My Own Advisor

 

Happy Holidays everyone!

I trust all my readers had a very Merry Christmas and you’re looking forward to ringing-in the New Year.  I know I am.

Before we leave 2012, I wanted to provide you with a review and some takeaways from an extensive investing ebook I read earlier this fall.   Check out this excellent guide for any dividend growth investor:  The Dividend Toolkit.

About the author and ebook

Matt Alden is the knowledgeable investor and blogger behind Dividend Monk and many months ago, he released an ebook entitled The Dividend Toolkit.  I received my copy a while back and I want to thank Matt for it.  A few months ago, I took some time to dig into this book, reading it cover to cover.  Here is my review of this detailed toolkit for the do-it-yourself (DIY) investor and why you might want a copy.

First Impressions

My first impression of this ebook was the volume – as in lots of it.  I expect most ebooks (rightly or wrongly) to be leaner when compared to traditional hardcopy books.  In this case, I was flat out wrong.  An avid investor for about seven years now, Matt didn’t hold back anything to demonstrate his thorough knowledge of the stock market and investing principles; the ebook is 200 pages long.  If you’re a DIY investor who appreciates details then this ebook was written for you.

Here are some of my favourite takeaways and what I enjoyed about The Dividend Toolkit.

Matt on living modestly and lightly

“….we’re living like kings and queens compared to most of the people that have ever lived on this planet, materially speaking. This includes most people that don’t have much money. It takes only a fraction of a decent income to support a comfortable and healthy lifestyle by most historical or global standards.”

“Here’s what we can all do instead: Produce more value than we consume, and make a lot more money than we spend. Reduce expenditure on depreciating assets.  Forget about status symbols. Let ourselves be rich rather than look rich.  We can invest our money to get a good rate of return, and spend money where it actually matters, such as investing in ourselves through school, or knowledge, or training, or experience.”

Matt on dividend investing basics

The Dividend Toolkit provides readers with an overview on how the markets operate, brokers and dividend reinvestment plans.  The book also provides good definitions for company and dividend metrics, such as revenue, free cash flow, interest coverage ratio, dividend payout ratio and dividend growth rate.

Matt on dividend investing and investing psychology

“There isn’t just one way to invest. There are plenty of successful investing strategies that one can utilize, dividend growth investing is just one of those strategies, and this is just one individual investor’s view of dividend growth investing.  However, dividend growth investing combined with other approaches such as index investing, is among the most suitable of strategies for many individual investors. A good strategy not only offers good returns, but also works well with human psychology.”

“The most important aspect of investing is the discipline to consistently add fresh money. Individual investment decisions are secondary. To build wealth, one must be the wealth builder rather than the “dabbler”. Consistently add money to your portfolio, ensure you have adequate asset allocation and diversification, and think strategically far ahead.”

“Dividend Growth Investing is not just about investing in stocks with a high dividend; it’s also about investing in companies that grow their dividends year after year, like clockwork. A passive income stream is typically unimpressive over the long term if it doesn’t grow. By investing in dividend growth companies, you’ll be building passive streams of income that grow over time. Each year with this investment strategy, assuming your companies stay healthy and profitable, your dividend passive income will increase.”

“…unless you’re planning on living off of your dividends right now, you can reinvest your dividends to buy more dividend paying stocks to further increase your passive income. The growth is exponential, and the strategy works over a long period of time to dramatically build your net worth and passive income.”

“With dividend growth investing and aggressive saving habits, a person can benefit from a diversified portfolio of companies that provides enough dividend income to comfortably support all expenses. And investments like bonds and real estate can be included for support as well.”

Matt on how many companies to own

“Personally, I keep my number of individual stock holdings at any given time to under 25. I’d also recommend not putting more than 10% of your liquid net worth into any one company, and preferably less.”

And then so much more…

The first part of The Dividend Toolkit includes six core topics that discuss Matt Alden’s philosophies about living below your means, why dividend growth investing can be a powerful investing approach and how to construct your investment portfolio.  The second part of the book includes six advanced topics that focus on asset allocation, how to value stock investments and some information about alternative investments.  Matt discusses the cost-benefits of share buybacks and reinvested dividends and why companies who have economic moats should be the ones you want to own.

What’s more, Matt has included in his ebook the Pareto Principle Analysis Workbook – a step-by-step guide and workbook to analyze any prospective dividend paying company for your portfolio.  Matt writes:

“This guide explains how to maximize your time: spend a relatively small amount of time to get a rather thorough understanding of the companies you own or want to own. It states specifically what metrics I use when I quickly go through a company’s information to produce a report.”

