Sunday, October 16, 2011

Surprise, you're already in the top 1%

Please forgive me now since this is quite a sidebar from my normal politic-free unsolicited investment advice.

Guess what my friends, if you live in Canada, have a roof over your head, a computer, internet at home and eat every day YOU are already in the top 1% of the world's economic "elite."

Look down this list of the things I suspect you have and please consider your lot in life.  You're not an illiterate migrant worker in Asia/EuroAsia/India are you?  Are you living on the streets in a Mumbai slum competing with the thousands and thousands of other beggars who have NOTHING?  Are you a Somali fisherman trying to eke out a subsistence living for you and your family with the constant fear that the local pirate gangs will take you out?  Or have you been sold into slavery or into the sex trade with no hope of escape without risking the brutal rape and murder of you, and your family?

Consider the following items you might have around you:
  1. Clothing (and even occasionally clean clothing)
  2. food or at least access to food via your mobile phone speed dial
  3. health-care (if you're Canadian like me) which won't bankrupt you.
  4. safe living conditions (no threat of war-lords burning down your village)
  5. Layers of government support for retirement (Canada Pension Plan/Old age Pension)
  6. reasonably well maintained urban infrastructure (Montrealers watch out for those bridges!)
  7. Mobile phones
  8. Internet at home
  9. laptop/desktop/tablet computers
  10. flat-screen televisions
  11. credit-card debt (no doubt from too many nice lunches out)
  12. shoe fetishes
  13. electronic gadget addiction
  14. cars, scooters, motorbikes
  15. luxury coffee (Starbucks, or making it yourself with Kopi luwak beans)
  16. luxury clothing/goods/cars
  17. this list continues...
I'm sure you might not have all of these items, or even most of them but guess what?  Consider how much the FoxConn employee got paid to make your iPhone, iPod, or iPad! (Or shoes, or TV, or t-shirt, or, or or)  Even if you're on minimum wage you earn more in one month than that person gets for an entire year.  Do you think they have healthcare like we do here in Canada?  Don't be so sure.  The establishments in both India and China are often VERY lax in worker safety because it's viewed as a population control mechanism.

So the current whining of a great deal of protesters of the "occupy whatever-city-here" movement are misinformed greedy hypocrites.  They should try living in a slum in India for a month.  Many of them think they are the 99%, but seriously folks, even your minimum wage burger flipping job pays more per DAY than the kids in India get ALL YEAR for the burger uniform they sewed together for your burger-flipping ass.

 Now I'm not trying to discredit all of what they are saying.  Part of their message includes FAIR taxation for ALL and I completely agree with this part.  History has proven that ONLY a graduated income tax is the fairest most responsible way to go.  The more you make, the more you pay.  Simple.

Our American friends however have a bit more ground to stand on in their complaints since Wall Street did set them up for disaster with the sub-prime mortgage fiasco from a few years back, AND more than half of all American bankruptcies are caused from medical bills.

Thanks to CONSUMER demand for cheaply made crap a great deal of the manufacturing base in many first-world countries has been outsourced.  We did it to ourselves and only have ourselves to blame.  YOU have to make the choice to spend more on your socks or your shirts.  You have to create more demand for home-made goods.  The sooner we all do, the sooner the disparity curves flatten, and the middle classes bloom.

But if you have a job and you live in Canada, get over yourself.  YOU are in the top 1% of the world elite.  Now start behaving like you are...  Buy some shares of companies you like and for the products and services you use on a daily basis.  (I own shares of my mobile phone provider... The dividends pay for 1/3 of my bill so far.  Eventually I'll have enough shares so that the dividends pay for the phone bill completely)

Capitalism isn't going away.  We all need to man-up (or woman-up) and pay our fair share of taxes to help keep our country great and running smoothly.  (Yes there will always be scandals and corruption, but not nearly to the same extent here as there are say in Somalia!)  TAXES MUST RISE people.  It's inevitable.  You can't borrow your way out of debt.  Having said that, there are rules in place that govern what sort of incomes are taxed in what ways, so it's both honest, and ethical (and damn smart) to make prudent choices to help determine how your slice of the pie gets taxed.  (TFSA, RRSP, dividend paying stocks, etc)

The real trick my friends?  Don't get greedy.  As soon as you starting thinking of the whole pie, you're in for a world of hurt.  I'm happy with a thin thin slice.  If you get greedy you stand to lose everything.  If you set reasonable and incremental goals then you will prosper for years to come.  As a starving artist the first while can be rocky, but stay the course and it will lead you to financial freedom.  My thin slice?  Enough monthly income to pay my rent, food, phone, and travel expenses.  Then I'll have more freedom when it comes to choosing what work I accept rather than just picking up the phone and saying "Yes I'm available" every time it rings.

