IShares that Pay Monthly Distributions
www.investingforincome.com
As an income investor I prefer investments that pay monthly distributions. For those that like exchange traded funds that trade on the TSX I suggest iShares.
Cash distributions for the eleven iShares funds listed on the Toronto Stock Exchange which pay on a monthly basis. Unitholders of record on the second to last business day of the month will receive cash distributions payable on last business day of the month. Details of the "per unit" distribution amounts are as follows:
----------------------------------------------------------------------------
Cash
Fund Distribution
Fund Name Ticker Per Unit ($)
----------------------------------------------------------------------------
iShares DEX Universe Bond Index Fund XBB 0.09828
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iShares DEX All Corporate Bond Index Fund XCB 0.08879
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iShares Dow Jones Canada Select Dividend Index Fund XDV 0.09638
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iShares S&P/TSX Capped Financials Index Fund XFN 0.07515
----------------------------------------------------------------------------
iShares DEX All Government Bond Index Fund XGB 0.06154
----------------------------------------------------------------------------
iShares U.S. High Yield Bond Index Fund (CAD-Hedged) XHY 0.13200
----------------------------------------------------------------------------
iShares U.S. IG Corporate Bond Index Fund XIG 0.07016
----------------------------------------------------------------------------
iShares DEX Long Term Bond Index Fund XLB 0.07347
----------------------------------------------------------------------------
iShares S&P/TSX Capped REIT Index Fund XRE 0.05900
----------------------------------------------------------------------------
iShares DEX Short Term Bond Index Fund XSB 0.08410
----------------------------------------------------------------------------
iShares S&P/TSX Income Trust Index Fund XTR 0.06625
----------------------------------------------------------------------------
Showing posts with label 15000 per month Income. Show all posts
Showing posts with label 15000 per month Income. Show all posts
Saturday, July 31, 2010
Sunday, May 10, 2009
Equality of Outcome vs Equality of Opportunity
May 6, 2009
Nothing New Under the Sun
by Victor Davis Hanson
Pajamas Media
The Same Old Equality of Result
Rather than nitpick about Obama’s envisioned brave new world, I think it wiser to see it in the larger context of age-old divides over the nature of Western democratic and liberal society. Nothing that we have seen proposed since January 20 is novel; everything is merely the promise of the past outfitted with a new snazzier veneer of hope and change.
Take his domestic policies. What overarching philosophy seems reflected in raising taxes, borrowing trillions to spend trillions more on new entitlements, creating a new health care bureaucracy, cap-and-trade, allotting trillions more for education, and the expectation of the appointment of more liberal judges?
It’s old…
In a word, it is adherence to the idea of equality of result rather than an equality of opportunity, the age-old debate that goes back to the Greeks. From Aristotle’s Politics and Plato Laws, we learn of the original dilemma: a stable city-state of roughly similar property owners, who vote as equals, and fight as comrades in the phalanx, tragically, but inevitably, soon becomes tragically unequal.
Divide the land up equally to found the polis; give everyone an similarly-size plot (klêros); and then health, luck, brains, accident, strength, ambition, character, and a myriad of other factors, some understandable, some capricious, conspire to create inequality. I agree with Aristotle; I have seen it with families and communities in which equal inheritances soon led to radically different outcomes, as one sibling on rocky ground thrives, while another in deep loam starves; one town with abundant resources goes broke, while another without natural advantages thrives.
As Aristotle saw, some lose, some expand their original homesteads, and suddenly we have Hoi beltistoi and Hoi polloi — and the rallying cry that someone’s liberty to do as he pleases means that egalitarianism of the lowest common denominator becomes impossible.
American vs. French
The notion of freedom then butts up against equality, as if they are as often antithetical as symbiotic. (N.B.: note the French Revolutionary sloganeering of “fraternity” and “egalitarianism” versus the American Revolutionary emphasis on “Give me liberty, or give me death”, “Don’t Tread on Me!”, “All men are created equal” [by opportunity rather than by result]. And note Obama’s references to the French ideal.)
In response, the state has two choices to preserve its original ideal of equality (and we see elements of this further debate voiced in the Old Oligarch, Aristotle, Plato, Hobbes, Hume, etc, as well as in histories of the middle and late Roman Republic).
The Therapeutic
1. The state and culture at large can be coercive to ensure an equality of result — in the modern liberal world by high redistributive taxes, generous means-tested entitlements, inflationary monetary policies to diminish the power of capital (in the ancient world by forbidding the alienability of land, mandating the maximum size of estates, coining cheap bronze/silver coated money in vast amounts, redistribution of property, cancellation of debt, etc.).
Such efforts at commonality are what we are now witnessing with income tax hikes, $1.7 trillion dollar deficits, inflationary federal spending and borrowing, along with huge new entitlements. Its extreme form is the European Union, its extreme, extreme manifestations are the failed -isms and -ologies of the bloody 20th century where authoritarian elites broke the requisite eggs for the omelet of “for the people” and in service to “equality.”
The Tragic
2. Or instead of the therapeutic mode, we get the tragic acceptance of innate inequality combined with the notion of personal responsibility to care for one’s fellow citizen.
That is, in the American version of equality of opportunity, we accept some will always end up poor, some rich, some in-between due to factors both in, and beyond, our control. But rather than sacrifice liberty to use the coercive powers of the state to enforce equality, we set a foundation at the bottom, a safety net to ensure a minimum level of support for the poor, and laws at the top to prevent buccaneering and piratical behavior — in theory.
Then the tragic view accepts that some will be very wealthy, but assumes that the race for individual riches will, first, create greater prosperity for society at large (the much caricatured “trickle down”). And, two, a host of private mechanisms exists to channel individual bounty back for the general welfare: the status; and/or sense of right of giving to non-profits, charities, etc; the shame of living it up to an excessive degree; the patriotic call upon one to invest their riches in the public good; the informal practice of lending and giving to family and friends, etc. In other words, millions risk dying to leave temperate, naturally rich equality of result Mexico to enter the once equality of opportunity United States.
Been There, Done That
It seems to me that on three occasions during the last seventy-five years we have someone who really did believe in the therapeutic, equality of result — FDR, LBJ, and Jimmy Carter (Truman, JFK and Clinton proved to be centrists in comparison).
FDR had the rhetorical gifts and personal genius to implement such an agenda; LBJ and Carter tried, but were inept and poor messengers. And now we have a fourth avatar, who, given the current alignment of the planets, has a real chance to complete the FDR mandate — not in the dark days of the Great Depression replete with real want and starvation, but in a recession during the greatest age of affluence in the history of civilization — making both success and failure obsolete, and turning us into a sort of egalitarian polis much like Sweden or France.
I Don’t Owe You Any More
Turn on the radio: ads blare out how to renounce mortgage debt; get out of maxed out credit-cards; short the IRS; be eligible for a subsidized government loan, or new entitlement. Other ‘buy gold’ ads warn: plenty of danger, but no money in passbook accounts, stocks, real estate, as the debtor gains on the creditor, and capital earns little in comparison to protected salaries. To match a $100,000 government salary (as an upper-level bureaucrat), the despised capitalist, at a 2% interest payout on his stash, would need $5 million in accumulated cash: advantage bureaucrat.
Ironies Galore
Obama rather brilliantly counts on two great constituencies (other than the professional Ivy League technocracy whose responsibility is to figure out how to borrow and tax the money, lavish it on constituencies, and do rather well themselves as government overseers). One is the hyper-rich, the Kerrys, the Soroses, the Gateses, and their appendages in universities, government, foundations, and the media. These power players either make enough to be unconcerned with high taxation, or are so well connected politically (cf. the machinations of a Daschle, Dodd, Geithner, Rangel) that the coercive state rules simply do not apply.
Instead the hyper-wealthy receive a sort of psychic gratification in helping the ‘poor’, and romanticizing the underprivileged, thereby alleviating the guilt of being blessed, and at relatively small cost — and so they quite enthusiastically support the equality of result state.