The Summary

The Dividend Toolkit is a comprehensive, well researched tool for the ardent stock investor. This ebook was written for any DIY investor looking to get the most out of dividend growth investing – just like Matt aspires and writes about passionately on his blog.  More information on The Dividend Toolkit is available here.  To follow Matt, read all his detailed stock analyses for free and follow his investing journey be sure to check out Dividend Monk.

Thanks for reading and sharing this article.

Will it end or won’t it end?  Is that the question?

I’m not talking about all the craziness in the stores lately or the NHL strike, I’m talking about the end of the world.

By most interpretations, by way of the last cycle of the Mayan calendar, the world is expected to end very soon…in a matter of hours.  Some have argued the Mayans, whose civilization spanned across southern Mexico, Guatemala and Belize from 1000 B.C. to 1519 A.D., have long known the day the world would end – December 21.  Do you believe it?  Or is this a bigger hoax than Y2K?

Over the last week, I’ve read about people making bunkers out of their basements to people flocking to Serbia to live at the foot of a mountain that apparently delivers a source of electromagnetic waves where they will celebrate the end of the time.

Reading this far, you can probably guess where I stand on the Mayans’ prediction – mainly because nobody has ever predicted tomorrow with any accuracy let alone a few thousand years.  Besides, the Maya people didn’t invent the calendar in the first place.

After you survive December 21st, I hope you’re looking forward to the holidays like I am.  It’s certainly a time to reflect, be thankful and spend time with those you care about.  Whatever your holiday plans are, enjoy them and be safe.  Although I don’t expect the world to end soon you can never take what you have today for granted.

The blogposts on My Own Advisor might be few to none, I’m not sure yet, so just in case I’m not online much between now and early 2013 - I wish you a very Happy Holiday and Best Wishes for 2013!

Enjoy this list of Weekend Reading,

Mark

 

For podcast # 14, Where Does All My Money Go interviewed John DeGoey, Financial Advisor of Burgeonvest Bick Securities, discussing advisor fees and transparency.

Head over to Canadian Budget Binder where they have a $100 cash giveaway going on.

Million Dollar Journey reminded us about the power of the TFSA and the increased contribution limit for 2013.

Sustainable Personal Finance offered some tips when shopping for eco-friendly appliances.

Mr. Money Mustache said the high cost of living – is a state of mind.

Canadian Couch Potato shared how the new Loblaw’s REIT will likely be added to the index.

Finance Fox wondered why Americans are clueless about Canada.

My University Money has some last minute Christmas gifts ideas.

Andrew Hallam was a big fan of this new movie:  Passive Investing – The Evidence.

Y&T shared five ways to save money on Christmas shopping.  They forgot the obvious, don’t spend as much.

The Passive Income Earner shared some tidy dividend income for December 2012.

Boomer & Echo provided his answer to this question:  should you pay off your mortgage early or invest?  He wrote:

“I’m taking a balanced approach by putting an extra $800 a month on our mortgage on top of our regular monthly payments, saving $800 a month in our tax free savings accounts and investing $400 a month in my RRSP.”

Retire by 40 wondered if you should invest in the stock market after retirement.  I say, yes.

Michael James on Money was annoyed with McAfee’s antivirus software trickery.

Marissa told us why she prefers to be a maker of things.

Derek discussed the Smith Manoeuvre and why it can work for some people.  I’ll be tempted to do this when my mortgage debt is much lower.

The Brighter Life had a list of interesting links to make your holidays, well, bright!

CBB provided a beginner’s guide to early retirement.  To paraphrase, save, save and save some more.

Kerry Taylor had some budget-friendly holiday decorating ideas.

Big Cajun Man drank the same water Michael did this week and was equally annoyed with the Bell storefronts.

Financial Highway had some good financial gift ideas for kids.

Freedom Thirty Five blog said don’t worry about Christmas shopping, the Mayans may be right.

The Blunt Bean Counter wondered if newspaper paywalls will be our new normal.

Modest Money shared a few ways to burn some cash at the last minute this holiday season.

Retire Happy reminded us about your most valuable asset.

The Loonie Bin nailed some 2012 financial goals.

Thanks for reading and sharing this article.

2012 was a great year for My Own Advisor blog thanks to every dedicated reader, the casual reader, anyone who took a few seconds to comment on my site and all the blogs who referred to and linked to My Own Advisor.  You made it an enjoyable year to be online.

This was my first full year of self-hosting after launching my domain in May 2011.  Although I had a few hiccups with my host provider now and then it was a pretty smooth operational year overall.  Thanks to Bluehost for keeping me up and running 24/7 and providing excellent customer service when I needed it.  I would highly recommend them to anyone.

