Owner: Middle Class Millionaire URL:http://middleclassmillionaire.blogspot.com/ Join Date: Wed, 16 May 2007 09:40:58 -0500 Rating:0 Site Description: I will document my journey from middle class to an early middle class retirement. I will share my financial progress, rant about the market, stocks, retirement, saving money and anything and everything related to money, investing and retiring early. Site statistics:Click here
Don’t Retire Early? 2007-05-16 15:32:00 I was recently reading a post on Savings Journey’s website entitled “Don’t Retire Early
”. I was going to leave a comment on his blog but instead I’m going to dedicate today’s and tomorrows entire posts to respond to the questions posed by Savings Journey in his post. Before I do I just wanted to let you know that I have contacted Savings Journey and he welcomes my responses and has given me permission to post his original entry.ORIGINAL POST BY SAVINGS JOURNEY“A lot of people aspire to retire early - age 40, 45, 50, whatever it may be. In the blogosphere, the phenomenon is pervasive - the dream of so many people! Everyone has their own justifications for their obsession with wanting to retire early - "write a book", "do things that I want to do that I can't now", yada yada.Personally, I find that my work is enthralling and rewarding. I am very passionate about what I do and I keep very abreast in my industry. I participate in conferences, and I basically look forward to
Pay Down the Mortgage or Invest? 2007-05-15 15:14:00 What should you do with your extra cash? Pay down the mortgage or invest? This is a common dilemma that many people have and I think the right answer depends on the individual and their unique situation, lifestyle, investing strategy etc... So I’m not going to say one is better than the other…instead I’ve gone over my own situation and here is what works for me.Personally, I pay the minimum amount on my mortgage and take all of my extra money and invest it in the market. I’ve chosen to do this because I currently have a low 5 year fixed interest rate (5%) and believe that over time I’ll be able to do better in the market. Part of my strategy is to pay the same in mortgage, maintenance and taxes as I would if I chose to rent. That has been my strategy since I bought my house and as such pay a few hundred dollars less a month than a friend who rents a similar sized house in a similar neighborhood. As rents go up in my city I intend to increase the amount that I’m contributi Read more:Mortgage
Useless Junk = Garage Sale 2007-05-14 13:55:00 Spring has sprung across most of country, the birds are chirping, the flowers are opening, the trees are starting to bud, and the piles and piles of useless crap stored in my basement is really getting on my nerves.Being frugal by nature my first instinct when offered anything free has always been “sure I’ll take it, I know I’ll be able to find a use for it sometime”. Well...from years of experience (and encouraging from my wife) I’ve come to the realization that actually NO I probably won’t be finding a use for most of the antiquated junk in my basement (you never know when you’ll need 2 extra toasters and 6 extra soap holders...).Over the weekend I’ve come to the conclusion that even if an opportunity did arise that required one of the items I’ve accumulated over the years I wouldn’t be able to find it in a timely manner amongst all the other boxed “treasures”. So... as an ex-pack rat trying to reclaim some shelf space in the basement I basically have 3 option Read more:Garage
Dividend Growing Stocks – III 2007-05-11 12:31:00 JNJ"Johnson & Johnson, through its operating companies, is the world's most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services, for the consumer, pharmaceutical, and medical devices and diagnostics markets. The more than 250 Johnson & Johnson operating companies employ approximately 121,000 men and women in 57 countries and sell products throughout the world."- Dividend
s issued to shareowners every quarter since 1944. - Dividend raised each year for 44 consecutive years. - Sales have increased each year for 73 consecutive years.- Double digit Earnings increases for 21 consecutive years.- Current yield of 2.65%- Estimated 2007 P/E of 15.4- 44% of sales outside of North AmericaFor more information on the company please follow the link to their website. Read more:Growing
, Stocks