Full disclosure:  My "income" (which is all re-invested at this point) from my investments just cracked $500 a month, even if I don't make any trades.  (Just the yield from my dividend and distribution paying holdings)  For some $500 a month represents a pittance, for me this represents nearly 20% of my fixed monthly costs. So start now, contribute often and in a few short years you will start to smile more and more.  I know I am.

I admit "a few short years"  is a VERY difficult concept for my hipster 20-something friends.  But honestly folks if you start saving this very instant even $25 a week you'll be a moderately wealthy jackass by the time you hit 45.  Handsomely wealthy by the time you hit 55 and a completely rich asshole by the time you hit 65.  Remember how long summer was when you were a child?  It seemed to last forever.  Now look outside!  It's nearly winter...  how did that happen so quickly?

Sunday, October 9, 2011

Human nature, greed, entitlements, and crappy ideologies.

That's quite a title I know...  But I encountered a fellow musician about 15 years older than myself  who in my opinion did way too many drugs or really just needs to grow up (or both).  He is so strongly set in his thinking about the corporate greed and the whole system and how flawed and broken it is.

He was both shocked and appalled when I told him I was investing for my future.  He asked snidely "How's that working out for you?" (with strong undertones of expecting epic failure on my part) but when I told him how much I get on yield alone each month he congratulated me (with strong tones of disbelief and sarcastic) about how lucky I was.  I immediately corrected him by saying, it wasn't luck.  I did a lot of research and made careful investment choices which have gotten me to my current level.  At which point the conversation ended.  His entrenched ideology didn't let him even get curious about how I did what I did and it could benefit him and his family too.

He was so wrapped up thinking that the whole pie gets kept by big corporate and a privileged few leaving nothing for anybody else.  His comments about the largeness of said pies and how much is consumed by the "fat cats" let me to suspect that he's either very jealous, or in a messed up entitled sort of way expects money to fall out of the sky to just be evenly distributed amongst the masses.  Judging from his commentary I don't know what sort of investments (if any) this man has.  I also suspected his wacky sense of entitlement led him to believe that he deserved the whole pie just for himself.  Now that's just plain greedy!  I don't want the whole pie.

But what's going on here?  He gave up his corporate position to go back to music, his passion.  But that comes with a cost.  You have to live like me!  I haven't taken a vacation ever...  I don't travel unless it's for work, I've quit drinking on a regular basis because it costs too much, I don't have a big TV, I don't have a fancy car, I don't have a big house with expensive repairs and a costly mortgage, I don't have a fancy stereo, I don't have a new (or even newish) computer.  I don't go out to eat unless I'm working and I have no other choice, all in my quest to save as many dollars as I can to invest for my future.

Now that my monthly yield is starting to become a sizeable portion of my monthly budget I have started re-introducing certain cuts from my life.  Which is a nice treat...  It feels special to splurge $20 on a bottle of wine and really enjoy it with a nice meal that I've made myself.  (My cooking skills have improved immensely over the past couple of years so that I can do a select few restaurant quality dishes)

But back to the point, if you want a future that includes you, your art, and enough money to not have to live in a cardboard box under the free-way then get your head out of the sand and INVEST for your future.  Government debts are running at all time highs, cuts are coming and they will be brutal.  The longer they are put off, the worse things will get for those of us who depend on government funding like so many of my friends in European orchestras.

Now here's the rub people:  if your belief system includes a general hatred for big corporate then I have some bad news for you.  If you don't like subsistence living in a shack out in the middle of the woods then you are going to have a bitter, angry life full of disappointments.  (Unless you're one of the 0.1% of artists who hit super-stardom... Then you'll just be a rich jerk!)

Set your objectives honestly and reasonably.  DON'T GET GREEDY!  Greed is a recipe for disaster.   It's a tendency we have to fight ALL the time while investing.  For example I bought some shares of CLQ @ $0.50 a long time ago.  It went up to $2.25 and I should have sold, but I was holding on hoping for more and more and more.  Guess what happened?  It plunged on some bad news (faulty resource assessments) and fell back to just over where I started.  It's NEVER wrong to take profits.  There may be some choices to make though when you do decide to take some.

My advise for this all:  Invest for your future, nobody else will do it for you.  (Unless you're in a cushy government job... but my friends cuts are coming to government be careful!)  And lastly don't be afraid to take a profit.  Any profit no matter how big or small is a profit and money you didn't have before.  Just don't get greedy and don't beat yourself up for not timing it right.  You had more money then you did before, so shut up.

Disclaimer:  My advice is based on my opinions and experience only.  I have not been paid for anything I've recommended or talked about.  (I'll let you know who's paying me if that ever happens!)  If you do follow my advise, I can not be held accountable for your faulty research.  I have made money and I have lost money.  If you bet the farm on a flyer, it's not my fault.  I didn't recommend it for you.  Your actions are yours and yours alone.  I never pushed that buy/sell button on your behalf.  Plus if you try to sue me, I don't have much money anyway!