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Friday, November 6, 2009 09:15 AM
Seller beware when cashing out on gold
Earlier this week I wrote about some of the top online destinations for buying gold coins and wafers. But the precious metal’s recent highs may have you thinking more about selling than buying. If you are looking to cash out on some of your gold jewellery, you have a lot of options. You could visit a local pawnshop or go to a gold party and have an appraiser make you an offer.
Or you could respond to one of the many ads promoting quick cash for gold. Companies such as Cash4Gold, GoldKit and GoldPaq will accept your gold jewellery by mail. Send them that hideous brooch you inherited from your great-aunt in a postage-paid envelope and they’ll send you a cheque a few days later. If you don’t like the amount, you can return it and get your gold back at no charge.
But seller beware. Consumer Reports recently investigated the cash-for-gold business and found you’re likely to get a payment absurdly below gold’s spot value.
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Thursday, November 5, 2009 12:23 PM
Want to get your hands on some gold?
With gold hitting a record high above $1,095 (U.S.) on Wednesday, I recalled the year my father turned into a gold bug. In 1990, at the start of the recession, he began filling his portfolio with the equities of junior mining companies. He also bought a number of gold coins and wafers and stored them in a safety deposit box.
Commodities guru Eric Sprott has built his fortune on the belief that gold – especially in its physical form – is the ultimate asset to own in any economic environment.
“In my portfolio I have 40 per cent in gold and I think that’s the safest, and probably the most rewarding investment that I could have,” the founder of Sprott Asset Management told investment website Seeking Alpha in an interview earlier this year. “I believe no matter what environment you’re in—deflation or inflation—people will run to gold.”
“For the most part, I always own physical gold. When I say gold, I really mean gold and silver; and I am probably about equal in each. I always take delivery. I want to own the physical—I don’t want an owner’s certificate, I don’t want to own an ETF. I believe that it’s really the only security you have, and you don’t want any counter-party between you and your gold, so I take delivery.”
For my father, gold coins and wafers were appealing because they are easily portable and transferable into cash. Maple Leaf coins are as good as currency and can be quickly exchanged at any bank or commodities trader, while wafers need to be inspected and weighed to be valued.
Tuesday, November 3, 2009 02:11 PM
Gearing up for winter
As winter quickly approaches, our household expenses are mounting. We’re spending on those necessities that will keep us safe and warm during the cold, dark months ahead.
Still, even as we securely batten down the hatches, we’re trying to trim our annual winter readiness costs by sticking to the basics. Here is my family’s winter spending checklist, divvied up into four key categories: the car, the house, the yard and the kids.
The Car
Our most significant purchase this November is a new set of winter tires for my car. In the past, I’ve relied on all-season tires to see me through all weather conditions.
All-season tires work fine in light to moderate snow, but aren’t designed for heavier snowfalls. After skidding a few times on icy roads last winter, even while driving very slowly, I want the extra control and stability of winter tires. It’s not a small investment. I am spending $910 for four tires with steel rims, including installation. But if I treat them well and maintain the right air pressure, they should last me six seasons.
There are many different brands of winter tires - all with different price points. A review of winter tires at Wheels.ca highlights their top picks which range from $111 to $536 each. I’ve also been hearing a Wal-Mart radio commercial advertising winter tires for as low as $36.
Whatever brand you choose, you’ll need to buy four. According to Transport Canada, using only two winter tires, regardless of whether the car is rear-wheel or four-wheel drive, will not give you enough traction.
The House
Two winters ago, my neighbour had to clean up a messy and expensive leak in their bedroom after their eavestroughs became clogged with leaves. Now I always hire a company to come and clean out the gutters and the downspout before it begins to snow. To reduce the ongoing cost of eavestrough maintenance, you can consider installing a filter to keep leaves and debris out. The cost of installation is around $2.25 to $3.00 per linear foot. I had the product installed along a few feet of our home’s eavestrough that tends to get blocked most often.
Now that we are turning our heating on, we’re also taking the opportunity to have our furnace checked out. I want to replace the filter and make sure the humidifier is in good working order.
For more ideas on how to prepare your home for winter, check out this list of 29 tips by blogger Frugal Dad. Among his suggestions are caulking around windows to prevent cold air from seeping in around cracks and having your chimney cleaned.
The Yard
I am feeling guilty for not yet raking the mountain of leaves that have fallen from the trees in my yard. It’s hard to believe the slim branches of our umbrella tree held all the leaves that now blanket our grass. Bagging the leaves will be my priority this week, but there are other gardening duties to tend to before winter.