Questrade - Review 2007-05-09 13:28:00 Well I used my Questrade account yesterday for the first time so…now that I’ve had a little field experience actually using it I think I’m ready to give it a proper review. However, I would just like to point out that there are four different trading platforms available but the only one I’ve used and thus the only one I’ll review is the WebTrader platform. The WebTrader platform is similar to the online platforms of the big banks however it is not as slick or user friendly.POSITIVES:-has decent charting tools for those of you interesting in technical analysis-CHEAP TRADES. I can’t really over emphasize this. This is the real positive of Questrade. When you sign up you can chose from 2 different accounts:1. $0.01 a share (minimum fee of $4.95)2. a flat fee of $9.95 a trade (unlimited shares)I chose option 1. However, if you were a real day trader into penny stocks option #2 would save you a huge amount of money compared to the fees charged by the big banks.NEGATIVES:-No onli
ZED 2007-05-08 13:50:00 I tried out my Questrade account yesterday and bought a very small initial position (less than 1% of my port) in a small company (ZED) that trades on the Venture Exchange. For those of you unfamiliar with the company here is an excerpt from the “about us” section of their website:"Zedi (TSX Venture: ZED) specializes in production operations management, delivering systems and services that help oil and gas producers to better manage people, assets and information. We help our clients to increase earnings from production, decrease operating costs, best utilize human, physical and fiscal assets and mitigate compliance risk."Here are my reasons for buying:-over 90% of their revenues are reoccurring-their main market (small to intermediate oil/gas trusts) has been under pressure recently.-projected 2007 P/E of 12-projected 2008 P/E of 7.7-top line growth of 35%-40% a year.-very little debt – current ratio of around 5-trading at 2X book (I think this is cheap considering they are prim
Compensation of Financial Advisors – A Middle Class Rant V 2007-05-07 15:35:00 Here is my submissions for the Canadian Tour of Personal Finance Blogs:There are many posts out there on the high commissions/fees charged by both financial advisors and mutual fund companies. Almost all of these posts slam the high fees charged with no mention of the benefits that financial advisors do offer for some. Personally, I have mixed feelings on the compensation of financial advisors. For knowledgeable amateur investors like you and me their fees do seem ridiculous. Many amateur investors (myself included) shudder at the thought of paying 2% annually to a financial advisor or mutual fund manager. However, I would argue that isn’t the case for the majority of society. We shudder at the 2% fees in the same way a plumber would shudder at paying $80 an hour for someone to replace his faucets. There are many, many people out there who have absolutely no interest in finance or investing and as a result don’t find 2% to be an unreasonable fee to pay for advice on a subject that Read more:Compensation
, Financial
Canadian Tour of Personal Finance Blogs 2007-05-04 13:15:00 I’ll be participating in the second Canadian
Tour of Personal
Finance Blogs
on Monday May 7th. This time around the event has been generously hosted by The Money Diva. If you have a moment you might want to check out her blog as well as the other participants.For this tour I’ll be ranting about the compensation of Financial Advisors. However, it’s not your usual "fees are too high" rant...it’s a rant with a twist...tune in Monday to find out.Have a great weekend.
Retirement Nest Egg May 1 - 2007 2007-05-03 13:52:00 Retirement Nest Egg at the close of May 1, 2007.$110,327.50-Up $1617.53 from last month-Up $9969.14 in 2007TRP - 4.32%ABX - 3.65%CSH.UN - 3.56%GWO - 4.77%PFE - 4.28%POW - 4.12%BA.UN - 0.40%L – 4.12%UNS - 2.77%GZ - 2.89%TD – 12.65%EIT.UN - 2.99%JNJ - 3.58%MMM – 4.04%O'Shaughnessy’s Global Fund - 4.03%American Growth Fund - 1.06%CDN Value Fund - 3.85%Small Cap Growth Fund – 4.09%Chou Associates Fund - 10.84%Health Science Fund - 0.91%Bond (9% yield) - 5.45%Money Market Fund - 11.64%Basically there were no major changes in my portfolio composition this month. The 1.5% increase in my networth was due to dividends and share appreciation as no contributions were made this month.