2012 Blog Traffic

Since moving my blog from Blogger to WordPress platform and self-hosting, traffic to My Own Advisor increased over 2011, and thanks to you for that.

In 2012:

• Visits to were steady, averaging between 12,000 and 14,000 per month.
• Pageviews were consistent, averaging from 21,000 up to 24,000 per month.
• Almost 50% of all site traffic is courtesy of new visitors.  I hope you keep coming back.
• Most of my visitors are from North America, but folks are following from around the world.  I had visitors from all parts of Europe, many parts of African and Asia.  Readership is also growing in Australia.  Aussie-Aussie-Aussie, Oi, Oi, Oi!
• Almost 20% of my traffic is coming from mobile hardware, tablets and smartphones.  Nice to see you taking me along.
• About 50% of my traffic is coming from organic searches, folks I assume, stumbling upon My Own Advisor.  Thousands of visits per month are due to direct traffic and feeds.  Finally, thanks to many of my favourite blogs, personal finance and investing sites and forums more traffic is coming this way every day.  Special recognition goes out to:

Million Dollar Journey

Dividend Ninja

Canadian Money Forum

Michael James on Money

The Passive Income Earner

Boomer & Echo

The Dividend Guy Blog

Andrew Hallam

Canadian Couch Potato

Dividend Monk

Modest Money

Canadian Capitalist

Young & Thrifty

Simply Investing

Thanks to the folks above and many other websites for supporting My Own Advisor in 2012.  You know who you are and I interact with you frequently on social media.

Looking Ahead

For 2013, like interest rates and stock markets, I really have no idea what’s in store for My Own Advisor.  I have a list of personal finance and investing goals I’m kicking around but in terms of this site, I don’t really have any specific goals in mind.  Maybe I should?  To come to think of it more, these would be great milestones if they were achieved:

• Consistently average over 20,000 site visits per month.
• Hit 30,000 pageviews per month.
• Surpass 1,500 subscribers.
• Surpass over 2,000 Twitter followers.
• Redesign the site.

The last bullet I’ve been toying around with for some time and I might get some professional help to do it.  We’ll see.  On one hand, I would like to learn how to do this myself, learn more code and be very much in control over everything.  The downside, this takes time, some willingness to practice and also make some mistakes.  I’m OK with the latter but the former, time, might be hard to find.  If I decide to redesign the site, I will let you know when I do

In closing, it’s been great to see the blog get some more exposure, amongst my peers, in the media and internationally through more feeds and subscriptions.  I look forward to wherever it may take me next year.

In 2013, I encourage you to keep following my investing journey, interact with me, share my posts and stories with everyone but maybe most importantly, leave a comment about all things personal finance and investing, or really, anything else when the mood strikes.  We can all learn from each other.

Thanks for a rewarding year in 2012.  Stay tuned for a couple more posts in 2012 and a whole bunch of good stuff in 2013!

Thanks for reading and sharing this article.

 

Hard to believe how time flies…2012 is coming to an end.  Overall, it’s been a good year for my wife and I and we have many things to be thankful for.  First and foremost we have our human capital, which makes our financial capital easier to obtain.  My parents instilled in me “you don’t have much without your health” and there’s certainly some truth to that.

In January armed with our human capital, I laid out what I thought were some pretty aggressive saving and investing goals for the year ahead.  As 2012 comes to a close, let’s revisit our six personal finance and investing goals and then I’ll describe if we achieved any of them or where we fell down.

Here’s a recap of our 2012 goals:

• Goal # 1 – Pay off our LOC by end of February ($2,000).

• Goal # 2 – Starting in March 2012 (after the LOC is paid off) put $300/month as lump-sum payments on the mortgage for the rest of the calendar year ($3,000).

• Goal # 3 – Maximize both TFSAs before end of year ($10,000 in contributions).

• Goal # 4 – Grow our emergency fund by $3,000 (to $5,000) by the end of this year.

• Goal # 5 – Optimize RRSPs ($5,000 in contributions).

• Goal # 6 – Save $3,000 for a great trip in the fall/winter.

Here’s our update for December:

• Goal # 1 – Pay off our LOC by end of February ($2,000).

Back in February we slayed this financial dragon.    At 4% interest, our line of credit (LOC) borrowing costs were rather cheap and we took advantage of this by putting almost every available cent we could find to pay off this debt.  I hated having this debt.  Since paying it off we’ve kept it off and our LOC balance remains zero.

• Goal # 2 – Starting March 2012 (after line of credit is paid off), put $300/month lump sum payments on our mortgage.

This goal is no longer a work in progress.  From March through this month, we put $300 per month as lump sum payments on our mortgage.  These pre-payments have helped make a small dent in our mortgage, debt we hope to have killed off in about nine years.