Again, the poor present no challenge, offer no threat to the hyper — wealthy, but are thankful client recipients of ensured government largess. In contrast, the fellow elites have the necessary taste and education to satisfy the demands of aristocratic society.
And The Upper Middle Class?
But those in between, and especially those of the upper-middle class — the hardware store owner, the dentist, the paving contractor, the successful restaurateur, the real estate agent? These grasping who wish and aspire and may reach a mythical $250,000 salary some day (again, the threshold where one becomes the hated “they”), well now, they are not poor, need no government or private help, and offer no psychological alleviation of guilt to the elite. Romanticize a gardener or farm worker, or even clerk or teacher, but how does one mythologize a successful optometrist or insurance agent?
And yet they are not usually sophisticated in the snobbish sense, not opera-goers, not familiar with museums, not symphony buffs. Their children don’t necessarily attend Stanford or Harvard. In other words, they are near-to-wells, wannabes, without requisite culture, deserving of neither cultural awe and acceptance nor noblesse oblige.
A leftist elitist would always prefer the dubious (and now upscale, tax avoiding) huckster Al Sharpton, Tawana Brawley and all, to Sarah Palin, former mayor of Wasilla and Idaho University graduate. Joe the Plumber, the Cuban upper-middle class of Miami, the local talk show host, anyone who wants to get ahead, but shows so visibly the scars of the struggle to do so, lacks the refinement and taste of the more affluent, yet is in the crosshairs of the Obama revolution.
The only impediment to our new polis? There are not simply enough of these entrepreneurial dinosaurs to pay the taxes to feed the new $3.6 trillion annual beast. One can take all the income of the $250,000 “them”, and there won’t be enough to pay down the $9 trillion in new debt.
In short, Bush = lower taxes, more spending, and more debt; Clinton = higher taxes, more spending, and less debt; Obama = more taxes, more spending, and a lot more debt — and the same old dream that we can make everyone equal in the end — or else!
©2009 Victor Davis Hanson
Nothing New Under the Sun
by Victor Davis Hanson
Pajamas Media
The Same Old Equality of Result
Rather than nitpick about Obama’s envisioned brave new world, I think it wiser to see it in the larger context of age-old divides over the nature of Western democratic and liberal society. Nothing that we have seen proposed since January 20 is novel; everything is merely the promise of the past outfitted with a new snazzier veneer of hope and change.
Take his domestic policies. What overarching philosophy seems reflected in raising taxes, borrowing trillions to spend trillions more on new entitlements, creating a new health care bureaucracy, cap-and-trade, allotting trillions more for education, and the expectation of the appointment of more liberal judges?
It’s old…
In a word, it is adherence to the idea of equality of result rather than an equality of opportunity, the age-old debate that goes back to the Greeks. From Aristotle’s Politics and Plato Laws, we learn of the original dilemma: a stable city-state of roughly similar property owners, who vote as equals, and fight as comrades in the phalanx, tragically, but inevitably, soon becomes tragically unequal.
Divide the land up equally to found the polis; give everyone an similarly-size plot (klêros); and then health, luck, brains, accident, strength, ambition, character, and a myriad of other factors, some understandable, some capricious, conspire to create inequality. I agree with Aristotle; I have seen it with families and communities in which equal inheritances soon led to radically different outcomes, as one sibling on rocky ground thrives, while another in deep loam starves; one town with abundant resources goes broke, while another without natural advantages thrives.
As Aristotle saw, some lose, some expand their original homesteads, and suddenly we have Hoi beltistoi and Hoi polloi — and the rallying cry that someone’s liberty to do as he pleases means that egalitarianism of the lowest common denominator becomes impossible.
American vs. French
The notion of freedom then butts up against equality, as if they are as often antithetical as symbiotic. (N.B.: note the French Revolutionary sloganeering of “fraternity” and “egalitarianism” versus the American Revolutionary emphasis on “Give me liberty, or give me death”, “Don’t Tread on Me!”, “All men are created equal” [by opportunity rather than by result]. And note Obama’s references to the French ideal.)
In response, the state has two choices to preserve its original ideal of equality (and we see elements of this further debate voiced in the Old Oligarch, Aristotle, Plato, Hobbes, Hume, etc, as well as in histories of the middle and late Roman Republic).
The Therapeutic
1. The state and culture at large can be coercive to ensure an equality of result — in the modern liberal world by high redistributive taxes, generous means-tested entitlements, inflationary monetary policies to diminish the power of capital (in the ancient world by forbidding the alienability of land, mandating the maximum size of estates, coining cheap bronze/silver coated money in vast amounts, redistribution of property, cancellation of debt, etc.).
Such efforts at commonality are what we are now witnessing with income tax hikes, $1.7 trillion dollar deficits, inflationary federal spending and borrowing, along with huge new entitlements. Its extreme form is the European Union, its extreme, extreme manifestations are the failed -isms and -ologies of the bloody 20th century where authoritarian elites broke the requisite eggs for the omelet of “for the people” and in service to “equality.”
The Tragic
2. Or instead of the therapeutic mode, we get the tragic acceptance of innate inequality combined with the notion of personal responsibility to care for one’s fellow citizen.
That is, in the American version of equality of opportunity, we accept some will always end up poor, some rich, some in-between due to factors both in, and beyond, our control. But rather than sacrifice liberty to use the coercive powers of the state to enforce equality, we set a foundation at the bottom, a safety net to ensure a minimum level of support for the poor, and laws at the top to prevent buccaneering and piratical behavior — in theory.
Then the tragic view accepts that some will be very wealthy, but assumes that the race for individual riches will, first, create greater prosperity for society at large (the much caricatured “trickle down”). And, two, a host of private mechanisms exists to channel individual bounty back for the general welfare: the status; and/or sense of right of giving to non-profits, charities, etc; the shame of living it up to an excessive degree; the patriotic call upon one to invest their riches in the public good; the informal practice of lending and giving to family and friends, etc. In other words, millions risk dying to leave temperate, naturally rich equality of result Mexico to enter the once equality of opportunity United States.
Been There, Done That
It seems to me that on three occasions during the last seventy-five years we have someone who really did believe in the therapeutic, equality of result — FDR, LBJ, and Jimmy Carter (Truman, JFK and Clinton proved to be centrists in comparison).
FDR had the rhetorical gifts and personal genius to implement such an agenda; LBJ and Carter tried, but were inept and poor messengers. And now we have a fourth avatar, who, given the current alignment of the planets, has a real chance to complete the FDR mandate — not in the dark days of the Great Depression replete with real want and starvation, but in a recession during the greatest age of affluence in the history of civilization — making both success and failure obsolete, and turning us into a sort of egalitarian polis much like Sweden or France.
I Don’t Owe You Any More
Turn on the radio: ads blare out how to renounce mortgage debt; get out of maxed out credit-cards; short the IRS; be eligible for a subsidized government loan, or new entitlement. Other ‘buy gold’ ads warn: plenty of danger, but no money in passbook accounts, stocks, real estate, as the debtor gains on the creditor, and capital earns little in comparison to protected salaries. To match a $100,000 government salary (as an upper-level bureaucrat), the despised capitalist, at a 2% interest payout on his stash, would need $5 million in accumulated cash: advantage bureaucrat.
Ironies Galore
Obama rather brilliantly counts on two great constituencies (other than the professional Ivy League technocracy whose responsibility is to figure out how to borrow and tax the money, lavish it on constituencies, and do rather well themselves as government overseers). One is the hyper-rich, the Kerrys, the Soroses, the Gateses, and their appendages in universities, government, foundations, and the media. These power players either make enough to be unconcerned with high taxation, or are so well connected politically (cf. the machinations of a Daschle, Dodd, Geithner, Rangel) that the coercive state rules simply do not apply.
Instead the hyper-wealthy receive a sort of psychic gratification in helping the ‘poor’, and romanticizing the underprivileged, thereby alleviating the guilt of being blessed, and at relatively small cost — and so they quite enthusiastically support the equality of result state.