Reader Question 2007-05-02 13:51:00 I was recently asked a few questions by a reader and thought I’d post my answers on the main page.What do you plan to do with the rest of your life?Well I think that in order to properly answer your question I should probably define what retirement means to me. When I say I want to retire at 40 basically all I want is to NOT HAVE TO WORK but still live the middle class lifestyle (thus my handle Middle Class Millionaire). In retirement I’m not interested in keeping up with the Jones, traveling the world, buying a vacation property etc… I just want to live the typical middle class lifestyle without having to work. I want working to be an option and not a necessity---basically I don’t want to be a slave to my job (or any job). At this point in my life I have to work whether I feel like it or not. I currently enjoy my job but would enjoy it more if I was part time. Here is a link to my basic retirement philosophy. Is the plan to be a full-time investor once you reach your "million Read more:Reader
, Question
Stolen Luxury Cars 2007-04-30 13:27:00 Thinking of buying a luxury car? Maybe you like to ride around in style or perhaps you’re hoping a brand new luxury car will guide you through a mid-life crisis. Either way here’s something to consider when buying a new luxury car.“Every 25.5 seconds, a vehicle is stolen in the U.S., according to the National Insurance Crime Bureau. Vehicle theft is the costliest property crime in America, costing consumers more than US$8.6 billion annually.”Here is a list of the 7 luxury cars with the highest probability of being stolen. (all prices in US Dollars)1. Cadillac - Escalade SUV - Base price: $55,0452. BMW - 7 Series Sedan - Base price: $78,9003. Land Rover – Range Rover SUV - Base price: $77,250 (tie)3. Lincoln Navigator 4-wheel-drive SUV - Base price: $46,575 (tie)4. Lexus – GS Sedan - Base price: $44,1505. Mercedes Benz S-Class long-wheelbase sedan - Base price: $86,5256. Mercedes Benz SL-Class convertible - Base price: $95,575So basically if your going to drop a lot of cash Read more:Luxury
Taxes 2007-04-27 17:13:00 I love investing, I love stocks, and I love retirement planning but man do I hate taxes!This post is just a reminder that for those of you (like me) that often leave things to the last minute --- the deadline is quickly approaching…so unless your 100% sure you’re going to get a refund make sure you have them in by midnight Monday, April 30.If you haven’t filed your taxes yet you’ll probably have to file electronically so here is a list of the software packages and web applications that are certified by the government of Canada for the 2006 tax year.Have a good weekend and happy filing! Read more:Taxes
Follow Up To “Calculating Networth” Post 2007-04-26 15:07:00 I just wanted to take this post to respond to some questions asked by silverm in the comments section of a recent post. Due to the length of my response I chose to respond here instead of in the comments section. Additionally, I respect silverm’s opinion as I often read his posts on various investing forums and wanted to give his questions a proper response. I also want to thank those of you who commented on my networth postings and correctly pointed out that I should change the title of my monthly “Networth” updates to “Retirement Nest Egg” updates. Despite the title change my method of calculating this number will remain the same and I believe the logic behind it is sound based on my personal situation. My Response to Comments:Your network calculation looks arbitrary. For example:You have a $200,000 home with a $100,000 mortgage. You also have a $50,000 portfolio. Then your retirement nest egg is $50,000?In my situation - yes my retirement nest egg would be $50,000. I woul
Stocks That Trade At Book Value 2007-04-25 12:22:00 Here is a link to an article by Norm Rothery - “Investing by the book” In his article Norm makes a case for buying companies at their book values and outlines 5 Canadian companies that are trading at approximately their book value. It should be no surprise that all of the companies identified by Norm are currently out of favour and will definitely only suit investors with a long time horizon as it may take the market a while to realize the value of the company. Read more:Stocks
, Trade
, Value
Credit Card Debt – A Middle Class Rant IV 2007-04-24 15:07:00 Well it’s about time for another one of my rants...credit card debt. There are a number of shows out there now ie - “Till Debt Do Us Part” that profile a couple or family with debt issues and provide them with debt counseling, if they listen to the counselor they receive some cash to put towards their debts. I’ve painfully watched a few shows, not because they were so good, but because it was so pathetic that I just couldn’t look away…In each show a middle class couple with decent jobs ended up racking up so much credit card debt that they had trouble paying the interest each month. The stupidity of this blows my mind. If people are using their credit card to buy food, shelter, emergency medical treatment etc... than that would be just sad…but if it’s being used to buy consumer items (wants instead of needs) than that’s just stupid. Although I don’t personally know anyone who’s gone bankrupt (except the person I bought my house from) I do have lots of friends a Read more:Credit Card