Before the ground freezes, I’m going to plant flower bulbs so that I can enjoy the splash of colour when spring comes. There are many tips on how to get your garden ready for winter at HGTV Canada’s website.
The Kids
Fortunately, I already have winter coats for my daughters this year. We bought my five-year-old a snowsuit at last year’s sales and my three-year-old is getting a hand-me-down. Still, they both need new boots, hats and mittens. Before I go shopping, I’m scouring our clothing storage bins to see if anything can be reused from last winter. The cost of outfitting your child for winter is not cheap, but it’s best to buy what they need at the start of the season.
A friend with a three-year-old daughter has already bought her a warm coat, boots, a hat and gloves. “I’m not willing to wait for the sales,” she says. “I waited too long last year and could barely find a snowsuit in her size.”
She is saving though by skimping on herself and her husband this winter. “I will probably just wear my old coat, even though it's ripped. Maybe I’ll wait until stuff starts getting marked down to buy something new.”
I plan to do the same.
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Monday, November 2, 2009 03:22 PM
Ten ways to dump your financial adviser
After a recent entry in this blog about how many Canadians are unhappy with their financial advisers, a friend confided that he is trying to leave his.
“I am ditching my guy after four years and just signing up a new one that is better suited for my needs,” he told me. But he wasn’t sure how to actually deliver the bad news to his long-time consultant.
Like any relationship, the one between investor and financial adviser requires trust and compatibility to be successful. Breaking up is hard to do. But, like Joe Cocker says, when the magic is gone, there’s no sense in holding on. For my friend, and anyone else trying to dump their adviser, here a couple of ways to deliver the blow.
Monday, November 2, 2009 02:43 PM
Why buy Canada Savings Bonds?
All this month, the federal government has been hawking its 10-year Canada Savings Bonds Series 120 through a constant stream of television commercials. You have only a few days until the November 1 deadline to buy the bonds that pay an annual interest rate of 0.4 per cent. Don’t rush.
The bonds carry the lowest annual return since the government started selling the debt instruments in 1946.
I recall in 1987, my eight-year-old brother took his birthday money and invested $100 in a Canada Savings Bond. It paid over 7 per cent in annual interest. A lot of Canadians invested in them. That year, the best on record for Canada Savings Bond assets, the government raised $17.5-billion through the program. In 2008, gross sales of the savings bonds had dropped to $1.9-billion.
Even though many Canadians are feeling jittery about the equities market and keeping money on the sidelines, they are not stashing their cash in CSBs. The 0.4 per cent coupon doesn’t come close to meeting the core inflation rate, currently around 1.6 per cent according to the Bank of Canada. Factor in tax (unless you hold the bond in a tax-free savings account) and you're really losing money on the deal. You can do far better with a high-interest savings account such as the one available from new retail bank Ally, owned by GMAC Financial Services, which pays 2 per cent.
Yet the federal government is still promoting the investment vehicle to the average Canadian through payroll savings programs across the country. Last week, a friend who works for a financial institution emailed me the pitch she had received from the company’s human resources department.
“Plan for a comfortable retirement with Canada Savings Bonds purchased through the Payroll Savings Program,” it started. “The earlier you start saving, the more secure your future will be. A contribution of just $50 per bi-weekly pay can help you enjoy a worry-free retirement.”
My friend, who is pretty savvy at managing her family’s budget, wondered why anyone would buy into the scheme. “I especially love the line ‘it's easy to save for your dreams’,” she joked. “My dream is a latte in November 2010.”
And even that may be a stretch.
Thursday, October 22, 2009 12:07 PM
Do you have stroller envy?
Some good friends of mine are expecting their first child and, two months from the due date, have been stressing over strollers. They’ve been agonizing over whether to buy a low-to-mid range brand or splurge on an “it” stroller.
In the past few years, high-end luxury strollers – such as the stylized Bugaboo – have become status symbols for new parents.
“I'm a total victim of stroller envy,” says one friend with three young children. “I'm one of those that stare at the strollers instead of the babies. Men care about cars and women like strollers.”
A report by The Big Money found that the trend towards spending on luxury goods for children has survived the recession.
Retail analyst Michael Silverstein, a senior partner at the Boston Consulting Group and author of Women Want More, told The Big Money: “The Dow might not be anywhere close to 14,000 any longer, but millions of Americans are continuing to produce two children at most, and having them at older ages, which increases both their desire and capacity to spend money on them.”
Although spending contracted during the economic downturn, Mr. Silverstein believes it’s a blip. “I don’t buy that we have a permanent decrease in consumption or lifestyle choices. People will continue to invest in their children.”