Again, the poor present no challenge, offer no threat to the hyper — wealthy, but are thankful client recipients of ensured government largess. In contrast, the fellow elites have the necessary taste and education to satisfy the demands of aristocratic society.
And The Upper Middle Class?
But those in between, and especially those of the upper-middle class — the hardware store owner, the dentist, the paving contractor, the successful restaurateur, the real estate agent? These grasping who wish and aspire and may reach a mythical $250,000 salary some day (again, the threshold where one becomes the hated “they”), well now, they are not poor, need no government or private help, and offer no psychological alleviation of guilt to the elite. Romanticize a gardener or farm worker, or even clerk or teacher, but how does one mythologize a successful optometrist or insurance agent?
And yet they are not usually sophisticated in the snobbish sense, not opera-goers, not familiar with museums, not symphony buffs. Their children don’t necessarily attend Stanford or Harvard. In other words, they are near-to-wells, wannabes, without requisite culture, deserving of neither cultural awe and acceptance nor noblesse oblige.
A leftist elitist would always prefer the dubious (and now upscale, tax avoiding) huckster Al Sharpton, Tawana Brawley and all, to Sarah Palin, former mayor of Wasilla and Idaho University graduate. Joe the Plumber, the Cuban upper-middle class of Miami, the local talk show host, anyone who wants to get ahead, but shows so visibly the scars of the struggle to do so, lacks the refinement and taste of the more affluent, yet is in the crosshairs of the Obama revolution.
The only impediment to our new polis? There are not simply enough of these entrepreneurial dinosaurs to pay the taxes to feed the new $3.6 trillion annual beast. One can take all the income of the $250,000 “them”, and there won’t be enough to pay down the $9 trillion in new debt.
In short, Bush = lower taxes, more spending, and more debt; Clinton = higher taxes, more spending, and less debt; Obama = more taxes, more spending, and a lot more debt — and the same old dream that we can make everyone equal in the end — or else!
©2009 Victor Davis Hanson
Saturday, September 27, 2008
Money is the Most Egalitarian Force in the World Bestowing Power on Whoever Holds It
Novelist Joyce Carol Oates once wrote, "The only people who claim that money is not important are people who have enough money so that they are relieved of the ugly burden of thinking about it."
French existential writer Albert Camus agreed. He said, "It is a kind of spiritual snobbery that makes people think they can be happy without money."
In many ways, they're right. How can you feel genuine contentment if you are harassed by bill collectors, living paycheck-to-paycheck, or worried whether you have enough to retire?
Don't get me wrong. Money doesn't buy true love or friendship. It won't solve all your problems, fix your marriage, turn you into "a success," or make you charitable if you're not already charitably inclined.
But money is the most egalitarian force in the world, bestowing power on whoever holds it.
It gives you the freedom to make important choices in your life. No one is free who is a slave to his job, his creditors, his circumstances, or his overhead.
Money allows you to support worthy causes and help those in need. It allows you to do what you want, where you want, with whom you want. It's called financial independence. And it's a great feeling.
As author Tom Robbins once remarked, "There's a certain Buddhistic calm that comes from having money in the bank."
As my regular readers know, I think more about money than most.
I've given the portfolio a light-hearted name. But securing your financial independence is serious business. The money that you will retire on - or are already retired on - should not be treated like chips in a poker game.
The Gone Fishin' Portfolio is risk-averse by design. Yet it has compounded at 17.3% annually since inception.
I don't want to suggest that you can eliminate investment risk entirely. That's not possible. But investing for income is a realistic approach. No other investment system comes closer to guaranteeing you long-term investment success.
My goal is to allow you to redirect your time from worries about money to high value activities, whether that's work you enjoy, time spent pursuing your favorite activities, or just relaxing with your friends and family.
In "The Pleasures of Life," Sir John Lubbock writes, "All other good gifts depend on time for their value. What are friends, books, or health, the interest of travel or the delights of home, if we have not time for their enjoyment? Time is often said to be money, but it is more - it is life; and yet many who would cling desperately to life, think nothing of wasting time."
French existential writer Albert Camus agreed. He said, "It is a kind of spiritual snobbery that makes people think they can be happy without money."
In many ways, they're right. How can you feel genuine contentment if you are harassed by bill collectors, living paycheck-to-paycheck, or worried whether you have enough to retire?
Don't get me wrong. Money doesn't buy true love or friendship. It won't solve all your problems, fix your marriage, turn you into "a success," or make you charitable if you're not already charitably inclined.
But money is the most egalitarian force in the world, bestowing power on whoever holds it.
It gives you the freedom to make important choices in your life. No one is free who is a slave to his job, his creditors, his circumstances, or his overhead.
Money allows you to support worthy causes and help those in need. It allows you to do what you want, where you want, with whom you want. It's called financial independence. And it's a great feeling.
As author Tom Robbins once remarked, "There's a certain Buddhistic calm that comes from having money in the bank."
As my regular readers know, I think more about money than most.
I've given the portfolio a light-hearted name. But securing your financial independence is serious business. The money that you will retire on - or are already retired on - should not be treated like chips in a poker game.
The Gone Fishin' Portfolio is risk-averse by design. Yet it has compounded at 17.3% annually since inception.
I don't want to suggest that you can eliminate investment risk entirely. That's not possible. But investing for income is a realistic approach. No other investment system comes closer to guaranteeing you long-term investment success.
My goal is to allow you to redirect your time from worries about money to high value activities, whether that's work you enjoy, time spent pursuing your favorite activities, or just relaxing with your friends and family.
In "The Pleasures of Life," Sir John Lubbock writes, "All other good gifts depend on time for their value. What are friends, books, or health, the interest of travel or the delights of home, if we have not time for their enjoyment? Time is often said to be money, but it is more - it is life; and yet many who would cling desperately to life, think nothing of wasting time."
Sunday, March 23, 2008
If You Are Investing Less Than 25% of Your Income Then You Aren’t Serious About Becoming Wealthy
If you are investing less than 25% of your income then you aren’t serious about becoming wealthy. But how do you afford to do this without suffering? The answer is here.
You can do this by eliminating waste and impulse spending from your spending habits. Studies have shown that the average person blows around 25% of their income in these two totally unnecessary areas; waste spend and impulse spending. Let’s see what these two types of unnecessary spending are and how to eliminate them.
First I will define waste spending. There are two main types of waste. Firstly waste is when you spend more money than you need to in order to get the result that you want. Secondly waste is when you buy more than you need in order to get the result that you want.
Here are two examples around food.
An example of Type 1 Waste would be buying a sandwich for lunch for $5 when you could have made the same sandwich at home, and brought it with you, for only 50 cents. You are paying ten times the true value of that sandwich by buying it ready made. You probably also spent more time standing in line to be served than the time you would have required to make the sandwich at home.
An example of Type 2 Waste is when you buy more food than you need and then have to throw it away. Because you couldn’t be bothered taking the time to calculate the amount that you really needed you overspent on your food bill.
The facts are that people are regularly guilty of both type 1 and type 2 waste on a regular basis, and not just with food. They tend to buy without asking for discounts and they over buy in all areas of their life.
Now let’s define impulse spending. Impulse spending is when you buy something that you had no intention of buying until you saw it by chance. It is no coincidence that supermarkets put chocolate bars and magazines next to the checkouts. They are there because the supermarket is well aware of the profit potential for them from impulse spending.
Impulse spending does not enhance your lifestyle. You are simply buying something just because you saw it and quite often you don’t even really want nor need these items. I was amazed to discover that most books purchased are never read. In fact the statistics are that 80% of books purchased are never even started and half of those that are started are never finished, People buy books on impulse, usually because they are attracted to the title and the cover design.
The main areas of impulse spending are sweets and magazines and anything that is “on sale”. People also tend to impulse spend in their areas of interest or hobbies. Young women will impulse spend on clothes, shoes and makeup. Musicians will impulse spend in the music shop, and so on.