, Credit Card Debt
I’ve Been Tagged 2007-04-20 15:12:00 Yesterday I was “tagged” for the first time by Frugal Trader over at Million Dollar Journey, so now I have to reveal my most obsessive thoughts.So here they are in order, starting from clinically obsessed to slightly unhealthy obsessed.1.The Stockmarket - (big surprise here eh?). I spend a lot of time thinking about the market, individual stocks, and equity strategies. Since I’ve started blogging the obsession has gotten a little worse…but I really do enjoy it.2.Fishing – I love to fish and go every opportunity that I have, summer, winter, spring, fall it doesn’t matter I’ll fish for whatever is in season.3.Retirement Planning – This is linked to my stockmarket obsession. I’m actually spending a lot less time thinking about retirement planning now as I’ve finally developed a strategy that I can stick to and works for me. While developing my retirement strategy this would have probably been my #1 obsessive thought but now I simply execute the strategy instead of cons Read more:Tagged
Dividend Growing Stocks - II 2007-04-19 20:22:00 GEI'm sure everyone knows who GE is but...for those of you who don't...they are a large multinational conglomerate who manufacture almost everything… from jet engines to power generation, financial services to plastics, and medical imaging to news and information.-has paid a dividend every year since 1899.-increased their dividend every year for the last 31 years.-has grown their EPS each year for the past 10 years (2003 excluded)-current yield of 3.2%-5 Star rating by S&P-trailing PE of 17.2-2007 projected P/E: 16.33-2008 projected P/E: 14.6-Progressive company building for the future with their ecomagination concept.All in all a great company and a great choice for those of you following a dividend growth strategy. Read more:Dividend
, Growing
, Stocks
Canadian Tour of Personal Finance Blogs – Reviews 2007-04-18 13:33:00 Today I’m just going to review some of the posts that other bloggers have contributed to the tour. I honestly didn't have time to read everyones post so I'm only going to review the posts from blogs in my "Blog I Read" section.Canadian
DreamHe contributed a post entitled “How Much Do You Need to Retire”. His post begins with some sound advice by dispelling the notion that there is a magic percentage of your income that you’ll require in retirement. He then describes the method he would use to calculate how much income is actually required in retirement. He has a pretty extensive list of the costs and revenues that you should use (I won’t list them all here) to generate a rough idea of how much you should have in retirement. Part of the review process of the PF blog tour is to provide some constructive criticism but the only thing that I would suggest is that after the final retirement figure is calculated that it be increased by 10% to ensure that the retirees lifestyle is Read more:Personal
, Blogs
CPI 2007-04-17 13:33:00 This is my post for the Canadian Tour of Personal Finance Blogs.For those of you unfamiliar with CPI (Consumer Price Index) you might want to check out the following link for a definition before reading the remainder of the post.http://www.bls.gov/cpi/cpifaq.htmThere has been some debate amongst both professional and amateur investors/advisors about the validity and accuracy of CPI (consumer price index). Some people argue it’s too low, while others argue it’s too high. There are many highly educated, respected and experienced economists on both sides of the fence, and quite frankly I’m happy to leave the academic arguing to them. The purpose of this post isn’t to further the argument one way or the other but simply to point out that regardless of which side of the argument you’re on inflation pressures should be a factor in your retirement planning. Inflation is an important consideration by anyone considering retirement, but especially those considering early retirement a
Why do I Have This Blog? 2007-04-16 15:04:00 I’ve been e-mailed by a few people asking what my motivation is for creating this blog and asking me how much money I make from it…the answer is really very pathetic…approximately $3 a month. I haven’t kept track of exactly how many hours I’ve spent on the blog but I’d estimate that my hourly wage would be somewhere between five and fifteen cents an hour (almost makes you want to start you own eh?). I didn’t create this blog with the intentions of making anything from it and honestly haven’t spent a minute considering how to boost revenues or how to strategically place my ads so that you’d click on them etc... I’ve tried to make the blog look like a blog that I’d want to visit. One of my first posts gives a little bit of my personal background as well as why I started this blog but for those of you that just want the highlights here they are:-A forum that I can document/record/share (and hopefully learn) with/from all of you blog nerds out there on my journey f
