribution cut from 90 cents to 70 cents, amidst external headwinds from weaker hydrology and the declining US dollar.
In 2007, BPT.un’s $42-million net cash flow related to operating and investing activities was $9-million short of the $53-million circulated to unit holders, but management has been proactive all along warning investors about the hurdles they’re facing.
Rather than masking the problems and jeopardizing the fund’s long-term health, the new distribution policy will see payout easing to $41-million a year. This is a conservative move considering the fund still has $10-million in the bank. (i.e. the cash could’ve prolonged the current payout by another year while waiting for a turnaround.) […]

Original post by Financial Jungle Guy

This is the fourth post on the Dividend Increases series.
First, let’s get the sore thumb out of the way. My portfolio suffered a minor set-back as CI Financial Income Fund, a non-core holding, is cutting distribution by about 10%, likely due to market jitter.
Dividend Increases

Canadian Oil Sand - 36% (150% from last year)
Canadian National Railway - 10% (10% from last year)
TransCanada - 6% (6% from last year)
HR Reit - 5.1% (5.1% from last year)
Bell Aliant Regional Communications Income Fund - 2.8% (2.8% from last year)

I’m not worried about market turbulence…
Once again, TSX and S&P500 investors are reeling over recession fears as the indexes sank by 2.5% and 2.9% respectively today. Good! This just means that we can invest new money and dividends into progressively higher yielding shares. For example, Royal Bank is paying you $2 a share, doesn’t matter if the share is […]

Original post by Financial Jungle Guy

Sure, you can invest in this 3-bedroom Vancouver old timer yielding a meager 3.5% to 4% CAP, but why torment yourself? Instead, you can indulge yourself with an 8.2% yield by owning these sexy office towers within H&R REIT’s portfolio:

As you may recall, the market has been punishing the Real Estate Income Trust (REIT) sector for much of 2007 and into early 2008, while the average yield is inching up each day. No one knows how long the spanking will persist, but as of this moment, the whole sector is roaming into a bargain territory as many REITs are yielding above 7%. That is far more attractive than the 3.74% offered by Canada 10-year bond, a popular yardstick to judge how attractive the REIT sector is relative to a guaranteed income investment.
I have taken an interest in H&R REIT - the largest Canadian office REIT […]

Original post by Financial Jungle Guy

Telly recently left a comment on my Top 5 Reasons Why Dividend Investing Over ETF post expressing her skepticism that anyone can build a diversified portfolio yielding over 4% “without loading up on some income trusts which are not favourably taxed or becoming less diversified by owning only high yielding dividend companies.”
I figure it would be a fun exercise to build this high-yielding diversified portfolio, although I wouldn’t shy away from income trusts. In my opinion, income trusts are an absolute key ingredient to sprinkle over a diversified portfolio. Just because some our best Canadian cash cows are structured as income trusts doesn’t mean we should place them in the penalty box:

Canadian Oil Sands - a 33 year life reserve of tarsand with no exploration risks like most other energy trusts.
Consumers Waterheater - Torontans take warm showers recession or not.
CML Healthcare - a highly […]

Original post by Financial Jungle Guy

It’s true. The rumour is resonating well in the office. According to our supervisor during a departmental meeting, management has reserved the necessary budget to increase salaries next year. Word on the street is for an average hike of 5% - not bad considering the Core CPI is resting at 2.2% this quarter.
As uplifting as it is, it’s still no match against the slew of dividend increases ringing under our Christmas tree:

Encana - 100% (100% from last year)
Parkland Income Fund - 8.6% (50% from last year) + ~4.7% of special dividend
Fortis - 19.0% (31.5% from last year)
Reitmans - 12.5% (12.5% from last year)
Scotia Bank - 4.4% (11.9% from last year)
Pfizer - 10.3% (10.3% from last year)

Not only that, most of these increases are tax-free, while about a third of salary increases goes to taxes.
Related post: Dividend Increase: Devoted Friend In A Stormy Market.

Original post by Financial Jungle Guy