If you can eliminate waste spending and impulse spending then, if you are like the typical American, you will free up around 25% of your income that you can put to investing. But how do you cure yourself of these costly habits? You can do this easily by developing two new habits.
New Habit Number 1:
The self-made rich decide in advance where and how they are going to spend their money. The average person spends their money randomly as the urge seizes them. Deciding where you money is going to go, while you are still at home, eliminates impulse spending. Making a conscious decision as to the value you will receive for each dollar spent will help eliminate waste spending.
Develop the habit of deciding, on pay day, where your money is going to go, write this down and then read over it and ask yourself if any of that planned expenditure is in the waste spending category.
When you are going shopping take a list and stick to the list. This will help remove the impulse spending habit. Developing the habit of deciding in advance where your money will go is a great way to ensure that you still maintain your quality of life in the present, but you free up money for investing so that you can become rich and enjoy a much greater quality of life in the future,
New Habit Number 2:
The self made rich have the habit of writing down every cent that they spend, as they spend it, so that they are fully aware of where their money is going. The average person is surprised when their money runs out because they were not fully aware of how much they where spending. As a result, bad money managers find that they have too much month at the end of the money whereas good money managers find that they have too much money at the end of the month.
Develop the habit of recording your expenditure as you spend it. Become fully aware of where your money is going and always ask yourself if this particular transaction is going to truly enhance your life or not. If the answer is no then don’t go through with that transaction.
Developing these two simple habits will free up a surprising amount of money for you to put to investing. So how should you invest that money in order to maximize your profits? Unfortunately this article is long enough already so that secret will have to be revealed on another day.
You can do this by eliminating waste and impulse spending from your spending habits. Studies have shown that the average person blows around 25% of their income in these two totally unnecessary areas; waste spend and impulse spending. Let’s see what these two types of unnecessary spending are and how to eliminate them.
First I will define waste spending. There are two main types of waste. Firstly waste is when you spend more money than you need to in order to get the result that you want. Secondly waste is when you buy more than you need in order to get the result that you want.
Here are two examples around food.
An example of Type 1 Waste would be buying a sandwich for lunch for $5 when you could have made the same sandwich at home, and brought it with you, for only 50 cents. You are paying ten times the true value of that sandwich by buying it ready made. You probably also spent more time standing in line to be served than the time you would have required to make the sandwich at home.
An example of Type 2 Waste is when you buy more food than you need and then have to throw it away. Because you couldn’t be bothered taking the time to calculate the amount that you really needed you overspent on your food bill.
The facts are that people are regularly guilty of both type 1 and type 2 waste on a regular basis, and not just with food. They tend to buy without asking for discounts and they over buy in all areas of their life.
Now let’s define impulse spending. Impulse spending is when you buy something that you had no intention of buying until you saw it by chance. It is no coincidence that supermarkets put chocolate bars and magazines next to the checkouts. They are there because the supermarket is well aware of the profit potential for them from impulse spending.
Impulse spending does not enhance your lifestyle. You are simply buying something just because you saw it and quite often you don’t even really want nor need these items. I was amazed to discover that most books purchased are never read. In fact the statistics are that 80% of books purchased are never even started and half of those that are started are never finished, People buy books on impulse, usually because they are attracted to the title and the cover design.
The main areas of impulse spending are sweets and magazines and anything that is “on sale”. People also tend to impulse spend in their areas of interest or hobbies. Young women will impulse spend on clothes, shoes and makeup. Musicians will impulse spend in the music shop, and so on.
If you can eliminate waste spending and impulse spending then, if you are like the typical American, you will free up around 25% of your income that you can put to investing. But how do you cure yourself of these costly habits? You can do this easily by developing two new habits.
New Habit Number 1:
The self-made rich decide in advance where and how they are going to spend their money. The average person spends their money randomly as the urge seizes them. Deciding where you money is going to go, while you are still at home, eliminates impulse spending. Making a conscious decision as to the value you will receive for each dollar spent will help eliminate waste spending.
Develop the habit of deciding, on pay day, where your money is going to go, write this down and then read over it and ask yourself if any of that planned expenditure is in the waste spending category.
When you are going shopping take a list and stick to the list. This will help remove the impulse spending habit. Developing the habit of deciding in advance where your money will go is a great way to ensure that you still maintain your quality of life in the present, but you free up money for investing so that you can become rich and enjoy a much greater quality of life in the future,
New Habit Number 2:
The self made rich have the habit of writing down every cent that they spend, as they spend it, so that they are fully aware of where their money is going. The average person is surprised when their money runs out because they were not fully aware of how much they where spending. As a result, bad money managers find that they have too much month at the end of the money whereas good money managers find that they have too much money at the end of the month.
Develop the habit of recording your expenditure as you spend it. Become fully aware of where your money is going and always ask yourself if this particular transaction is going to truly enhance your life or not. If the answer is no then don’t go through with that transaction.
Developing these two simple habits will free up a surprising amount of money for you to put to investing. So how should you invest that money in order to maximize your profits? Unfortunately this article is long enough already so that secret will have to be revealed on another day.
Wednesday, October 10, 2007
The Spending and Investment Wave Propelled by Demographic Trends-Corporate Cash Machines
Harry S Dent has an article on their web site titled "The Spending Wave" (Click here to read the whole article) where he expects that US stock Markets will begin to decline starting in 2010.
He goes on to say;
"We are forecasting that the U.S. economy (and the global economy) will continue to boom into around 2010 before experiencing an extended slowdown into 2023. Stock prices are likely to peak by late 2009 or 2010 and then bottom around late 2022 or so. The Dow could reach 25,000 and the Nasdaq could surpass its old high above 5,000 before the end of the decade when this boom ends. Investors should be moving back into equities, and businesses should be investing in marketing, technology and productive capacity ahead of the final stage of this boom. But conversely, investors should be moving back into defensive fixed income investments as we approach 2010, and businesses should attempt to maximize market share by 2010 and not over-invest in capacity in the late stages of this next boom. "
and went on to say;
"In fact, businesses should decide whether to cash out and sell around the end of this decade, or use their dominant market share positions gained in the boom to further increase their dominance and/or buy-out their competitors in the bust – thereby preparing for the next boom to come from the echo boom generation from 2023 into around 2050. Europe and most of the developed world will follow us into this next demographic downturn. But Asia will still be booming for years and decades to come after the initial crash that is likely to set in between late 2010 and early 2013. Sectors that benefit from older consumers, like health care, will also boom after the initial crash in stock prices. "
I agree with Mr. Dents premise on demographic trends however, I think the markets will change to suit the new trends. I think the following will happen;
1) Stocks will begin increasing dividends as investors demand income over growth. This explains why income trusts became so popular so quickly. Company's will turn into "Cash Machines"
2) Investors will demand tax changes that make dividends tax deductible to a corporation but fully taxable in the hands of the investor (retiree) just like interest payments. This will drive stock valuations up.
3) Workers will continue working past 65 years old thus slowing the propensity to sell stocks.
4) Corporations will find creative ways to satisfy investor requirements of investing for income.
5) Home prices will be under more selling pressure than stocks as retirees cash out to pay for living expenses and purchase income producing assets such as stocks.
My strategy is to keep on acquiring income producing assets so that I can enjoy a rich life with passive income.