Canadian Tour of Personal Finance Blogs 2007-04-13 17:39:00 I just wanted to give you guys a heads up that over the next week or so I will be participating in the Canadian
Tour of Personal
Finance Blogs
facilitated by http://www.canadian-money-advisor.ca. The purpose of the tour is “is to get to know other bloggers who write about personal finance, and to show case these bloggers articles and expertise to their readers.” I haven’t chosen a topic yet but I’m thinking it might as well be something controversial so we can get a debate going among different blogs. I've noticed that many of the blog that I read daily (see my blog links) are also going to be participating.
The Complete Users Guide to Warren Buffet 2007-04-12 21:03:00 Sorry for the late post but I had to attend some training that I had forgot this morning. Anyways...I just wanted to share this interesting article that I came across: The Complete Users Guide
to WarrenBuffet
The article describes “four savvy strategies for intelligently capitalizing on Buffett's wisdom”. The basic premise of the article is that investors shouldn’t focus on Buffets' long term holdings but instead focus on his recent acquisitions (ie- JNJ, UNH, PKX) and on the long term macro trends that Buffet has identified in the market (ie- retiring baby boomers, China). The article also reassured me that my recent decision to buy JNJ for the long term was valid. It’s worth a read. Read more:Warren Buffet
1 Million at Forty 2007-04-11 13:32:00 I recently received an inspirational e-mail from a reader who like me had the dream of accumulating $1,000,000 by age forty. Although she has not yet met that mark she has accumulated a large six figure portfolio and is on track to have a million bucks by forty. I asked her about her investing strategy and she was kind enough to give me the 9 rules that she has followed to achieve her wealth.1. Don't invest money you can't lose.2. Take any tax advantages you can.3. Receive cash from dividend and reinvest.4. Don't invest more than 50% of your money with asset managers.5. Listen to old, rich people.6. Put as much as you can into your kids names (tax advantage).7. Spend some of your money to enjoy life.8. Give some of your wealth away.9. Bring your spouse on your journey.She also gave me some advice on my portfolio --- hold more real estate and take more risks...
Evil Blog Contest 2007-04-10 17:38:00 Ok I admit it...todays post has no benefit to any of my readers (unless you can find some humour in my groveling). Todays’ post is a self indulgent, shameless attempt at me winning a new 30GB Microsoft Zune.John Chow from www.johnchow.com is having another evil blog contest and in order to enter I have to whore out my post for the day and let you know about Johns' blog. Johns' blog was designed to help people make money on the internet and he is giving away a Microsoft Zune to a lucky blog owner who is willing to promote his site.NOW WHERE IS MY ZUNE JOHN!? Read more:Contest
Calculating Networth 2007-04-09 13:34:00 I’ve been asked this question by a few of the blog readers and thought that I should respond as a post as other people are probably asking themselves the same question.Question:“Why do you refer to your portfolio value as your net worth? Or did I read it wrong...”You didn’t read it wrong...I do refer to my portfolio value as my networth. I know this isn’t the traditional way of calculating networth but for my purposes I feel it’s the most accurate considering my early retirement goal. I’ve done a rough calculation and the cash flow from 1 million dollars is way more than enough for me to retire on…..but I’m pretty conservative and want to have a cushion in case something in my plan goes wrong (plus 1 million is a nice round number – really rolls off the tongue). I’ll outline the items that a traditional networth calculation includes and try to explain why I don’t.ASSETSCars – I don’t include them because they’re a depreciating asset and for me a necessit
GO.A - Galleon Energy 2007-05-18 17:14:00 I purchased Galleon Energy
(GO.A - TSX) yesterday and here are the reasons why:-It is primarily a play on natural gas and as a result has dropped dramatically along with the price of gas.-Have a very large land base 8 million acres.-Assuming 7.32 Alberta spot prices-Have a history of exploration success.-Have the potential for good production growth-They had some production delays in the past however (according my favorite energy analyst Joseph Schachter) they are expecting increased production by the end of the year.-Current P/E 63.2-Projected 2007 P/E 26.19-Projected 2008 P/E 11-Located in politically stable environment(Disclaimer: I'm not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice.)