I’ve crossed paths with many four-digit strollers in my neighbourhood. In the interests of full disclosure, I admit that I too transport my children in an expensive stroller (a red double Mountain Buggy) which was a generous gift from my parents when my second daughter was born. It’s a rugged stroller equipped with bicycle tires. Pushing it through a blizzard last year was like running a hot knife through butter. But I still wouldn’t have put down my own $800 for it.
Most of my friends agree that a high-end stroller is well down on their list of spending priorities.
“It ranks close to dead last,” says one mother of three. “Bugaboo isn’t even so bad. I was in a baby store recently and saw the Stokke Explorer for $1,400. And that's with minimal accessories. Personally, I think you can buy a good, sturdy stroller for a mid-range price and be really happy.”
Another friend, a mother of two, rejected the luxury stroller trend outright. “I remember the first time I saw a Bugaboo, the owner told me it was ‘the best stroller. Madonna has this stroller.’ Never being a Madonna fan, I gave it a pass.”
Still, she does regret not investing in a good-quality double stroller for her kids, aged four and two. “We often take long walks which are too far for my four year old. He is too big for our side-by-side umbrella stroller and we now find ourselves in a real in-between stage, especially when we are planning day trips,” she says. “Still, if I were looking to buy a double today, would I be willing to shell out the $800-1000 dollars? Probably not. I might try to find one used, though.”
One parent I know sees a high-quality stroller as an investment piece. She received her Valco model as a gift from a relative when her three-year-old was born, but would have likely bought it on her own.
“I do believe that you should buy the best quality you can afford that fits your lifestyle. For example, we live in Canada and need something to go through the snow,” she says. “Looking back, I would say the stroller is the one piece of gear you use the longest – longer than the crib, baby car seat, baby toys, clothes, and changing table. If you have one that doesn't fit your needs it would create a major sense of frustration.”
There is a case to be made for buying a stroller that will last – but that doesn’t mean you need to spend a month’s mortgage payment on it. The costs of raising a child are steep enough without adding luxury goods.
Monday, October 19, 2009 12:08 PM
Downsizing to a single car
I grew up in a single vehicle family. As a one-car household, our schedules and excursions were tightly synced. Each morning, on her way to work, my mother would drive my father to the subway to reach his job downtown. She then dropped my brother at his nearby school and me at the bus stop.
These days, with my own family, it’s difficult to imagine how we would manage with just one car. My husband and I drive to jobs that would take at least twice the time to reach by public transportation. Our work often calls for late nights on short notice and we rely on each other to be available to pick up the kids from school.
Many families, especially those of us in suburban communities, own two cars. In Canada, 83 per cent of all households owned or leased at least one motor vehicle. Of these, more than half had two or more vehicles.
But owning two cars, with the cost of insurance, fuel and maintenance, takes a big bite out of a household budget. For the average Canadian, transportation is one of the top household expenses, ranking third only behind taxes and shelter, according to Statistics Canada. Many times I’ve thought about how much money we could save by downsizing to one vehicle.
According to a recent report from LeaseTrader.com, more of us are getting rid of our second car. The online car lease swap marketplace has seen the number of customers transferring out of car leases to share the only remaining family car triple in the past year. It attributes the trend to rising unemployment that is forcing families to cut their monthly expenditures.
“We’re finding more and more families right now willing to give up one or two of their cars even if it means they have to share the only remaining vehicle for the entire family,” said Sergio Stiberman, CEO and founder of LeaseTrader.com. “Despite many headlines that say the recession is over, the reality is that people are still hurting financially and they’re finding additional ways to slash their own bills.”
LeaseTrader.com data indicates showed that many of the downsizing families in the U.S. are located in recession-worn areas like Southern California and Florida. In Canada, the downsizing numbers are skewed towards the more highly populated areas such as Ontario and Quebec, with some rising activity in Vancouver, British Columbia.
A friend of mine has a relative in Vancouver who recently gave up his lease when his business slowed. He started riding his bike to work. “He consoled himself by focusing on the exercise benefit,” my friend says.
Most of my friends rely on two cars to get to work and shuttle their children around.
“We would never live with just one car,” says one mother of two. “We could not even live with just one car when we did not have kids. I am not good about taking the bus and we both need the flexibility with the kids.”
Another friend who is a mother of three admits she and her husband have never seriously considered downsizing to a single car, given the location of their jobs. “But, I suppose nothing is impossible if you really want to make it happen.”
One couple I know made the decision to be a one-car family long ago. “We’ve never had two cars,” says the wife, who works full-time and has two young children. “We carpool to work. We love having our own quiet time together and love saving the money. It’s amazing how rarely we wish we had two cars.”