He goes on to say;
"We are forecasting that the U.S. economy (and the global economy) will continue to boom into around 2010 before experiencing an extended slowdown into 2023. Stock prices are likely to peak by late 2009 or 2010 and then bottom around late 2022 or so. The Dow could reach 25,000 and the Nasdaq could surpass its old high above 5,000 before the end of the decade when this boom ends. Investors should be moving back into equities, and businesses should be investing in marketing, technology and productive capacity ahead of the final stage of this boom. But conversely, investors should be moving back into defensive fixed income investments as we approach 2010, and businesses should attempt to maximize market share by 2010 and not over-invest in capacity in the late stages of this next boom. "
and went on to say;
"In fact, businesses should decide whether to cash out and sell around the end of this decade, or use their dominant market share positions gained in the boom to further increase their dominance and/or buy-out their competitors in the bust – thereby preparing for the next boom to come from the echo boom generation from 2023 into around 2050. Europe and most of the developed world will follow us into this next demographic downturn. But Asia will still be booming for years and decades to come after the initial crash that is likely to set in between late 2010 and early 2013. Sectors that benefit from older consumers, like health care, will also boom after the initial crash in stock prices. "
I agree with Mr. Dents premise on demographic trends however, I think the markets will change to suit the new trends. I think the following will happen;
1) Stocks will begin increasing dividends as investors demand income over growth. This explains why income trusts became so popular so quickly. Company's will turn into "Cash Machines"
2) Investors will demand tax changes that make dividends tax deductible to a corporation but fully taxable in the hands of the investor (retiree) just like interest payments. This will drive stock valuations up.
3) Workers will continue working past 65 years old thus slowing the propensity to sell stocks.
4) Corporations will find creative ways to satisfy investor requirements of investing for income.
5) Home prices will be under more selling pressure than stocks as retirees cash out to pay for living expenses and purchase income producing assets such as stocks.
My strategy is to keep on acquiring income producing assets so that I can enjoy a rich life with passive income.
Tuesday, October 9, 2007
How I Lost it All in the stock Market
This is a reprint of a letter sent to us in 2003. Its as relevant today as it was then.
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February 2, 2003
To: investingforincome.com
From: DRG
Finally someone agrees with me or better me with them!
I have been playing around in the marked for more than 25 years. I made some I lost some . I lost my whole house on a stock (Abacus) of a company who was building the Edmonton shopping mall. At the recommendation of my broker who was very friendly to me (he bought me coffee quiet often) I borrowed as much money as I could to buy the said stock.
Now, he worked for a reputable brokerage house, so I felt fairly good about my investment. I had 2000 shares @5.00 a piece. Thats what my house was worth in the early 70's. My broker told me he knows the people who were running the company, don't worry. Well the stock kept sinking and sinking. I questioned him (over another cup of coffee) what is the meaning of all of this. O, all stocks fluctuate up and down, he said. I figured, he should know, he is the "professional", and I don't know anything. When they dropped to 40 cents I asked him: "Don't you think I should buy some more, after all that is a excellent stock , is it not"? He hesitated and said, "well, I think, you got enough, lets not become greedy". I got him to buy me another 3,000 @ 45 cents, anyway. What a good average I had achieved, I was so proud of myself.
A little while after that, I turned on the TV and I heard the word Abacus.-- Close to bankrupt.-- I was sick, and yes I lost the whole works. I paid my house off a second time and left the market alone until 15 years later. In time the broker had been ?invited to court?, but left the country instead.
O'how I missed my coffee. I had to think of retirement and managed to get a couple houses to rent out. A friend told me about income producing stocks (units). I have never looked back since. I borrowed again from the bank, a house worth. As of today my holdings are $ 250,690 and I got paid at for January 2003 a total of $3,470. That is twice as good as getting rent, even after paying almost a $1,000 to the bank, and the interest to the bank is deductible. No houses to fix up, no painting, no complaints.
Sure I still have some property, diversification is good, but as far as income is concerned, you can't beat the income funds. When I got your e-mail (from a friend) about the different recommendations I was glad to see that those were exactly my choices for the last three years. It feels good to see that I finally got paid back from the school of hard knocks. I hope it lasts for a while.
DRG
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February 2, 2003
To: investingforincome.com
From: DRG
Finally someone agrees with me or better me with them!
I have been playing around in the marked for more than 25 years. I made some I lost some . I lost my whole house on a stock (Abacus) of a company who was building the Edmonton shopping mall. At the recommendation of my broker who was very friendly to me (he bought me coffee quiet often) I borrowed as much money as I could to buy the said stock.
Now, he worked for a reputable brokerage house, so I felt fairly good about my investment. I had 2000 shares @5.00 a piece. Thats what my house was worth in the early 70's. My broker told me he knows the people who were running the company, don't worry. Well the stock kept sinking and sinking. I questioned him (over another cup of coffee) what is the meaning of all of this. O, all stocks fluctuate up and down, he said. I figured, he should know, he is the "professional", and I don't know anything. When they dropped to 40 cents I asked him: "Don't you think I should buy some more, after all that is a excellent stock , is it not"? He hesitated and said, "well, I think, you got enough, lets not become greedy". I got him to buy me another 3,000 @ 45 cents, anyway. What a good average I had achieved, I was so proud of myself.
A little while after that, I turned on the TV and I heard the word Abacus.-- Close to bankrupt.-- I was sick, and yes I lost the whole works. I paid my house off a second time and left the market alone until 15 years later. In time the broker had been ?invited to court?, but left the country instead.
O'how I missed my coffee. I had to think of retirement and managed to get a couple houses to rent out. A friend told me about income producing stocks (units). I have never looked back since. I borrowed again from the bank, a house worth. As of today my holdings are $ 250,690 and I got paid at for January 2003 a total of $3,470. That is twice as good as getting rent, even after paying almost a $1,000 to the bank, and the interest to the bank is deductible. No houses to fix up, no painting, no complaints.
Sure I still have some property, diversification is good, but as far as income is concerned, you can't beat the income funds. When I got your e-mail (from a friend) about the different recommendations I was glad to see that those were exactly my choices for the last three years. It feels good to see that I finally got paid back from the school of hard knocks. I hope it lasts for a while.
DRG
Friday, October 5, 2007
Can I generate $15,000 per Month Income?
Can I generate $15,000 per Month Income?
On November 1, 2006 I had major losses from the Canadian Government's about face decision to tax income trusts. I stayed up night after night worrying. Have any of you stayed up all night worrying? Have any of you had insomnia positions that threatened your sleep that destroyed your relationships and eroded your self-esteem? I have and I can tell you right now that holding and hoping is a recipe for disaster, both financially and personally.
I finally sold out on November 15, 2006 and reinvested my remaining funds in SDT.Un and EIT.UN. These are still my largest holdings.
Just because my income investments got clobbered does not mean that the underlying investment philosophy of investing for income is wrong.
I plan on rebuilding my income portfolio and I plan to share my experience with you in the coming months and years.
My Goal is to generate $15,000 per month income net of intererst costs and taxes.
Stay tuned.
On November 1, 2006 I had major losses from the Canadian Government's about face decision to tax income trusts. I stayed up night after night worrying. Have any of you stayed up all night worrying? Have any of you had insomnia positions that threatened your sleep that destroyed your relationships and eroded your self-esteem? I have and I can tell you right now that holding and hoping is a recipe for disaster, both financially and personally.
I finally sold out on November 15, 2006 and reinvested my remaining funds in SDT.Un and EIT.UN. These are still my largest holdings.
Just because my income investments got clobbered does not mean that the underlying investment philosophy of investing for income is wrong.
I plan on rebuilding my income portfolio and I plan to share my experience with you in the coming months and years.
My Goal is to generate $15,000 per month income net of intererst costs and taxes.
Stay tuned.
Tuesday, September 4, 2007
The Time is now for Oil & Gas Trusts
I will be picking up oil and gas trusts over the next month because I think the lows are in for the year.
The gassy trusts are a real value at these levels because nobody wants them with Natural Gas storage full and prices in the low $5 area.
Remember, be fearful when everyone is greedy and be greedy when everyone is fearful.
The gassy trusts are a real value at these levels because nobody wants them with Natural Gas storage full and prices in the low $5 area.
Remember, be fearful when everyone is greedy and be greedy when everyone is fearful.
Monday, June 25, 2007
I have not Changed my Holdings
I have not published in awhile but rest assurred that I have not changed my holdings.
My largest positions are the same picks I have been advocating over the last 6 months.
My largest positions are the same picks I have been advocating over the last 6 months.
