Financial Independence

Its July 4th, Independence Day in the United States of America!  I decided that today is the most appropriate day for this short post on financial independence.

What does it mean to be financially independent?

Financial independence has a different meaning each person.  To some people it may mean not having to worry about paying mortgage, bills, or putting food on the table.  To others, it may mean not being at the mercy of a company who may lay you off just before retirement.

Personal Finance III – Practical Steps

This series of personal finance articles take a different perspective than what you would ordinarily find on blog and other sites related to the topic.  The first article in this series [Personal Finance I, The Essential First Step To Investing] discussed the importance of personal finance, as the first step to investing.  It discussed how a solid foundation (skills, knowledge, mindset, attitude, and other qualities) is important to becoming a successful investor, and is gained directly through the experiences of managing your personal finances. In the previous article [Personal Finance II, Getting Started] we explored how society and the media have misguided peoples’ mindset & attitude, to become financially counter-productive and actually harmful.  We went through a list of mindset & attitude changes, along with their important relation to investing:

- Prioritizing Needs vs Wants.
- Self-Control & self-awareness.
- Discipline & Patience.
- Perceived worth (artificial or real?).
- Work Ethic (No excuses).
- Independent thinking.
- Self Improvement & Continual Learning.
- Procrastination & Motivation.

We also highlighted the fact that the task itself can seem huge, and that simple baby steps at first can be a good way to begin.  This article will outline practical steps to getting started that will put the concepts into practice.  As always, I like to put an investment minded slant to things, and included some personal finance ideas that relate directly to investing (linking the two subjects together).

Q&A: Preferred Share Prices, Yields, The Fed Rate

Reader Question: What is behind the price movements of preferred shares. They work like bonds, but why do they seem to move in tandem with the issuing entity? When the Fed raises the rate, bond prices would fall, but what about preferred shares? The yields for preferred shares still seem rather high. Standard Chartered recently launched preferred shares with a yield of 9.5%, is this the normal yield in a normal market?

Question From Article: Investing In Preferred Shares/Stock And Corporate Debt

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The price movements of preferred shares

In normal economic times and market conditions, the price of preferred shares don’t tend to fluctuate quite as much as we have seen since the beginning of the stock market decline. Within the past year alone we have seen a wide range of issues flucutate greatly. One example is issues by Wells Fargo & Co, which changed from close to $24 to $13, and now all the way back to around $24. The stock market crash/decline, financial sector’s problems, and general fear of corporate collapse are the causes of such recent price swings. However, similar price movements have been seen in preferreds of other industries, and not just in the financial sectors (which were the first to experience the significant declines).

Q&A: Long-Term vs Short-Term Treasuries, Spread, the Fed, Interest Rates

Reader Question: What is the correlation between 10 and 30 year Treasuries (Treasurys), or short term vs long term Treasuries?  What is the spread’s significance?  How is the prime rate affected?  How is the mortgage rates affected?

Question/Comment From Article: Implications Of The Federal Reserves Purchase Of Treasuries

There is quite a bit of information behind this question/topic, and a summarized article should be adequate for most investors.  However, it’s not a bad idea for investors to read further on their own, to get a more in-depth understanding than the information posted here.  This article should serve as a starting point.

Canada Unveils Carbon Market Plan

Its been a year (May 2008) since I wrote an article regarding carbon emission credits and related information (Canada begins trading carbon emission credits on the MCeX).  Since then not much news in Canada has surfaced due to the problems of the financial crisis taking priority.  But on Wednesday (June 10, 2009), the federal government of Canada detailed its plan to trade pollution permits (carbon credits) on the open market. Two draft documents were released by Canada’s Environment Minister Jim Prentice.  The drafts lay ground rules for a federal carbon-offset scheme. This included guidelines of which offset project qualification, applying for inclusion, offset credit value, verification of emission reduction, etc.

Personal Finance II, Getting Started

Too often people skip getting their personal finances in order, and jump right into learning about investing.  In the last article [Personal Finance, The Essential First Step To Investing] we discussed why it is the necessary prerequisite to investing. We saw how it shared many similarities, and also creates a solid foundation of skills, knowledge, mindset, attitude, and other qualities that are required before learning to invest. Through personal finances, the foundation that is developed will be useful across all areas of investing (RE, business, etc) and not just limited to one investment tool such as stocks.

But at times the tasks involved in managing and getting personal finances in order can seem too large and daunting.  People also start getting ahead of themselves, and use the excuse that it doesn’t solve the issue of not having extra/enough money to invest with.  In this article and the next one, I will discuss how to get started, as well as some ideas that relate specifically to investing (linking the two together directly).  This will help new investors break down these psychological barriers to the first step (personal finance), as well as to help with motivation.

Personal Finance I, The Essential First Step To Investing

In one of my older articles, How To Start Investing Part I, I listed getting your personal finances in order as the very first step to take in investing. In Part II, I briefly summarized the importance of that step. In this article, I will elaborate in more depth, to explain why personal finances is such an essential first step and prerequisite in becoming a successful investor.

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Why Is Personal Finance Important?
Wikipedia defines Personal Finance as “the application of the principles of finance to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.”

Ontario Provincial Energy Audit (Bill 150) Passed

Energy Minister George Smitherman’s proposed legislation, Bill 150, the Green Energy and Green Economy Act, has been passed in legislation.  The bill would make an energy audit compulsory for the sale and some leases of every residential property in Ontario, including houses, apartments, and condominiums.  Commercial and industrial is not included.