Don't Retire Early? - My View on the Subject 2007-05-17 15:01:00 Before I begin I have to admit I'm envious of anyone who "loves" their job so much they'd do for free. Now don't get me wrong I do like my job, but I don't love it. However, even if I did love it I still wouldn't want to do it for 40hrs a week, every week for the next 30 years. Actually, I don't think there is a single thing that I'd "love" to do every day for the next 30 years. I love doing lot's of things, fishing, reading, investing, watching movies etc... but like working I wouldn't want to "have" to do them for 40 hours a week for the next 30 years.Early
retirement is a risk to your future earnings - what if you retire at 45 then decide 5 years into your retirement hiatus that you want to work? Will you be happy with that Wal-Mart greeter job? ;) You greatly risk your future earnings potential.I disagree that the only jobs available to young early retirees out of the work force for 5 years is Wal-Mart greeter type jobs. Using the same logic the only j
JNJ (again) 2007-05-25 08:34:00 With the CDN pushing against 30 year highs I decided to increase my position in JNJ. I’ve posted these reasons before but here they are again:-44 years of consistent dividend growth.-Dividends issued to shareowners every quarter since 1944. -Dividend raised each year for 44 consecutive years. -Sales have increased each year for 73 consecutive years.-Double digit Earnings increases for 21 consecutive years.-Current yield of 2.50%-44% of sales outside of North America-ROE levels of above 21% for the past 10 years-Current P/E – 16.18-Projected 2007 P/E – 15.3-Projected 2008 P/E – 13.44-4 Star rating from S&P - $74 one year target-Argus rates it a buy with a $76 one year targetI like their diversified holdings within the healthcare sector particularly their consumer products.(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
Stock Splits 2007-05-24 08:05:00 I’ve got a great deal for you…..you give me a one 100 dollar bill and I’ll give you ten 10 dollar bills. Sound like a good deal? Interested? Of course your not interested...it’s not a good deal. Well this is exactly what happens when a stock splits. Essentially, you’re left with the exact same amount of pie…it’s just cut into more pieces.So if stock splits don’t effect the overall valuation of a company why do they bother to split their stock?• Make shares seem more affordable to small investors (although the intrinsic value of the company remains the same)• Could increase the liquidity of the stock as there are more shares available on the market (thus making it easier to trade) • Could split as a signal to the market that the company's share price has been increasing (the resulting attention could increase demand for the name)I know many of you that read this blog completely understand what happens when a stock splits, but I just thought that I should go over i Read more:Stock
, Splits
Garage Sale Follow Up & Lessons Learned 2007-05-23 08:15:00 Well I held my garage sale this weekend from 8am to 2pm and after advertising and beer expense I made a total of ...80 bucks. Certainly not a fortune but a lot better than nothing.Other than getting rid of some extra junk I actually learned a few lessons from my first garage sale experience.1. Your garbage is truly another man’s treasure.2. Active selling works.3. People will usually pay more than you think something’s worth (I ended up taking my price tags off half way through)4. Tax free money sure is sweet. Read more:Garage
, Lessons
, Learned
, Lessons Learned
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