Thursday, March 8, 2007
Canadian Income Trusts: A Screaming "BUY" Opportunity
The following excerpt was from Roger Conrad who has a free (and a paid version) newsletter called "Maple Leaf Memo".
Canadian Income Trusts: A Screaming "BUY" Opportunity
On Halloween day last year, Canadian Finance Minister Jim Flaherty decided that no more companies should be allowed to convert into trusts and that virtually all existing trusts should lose their tax-exemption starting in 2011.
We’ve seen this tax-grab before. The previous Labor government proposed taxing income trusts a year earlier, but ran into such heavy opposition that it was forced to shelve the idea.
Will this latest scare simply be a repeat of 2005’s false alarm? I can’t promise you anything, but we certainly have plenty of reasons not to panic.
First of all, the proposed legislation still needs to be approved by Parliament. All the minister has done so far is to file a notice of intent to table a bill in Parliament. There are no details on when this will happen.
Second, since the proposal provides a four-year grace period before existing trusts are taxed, current trusts will continue to pay their fat distributions.
Third, the proposed law as currently written might never see the light of day. Four years is an eternity in politics. It gives Canadian authorities plenty of time to allow certain businesses back into the income trust fold. (I’m convinced that what they really want is to restrict the format to the natural resource companies it was intended for--not to kill the trust format altogether.)
A year from now, I bet we’ll barely remember this Halloween scare.
And look on the bright side: It’s hard to lose if you buy in now. Trust prices have fallen in the face of uncertainty, giving you a great entry point and super-sized yields. Trusts that were yielding 10% the day before Halloween are now paying 12%. The actual businesses underlying these trusts haven’t changed a bit. Conservatively run, high-quality income trusts are as solid as ever, and I have no doubt they'll prevail for years to come.
Remember, the current yields still hold until 2011. So the owners of Precision Drilling, just to pick one of my favorites, will still receive 13.2% on their capital for the next four years.
And even if they're taxed four years from now, these companies will still be paying yields that dwarf your options in the Dow and S&P. Dozens of trusts now yield more than 10%, some as high as 21%.
Bottom line: I'm pounding the table because there are still plenty of trusts worth buying and holding for the long haul as their businesses grow.
Canadian Income Trusts: A Screaming "BUY" Opportunity
On Halloween day last year, Canadian Finance Minister Jim Flaherty decided that no more companies should be allowed to convert into trusts and that virtually all existing trusts should lose their tax-exemption starting in 2011.
We’ve seen this tax-grab before. The previous Labor government proposed taxing income trusts a year earlier, but ran into such heavy opposition that it was forced to shelve the idea.
Will this latest scare simply be a repeat of 2005’s false alarm? I can’t promise you anything, but we certainly have plenty of reasons not to panic.
First of all, the proposed legislation still needs to be approved by Parliament. All the minister has done so far is to file a notice of intent to table a bill in Parliament. There are no details on when this will happen.
Second, since the proposal provides a four-year grace period before existing trusts are taxed, current trusts will continue to pay their fat distributions.
Third, the proposed law as currently written might never see the light of day. Four years is an eternity in politics. It gives Canadian authorities plenty of time to allow certain businesses back into the income trust fold. (I’m convinced that what they really want is to restrict the format to the natural resource companies it was intended for--not to kill the trust format altogether.)
A year from now, I bet we’ll barely remember this Halloween scare.
And look on the bright side: It’s hard to lose if you buy in now. Trust prices have fallen in the face of uncertainty, giving you a great entry point and super-sized yields. Trusts that were yielding 10% the day before Halloween are now paying 12%. The actual businesses underlying these trusts haven’t changed a bit. Conservatively run, high-quality income trusts are as solid as ever, and I have no doubt they'll prevail for years to come.
Remember, the current yields still hold until 2011. So the owners of Precision Drilling, just to pick one of my favorites, will still receive 13.2% on their capital for the next four years.
And even if they're taxed four years from now, these companies will still be paying yields that dwarf your options in the Dow and S&P. Dozens of trusts now yield more than 10%, some as high as 21%.
Bottom line: I'm pounding the table because there are still plenty of trusts worth buying and holding for the long haul as their businesses grow.
Tuesday, March 6, 2007
How I Plan to Make $15,000 per Month with Canadian Income Trusts
If you have been reading this Blog you realize that I plan to earn $15,000 (Canadian $) per month by building a portfolio of Income Trusts.
On the right hand side of this Blog I list my largest holdings and the amount of monthly cash flow they generate.
For those that are new to the idea I will summarize as follows:
SDT.UN Pays $0.045 per month per unit. You can buy a unit on the TSX for $4.74 per unit. This results in a yield of 11.4%. I presently own 120,000 units. Therefore I receive monthly cheques of $5,400.
EIT.UN Pays $0.07 per month per unit. You can buy a unit on the TSX for $6.11 per unit. This results in a yield of 13.74%. I Presently own 33,000 units. Therefore I receive monthly cheques of $2,310.
If you want to learn more then go to the web site and if you follow my BLOG you can watch me achieve my goal.
This is not a get rich quick scheme. This is getting rich slowly by investing for income.
I only hope I have peaked your interest and I encourage you to perform your own due dilligence.
I am not paid by anybody to promote stocks and I have revealed my holdings to you.
Tune in regularly to see how am doing.
On the right hand side of this Blog I list my largest holdings and the amount of monthly cash flow they generate.
For those that are new to the idea I will summarize as follows:
SDT.UN Pays $0.045 per month per unit. You can buy a unit on the TSX for $4.74 per unit. This results in a yield of 11.4%. I presently own 120,000 units. Therefore I receive monthly cheques of $5,400.
EIT.UN Pays $0.07 per month per unit. You can buy a unit on the TSX for $6.11 per unit. This results in a yield of 13.74%. I Presently own 33,000 units. Therefore I receive monthly cheques of $2,310.
If you want to learn more then go to the web site and if you follow my BLOG you can watch me achieve my goal.
This is not a get rich quick scheme. This is getting rich slowly by investing for income.
I only hope I have peaked your interest and I encourage you to perform your own due dilligence.
I am not paid by anybody to promote stocks and I have revealed my holdings to you.
Tune in regularly to see how am doing.
Tuesday, February 6, 2007
Passive Income
I want you to take a step back and just think about this question; Why do you invest for retirement?
The answer that you have been bombarded with is something like this;
One must invest and have there money grow so that once they retire they can live off the income from no risk interest paying investments. Your planner probably came up with a fancy work sheet and questionnaire and at the end they tell you based on X% interest you will need $Y when you retire so that you can have an income of $Z per month when you retire. This income is called passive income. If you think about it, that is what we are all in the end trying to achieve.
Passive income is when you work once but continue to get paid over and over again from work you're no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income. So far so good.
This is the thought pattern I went through back in early 2001. However, this seemed impossible. The market had crashed. I had no Idea how I could save enough from my earned income to eventually build up a nest egg. So, like everyone else we keep chasing the big score on a real estate deals, stock market or even a lottery.
There is no such thing as something for nothing. That is why most of will fail at achieving the big score.
The problem is that Wall Street has it backwards. Instead of focusing on investing for capital gains, you should focus on income invest immediately. That's right forget about capital gains-no matter how old you are. I decided that when I retire I need so much a month to live on. So at 45 years old I sold all my stocks and mutual funds in my RRSP (IRA) and focused on income producing securities. This is when I discovered Canadian Income Trusts. I had less than $70,000 in the RRSP at the time and today that account alone is producing over $1,000 per month income. Because of compounding this account will probably be producing about $14,000 per month income when I turn 65 years old. Now that's passive income! This does not include my other portfolios.
To put it simply, passive income is income that continues to generate money for you even when you have stopped working. Passive Income is financial freedom with real financial security.
For example, your rental income is a good source of passive income. Rental income includes payments made by an occupant for the use of property, payments to cancel a lease, advance rent, and any security deposit used as a final payment of rent. If you own a house and you rent it out, you will continue to receive your rental income for as long as you have a tenant, regardless of whether you work or not. Similarly, if you invest in unit trusts and it generates dividends for you, the dividends are your passive income. There are many ways to create passive income.