• Goal # 3 – Maximize both TFSAs before end of year ($10,000 in contributions).

Earlier this year I maxed out my TFSA for 2012.  This fall, my wife’s TFSA was maxed out for 2012.  Another goal accomplished.

• Goal # 4 – Grow our emergency fund by $3,000 (to $5,000) by the end of this year.

I know not everyone agrees with having an emergency fund but it works for us.  In September, we achieved this goal.

• Goal # 5 – Optimize RRSPs ($5,000 in contributions).

You may have read about my practice of optimizing my RRSP instead of trying to maximize my contributions every year.  I do this primarily because I have competing priorities, here are a few:

• I need to focus on paying down my mortgage.
• I need to pay off my credit card expenses every month.
• I need to maximize the TFSA.

I also do this because while RRSPs are excellent, recall the RRSP is a tax-deferral tool and I’d rather have a more balanced approach.  Remember, tax-refunds are really borrowed government funds – if you manage to contribute $5,000 to an RRSP and your tax rate is 40%, your refund is $2,000.  That refund should be put to good use since some or all of it must be paid back at some point when you withdraw from your RRSP or collapse the account – hopefully in a lower tax bracket.  Instead of maxing my RRSP and forecasting what my tax rate will be a couple decades I prefer a balancing act that includes living for today, while paying off debt and investing for the future.  Based on December’s contributions, I’ve calculated we’ve contributed enough to our RRSPs in 2012 to avoid paying any additional income tax, come tax time in the spring of 2013; we’ve accomplished this goal.

• Goal # 6 – Save $3,000 for a great trip in the fall/winter.

While saving for our future is prudent this was by far our most exciting financial goal in 2012, saving for a great trip.  Our philosophy is to usually spend money on experiences not stuff, so travelling is where it’s at.  We’re looking forward to our vacation soon and although we wanted to save $3,000 before the end of the month for this trip, we didn’t quite make it.  We’re only $400 short of this goal as I write this post and I figure we should be able to find the funds before our trip by moderating expenses in the next few weeks.

So, that’s it for our saving and investing goals for 2012:  5/6.  We’re proud of these accomplishments and already looking forward to 2013 to see what new heights can be achieved.

How did your 2012 personal finance and investing goals work out?   Do you have any comments on our goals or where our priorities are?

Thanks for reading and sharing this article.

Leading off this Weekend Reading list is a link to Passive Investing:  The Evidence.  This financial documentary is divided into eight chapters in a video just under an hour long.   The movie is full of Nobel Prize economists and distinguished academics singing the praises of index investing.  The experts in the video make a strong case for indexing and if you have time to check out the video, do so if only for a few minutes.

One of my favourite blogs celebrated his 6-year anniversary this week with a $3,000 giveaway.  Congrats to Million Dollar Journey for reaching this milestone!  I enjoyed reading this part of his post:

It still baffles me how much this site has grown over the years.  It all started with a personal online journal to track my finance journey which evolved into the community you see today.  A strong and loyal readership who is as passionate about personal finance and investing as I am.  Proudly, we have grown to over 18,500 daily subscribers and over 3,100 twitter followers. In addition to that we have received over 13 million hits over the past six years.

Congrats Frugal Trader and continued success on your financial journey.

Here are more great articles to check out this weekend – enjoy!

Susan Brunner was kind enough to highlight a few articles on my site geared to novice investors.

Canadian Budget Binder said to celebrate Christmas like Scrooge this year with a gift exchange.

Tom Bradley said there might be a rush for the exit on bonds soon.  I haven’t purchased bonds in a long time.

Finance Fox told us how to be a responsible party host.

Boomer & Echo have a theory about longer bank hours.

Michael James on Money talked about the snowbird tax trap.

Canadian Capitalist had a good Q&A with Vanguard Canada.

Big Cajun Man wondered if you saw what you looked like at age 65 would you save for retirement?

Dividend Monk said railroads appear attractively valued.

Modest Money has an Apple iPad giveaway contest underway.

Invest It Wisely told us how to host a Christmas party on a budget.

Thirty Six Months shared some good languages to learn in 2013.

SPF had a few tips for reducing holiday consumerism.

Y&T increased her net worth.

Dividend Guy Blog reviewed Fortis.

The Brighter Life shared the benefits of year-end donations.

101 Centavos said getting laid off sucks.

Thanks to the following blogs for putting me in their carnivals:

Finance Triggers

Canadian Personal Finance

Making Sense of Cents

Young & Thrifty

My University Money

20s Finances

Carnival of Investing

Thanks for reading and sharing this article.