Financial freedom is not having to rely on a paycheck for your standard of living. If you are sick, or want to take a vacation, you will still have money coming to you from your investments. This is Passive Income. Passive Income is Freedom. Passive Income is Security.
The earlier you start planning and building your passive income, the earlier you can achieve being financially free. It takes time and effort, especially in the beginning, just like building anything worthwhile does. You build a foundation and gradually build up your passive income from there.
There are many types of passive income such as
· Private business income
· Real estate income
· Residuals on mutual fund sales (This is what financial planners, brokers and the entire financial industry runs on)
· Welfare Income
· Unemployment Insurance Income
· Workers Compensation Income
· Disability Income
· Government Pension Income
· Employer Pension Income
· Registered retirement plan income
· Interest Income
· Royalty Income
· Dividend Income
· Income Trust Income (Our favorite)
When you look at the list above you can see why government social programs are so popular. By the way if you plan your future around passive income from Government you will become bitter and disappointed. By the time you figured out that you have been fleeced it will be too late. Why? Because the passive income they give you will be less in real purchasing power than you think. The problem is that it is so gradual that the unsuspecting public does not see it happen.
As a matter of fact the real reason Mutual Funds are so popular is because they generate billions of dollars of passive income for the financial industry. Not for investors (suckers?) like you. This is why they advertise so much. This is why they tell you to buy and hold. Do not fall for the line that your planner gives you that he invests in the same thing because he is not relying on his investments for his passive income. He is relying on yours.
How can you build your Passive Income?
The cornerstone of all wealth is understanding the difference between assets and liabilities. The difference is this: Assets put money IN your pocket. Liabilities take money OUT of your pocket.
A liability is something that takes money out of your pocket." (Monthly and continuously) Most people think their home, car, and other possessions are assets. But, the truth is that in most cases those things take money out of your pocket. They cost you money. They don't make you money. Those things are liabilities. They take money OUT of your pocket each month.
Here comes a shocker----Equity in your home is dead capital. You must convert that equity into passive income.
An asset is something that puts money in your pocket monthly and continuously. When you have more money coming IN from real assets than you have going OUT to pay for liabilities, you will be financially free. This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It's not knowing the difference that causes most of the financial struggle in the real world.
Our liabilities are someone else's (usually the bank's) assets. Most people mistakenly think of their home as their biggest asset. It is an asset - the bank's asset. Our home is usually our biggest liability in that it takes money out of our pocket month after month.
The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets.
Real assets fall into several different categories:
1) Businesses that do not require your presence;
2) Dividend paying stocks;
3) Bonds;
4) Income Trusts;
5) Income-generating real estate; 6) Notes (IOUs); and 7) Royalties from intellectual property (books, music, patents?).
Most people use their money to buy liabilities whereas the rich use their money to buy assets that pay for their liabilities.
Start to plant seeds inside your asset column. Start small and plant seeds. Some grow; some don't.
There are three different types of income: Earned Income; Passive Income; and Portfolio Income. You must know what kind of income to work hard for, how to keep it and how to protect it from loss. This is the key to great wealth.
Earned income is income derived from your job. It is linear in nature. You work for an hour and get paid only one time for that one-hour's work, and that's it. Your income stops when you stop working.
The rich don't work for money; they have their money work for them. This is achieved through portfolio income and passive income.
Portfolio income is the income you receive from interest, dividends, royalties and gains you get from investments in paper assets.
Passive income is when you work once but continue to get paid over and over again from work you're no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income.
But note the definition of a business!
Owning a business that provides passive income means the business works without you having to be there. You have a business if you can leave it for a year or more and then return to find it more profitable and running better than when you left. But if your business would falter without you then it's more like a 'job' than a business.
So you can think of earned income as coming from something you do. Passive income comes from businesses or real estate that work for you. And portfolio income comes from paper assets that work for you.
Everyone has income, but not everyone maximizes the use of that income. Of the four income patterns, the one to shoot for is that of the rich. And one myth you can dispose of is "It takes money to make money." Regardless of your income you can begin to acquire assets that return an income every year -- passive income that comes in, rain or shine, whether you work or not. This is money working for you, not you working for money.
Unlike passive income, earned income or linear income requires that you work for your money. You are basically exchanging your time and effort for money. You get paid when you work. The moment you stop working, you don't get paid.
The key to becoming wealthy is the ability to convert earned income into passive income and/or portfolio income as quickly as possible. The taxes are highest on earned income. The least taxed income is passive income. That is another reason why you want your money working hard for you. The government taxes the income you work hard for more than the income your money works hard for.
The rich incorporate their assets and are able to: Earn, Spend and Pay Taxes on what is left.
The poor and middle class work at a job and must: Earn, Pay Taxes and then Spend what is left.
This is so powerful that we predict that if our governments do not make some attempt to reduce corporate taxes and prevent the double taxation of dividends; that the market capitalization of income trusts in Canada will exceed the market capitalization of the TSX/S&P 300 index.
Wealth and freedom can, and should, be yours. You have the right to acquire it. The family that is jet setting around the world, teaching their children about art in Paris and about science on the Amazon, eating out whenever they want to, cruising on yachts, hot-air ballooning over wine country, relaxing on tropical beaches, has no more right to all of that than you. We believe you can have, should have, and will have all your dreams. All of them.
Only 4% will actually achieve freedom of choice or financial freedom, and a mere one per cent actually achieve his dream for true wealth. This means that only 5% of people are able to provide for themselves when they retire. Are you currently positioned to become one of the 5%?
Statistic further shows that of this one per cent, 74% made their money from running their own business, 10% are professionals, 10% are CEOs of large companies, and the rest achieve wealth from other sources.
The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money but never learn to have money work for them. The rich don't work for money; they have their money work for them.
This can be achieved through passive income.
We at investingforincome.com are focusing on passive income using Canadian Income Trusts. We think it's the easiest way to achieve passive income. One can start with as little as $1,000. We can all be little Warren Buffets.
You see before World War II investors invested in stocks for income. But after the war this started to change slowly. By the end of the millennium the stock market became a huge capital gains generating machine with little or no income.
We speculate that the trend to capital gains was due to favorable taxation of capital gains over dividends. However, we believe we are on a long term secular trend where we will see the stock market convert from a capital gains machine to an income generating machine. This has all ready started with the BUSH tax plan that tried to make dividends tax-free. This is only the beginning. The USA will lead the way for all nations. I bet you that in 20 years from now most stock market returns will be from dividends/income and not capital gains. Buy the time the experts figure this out and tell you they will have deprived you of billions of dollars of income.
We strongly recommend that on a long-term perspective you get out of stocks and mutual funds that do not pay income.
We have given you a lot to think about. Remember, we have nothing to sell you here. Instead of listening to the media and all the experts just think about this on your own. Your gut will tell you that we are right.
Remember, as Warren Buffet said if you are a poker game and you cannot figure out who is the patsy then guess what...your the patsy.
The answer that you have been bombarded with is something like this;
One must invest and have there money grow so that once they retire they can live off the income from no risk interest paying investments. Your planner probably came up with a fancy work sheet and questionnaire and at the end they tell you based on X% interest you will need $Y when you retire so that you can have an income of $Z per month when you retire. This income is called passive income. If you think about it, that is what we are all in the end trying to achieve.
Passive income is when you work once but continue to get paid over and over again from work you're no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income. So far so good.
This is the thought pattern I went through back in early 2001. However, this seemed impossible. The market had crashed. I had no Idea how I could save enough from my earned income to eventually build up a nest egg. So, like everyone else we keep chasing the big score on a real estate deals, stock market or even a lottery.
There is no such thing as something for nothing. That is why most of will fail at achieving the big score.
The problem is that Wall Street has it backwards. Instead of focusing on investing for capital gains, you should focus on income invest immediately. That's right forget about capital gains-no matter how old you are. I decided that when I retire I need so much a month to live on. So at 45 years old I sold all my stocks and mutual funds in my RRSP (IRA) and focused on income producing securities. This is when I discovered Canadian Income Trusts. I had less than $70,000 in the RRSP at the time and today that account alone is producing over $1,000 per month income. Because of compounding this account will probably be producing about $14,000 per month income when I turn 65 years old. Now that's passive income! This does not include my other portfolios.
To put it simply, passive income is income that continues to generate money for you even when you have stopped working. Passive Income is financial freedom with real financial security.
For example, your rental income is a good source of passive income. Rental income includes payments made by an occupant for the use of property, payments to cancel a lease, advance rent, and any security deposit used as a final payment of rent. If you own a house and you rent it out, you will continue to receive your rental income for as long as you have a tenant, regardless of whether you work or not. Similarly, if you invest in unit trusts and it generates dividends for you, the dividends are your passive income. There are many ways to create passive income.
Financial freedom is not having to rely on a paycheck for your standard of living. If you are sick, or want to take a vacation, you will still have money coming to you from your investments. This is Passive Income. Passive Income is Freedom. Passive Income is Security.
The earlier you start planning and building your passive income, the earlier you can achieve being financially free. It takes time and effort, especially in the beginning, just like building anything worthwhile does. You build a foundation and gradually build up your passive income from there.
There are many types of passive income such as
· Private business income
· Real estate income
· Residuals on mutual fund sales (This is what financial planners, brokers and the entire financial industry runs on)
· Welfare Income
· Unemployment Insurance Income
· Workers Compensation Income
· Disability Income
· Government Pension Income
· Employer Pension Income
· Registered retirement plan income
· Interest Income
· Royalty Income
· Dividend Income
· Income Trust Income (Our favorite)
When you look at the list above you can see why government social programs are so popular. By the way if you plan your future around passive income from Government you will become bitter and disappointed. By the time you figured out that you have been fleeced it will be too late. Why? Because the passive income they give you will be less in real purchasing power than you think. The problem is that it is so gradual that the unsuspecting public does not see it happen.
As a matter of fact the real reason Mutual Funds are so popular is because they generate billions of dollars of passive income for the financial industry. Not for investors (suckers?) like you. This is why they advertise so much. This is why they tell you to buy and hold. Do not fall for the line that your planner gives you that he invests in the same thing because he is not relying on his investments for his passive income. He is relying on yours.
How can you build your Passive Income?
The cornerstone of all wealth is understanding the difference between assets and liabilities. The difference is this: Assets put money IN your pocket. Liabilities take money OUT of your pocket.
A liability is something that takes money out of your pocket." (Monthly and continuously) Most people think their home, car, and other possessions are assets. But, the truth is that in most cases those things take money out of your pocket. They cost you money. They don't make you money. Those things are liabilities. They take money OUT of your pocket each month.
Here comes a shocker----Equity in your home is dead capital. You must convert that equity into passive income.
An asset is something that puts money in your pocket monthly and continuously. When you have more money coming IN from real assets than you have going OUT to pay for liabilities, you will be financially free. This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It's not knowing the difference that causes most of the financial struggle in the real world.
Our liabilities are someone else's (usually the bank's) assets. Most people mistakenly think of their home as their biggest asset. It is an asset - the bank's asset. Our home is usually our biggest liability in that it takes money out of our pocket month after month.
The rich buy assets. The poor only have expenses. The middle class buy liabilities they think are assets.
Real assets fall into several different categories:
1) Businesses that do not require your presence;
2) Dividend paying stocks;
3) Bonds;
4) Income Trusts;
5) Income-generating real estate; 6) Notes (IOUs); and 7) Royalties from intellectual property (books, music, patents?).
Most people use their money to buy liabilities whereas the rich use their money to buy assets that pay for their liabilities.
Start to plant seeds inside your asset column. Start small and plant seeds. Some grow; some don't.
There are three different types of income: Earned Income; Passive Income; and Portfolio Income. You must know what kind of income to work hard for, how to keep it and how to protect it from loss. This is the key to great wealth.
Earned income is income derived from your job. It is linear in nature. You work for an hour and get paid only one time for that one-hour's work, and that's it. Your income stops when you stop working.
The rich don't work for money; they have their money work for them. This is achieved through portfolio income and passive income.
Portfolio income is the income you receive from interest, dividends, royalties and gains you get from investments in paper assets.
Passive income is when you work once but continue to get paid over and over again from work you're no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income.
But note the definition of a business!
Owning a business that provides passive income means the business works without you having to be there. You have a business if you can leave it for a year or more and then return to find it more profitable and running better than when you left. But if your business would falter without you then it's more like a 'job' than a business.
So you can think of earned income as coming from something you do. Passive income comes from businesses or real estate that work for you. And portfolio income comes from paper assets that work for you.
Everyone has income, but not everyone maximizes the use of that income. Of the four income patterns, the one to shoot for is that of the rich. And one myth you can dispose of is "It takes money to make money." Regardless of your income you can begin to acquire assets that return an income every year -- passive income that comes in, rain or shine, whether you work or not. This is money working for you, not you working for money.
Unlike passive income, earned income or linear income requires that you work for your money. You are basically exchanging your time and effort for money. You get paid when you work. The moment you stop working, you don't get paid.
The key to becoming wealthy is the ability to convert earned income into passive income and/or portfolio income as quickly as possible. The taxes are highest on earned income. The least taxed income is passive income. That is another reason why you want your money working hard for you. The government taxes the income you work hard for more than the income your money works hard for.
The rich incorporate their assets and are able to: Earn, Spend and Pay Taxes on what is left.
The poor and middle class work at a job and must: Earn, Pay Taxes and then Spend what is left.
This is so powerful that we predict that if our governments do not make some attempt to reduce corporate taxes and prevent the double taxation of dividends; that the market capitalization of income trusts in Canada will exceed the market capitalization of the TSX/S&P 300 index.
Wealth and freedom can, and should, be yours. You have the right to acquire it. The family that is jet setting around the world, teaching their children about art in Paris and about science on the Amazon, eating out whenever they want to, cruising on yachts, hot-air ballooning over wine country, relaxing on tropical beaches, has no more right to all of that than you. We believe you can have, should have, and will have all your dreams. All of them.
Only 4% will actually achieve freedom of choice or financial freedom, and a mere one per cent actually achieve his dream for true wealth. This means that only 5% of people are able to provide for themselves when they retire. Are you currently positioned to become one of the 5%?
Statistic further shows that of this one per cent, 74% made their money from running their own business, 10% are professionals, 10% are CEOs of large companies, and the rest achieve wealth from other sources.
The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money but never learn to have money work for them. The rich don't work for money; they have their money work for them.
This can be achieved through passive income.
We at investingforincome.com are focusing on passive income using Canadian Income Trusts. We think it's the easiest way to achieve passive income. One can start with as little as $1,000. We can all be little Warren Buffets.
You see before World War II investors invested in stocks for income. But after the war this started to change slowly. By the end of the millennium the stock market became a huge capital gains generating machine with little or no income.
We speculate that the trend to capital gains was due to favorable taxation of capital gains over dividends. However, we believe we are on a long term secular trend where we will see the stock market convert from a capital gains machine to an income generating machine. This has all ready started with the BUSH tax plan that tried to make dividends tax-free. This is only the beginning. The USA will lead the way for all nations. I bet you that in 20 years from now most stock market returns will be from dividends/income and not capital gains. Buy the time the experts figure this out and tell you they will have deprived you of billions of dollars of income.
We strongly recommend that on a long-term perspective you get out of stocks and mutual funds that do not pay income.
We have given you a lot to think about. Remember, we have nothing to sell you here. Instead of listening to the media and all the experts just think about this on your own. Your gut will tell you that we are right.
Remember, as Warren Buffet said if you are a poker game and you cannot figure out who is the patsy then guess what...your the patsy.
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