For those that can manage with one car, you have my admiration. It seems that there is more to gain than cost-savings alone.
Wednesday, October 21, 2009 08:17 AM
Want to ditch your financial adviser?
My husband and I have used the same financial adviser for more than eight years. At the start of our marriage, she helped us develop a financial plan, set financial goals and build a diversified portfolio. As our family grew, we turned to her for advice on insurance, wills, and RESPs.
When the market turbulence of the past year rocked our portfolio, we spent a lot of time talking to our adviser about our investment strategy. She counseled us to take a long-term view and stick with our plan. We invested more this past March, a fortunate move that erased most of our portfolio losses during the market rebound. We have stuck with our advisor because we like her record, her style and her accessibility. That we actually like our adviser puts us solidly in the minority of investors these days.
After the hit Canadians took on their portfolios last year, many are planning to change their investment strategies this coming RRSP season. And many blame their financial advisors for their losses.
Those are the findings of a recent survey by Maritz Research Canada that polled 500 Canadians with at least $75,000 in investible assets.
“Our survey shows that Canadians are re-examining every aspect of their investing strategy, from the firm and advisor they work with, right down to the specific makeup of their portfolios,” says Rob Daniel, Managing Director, Maritz Research Canada. “We predict a continued flight to safety among Canadian investors, which bodes well for Banks, Credit Unions and others who traditionally attract more risk-averse clients.”
Seventy per cent of investors surveyed believe that less risky investments are currently the best strategy. They’re also highly skeptical of the financial advisors who watched their portfolios crash.
“There is real uncertainty out there,” Mr. Daniel says. “It’s a good time to hate investment advisors. It ties into our uncertainty around the economy. Unless we’re getting superior service, it’s easy to blame the adviser.”
Thirty per cent of the investors surveyed did not plan to maintain or increase their level of investment with their advisor. But despite losing money, many investors remain loyal to their financial advisors. In fact, while 40 per cent say now would be a good time to look for a new advisor, few have intentions of doing so.
However, much of the loyalty may be due to investors’ lack of ability to move to a new advisor. “Most of the loyalty is driven by inertia rather than acute feelings of connection to them,” Mr. Daniels suggests.
There are several attributes that Canadian investors say they look for in a financial adviser. They include frequent contact, proactively offering solutions, helping create a useful and achievable financial plan, being treated as a valued client and giving objective advice.
I would never advocate a financial adviser for everyone. I have several friends who do very well overseeing their own portfolios, eschewing management fees and investing in ETFs or corporate debt. But if you do want a financial adviser, don’t be afraid to dump one who doesn’t meet your needs and find one who does. There’s still time before RRSP season arrives.
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Friday, October 9, 2009 07:31 PM
Why there are more jobs for women than men
September was a good month for women looking for jobs, according to the latest Statistics Canada report. For men, not so much. Last month’s overall employment gains were among women aged 25 and over (up 41,000 jobs) while employment fell for men aged 25 to 54 (down 17,000 jobs).
Since last October, when the recession set in, the majority of employment losses have been among men. The decline can easily be attributed to weakness in the manufacturing and resource sectors, traditional bastions of male employment. But one economist believes there is more to the story.
“When a man loses a $30 per hour job and what’s on offer is a temporary or contract job at $15 an hour, he may hold out,” says Armine Yalnizyan, senior economist at the Canadian Centre for Policy Alternatives. “A woman is much more likely to roll up her sleeves and just take the job.”
According to Ms. Yalnizyan, this is a trend that has held true in every recession. “Men typically have higher-paying jobs and it's harder to replace those wages. Women are picking up their pace. They’re willing to protect the household budget no matter what it takes.”
To be fair, much of the recent job creation is in areas of the public service sector such as education and health care, where women tend to dominate. Public sector employment grew by 36,000 positions while work in the private sector fell in September.
Still, the numbers behind the Statscan report show that women are taking on a lot of contract and casual work. Many women, especially those over age 55, are turning to self-employment. These jobs are temporary or unpredictable, leaving families with less control over their finances. To Ms. Yalnizyan, the shift in the workforce combined with Canadians’ debt loads is ominous.
“People are overly bridged on home ownership and it’s based on a household budget of two incomes,” she says. With home ownership at record levels, a growing portion of Canadians are wondering whether they can afford to stay in their house. “There is an economic dislocation waiting in the wings,” Ms. Yalnizyan predicts.
Until the private sector recovers and creates new jobs, women are likely to continue to drive employment gains, to support their families’ budgets and hold onto their homes. As long as this trend holds, we’re in for a ‘he-cession’ and a ‘she-covery’.
Friday, October 9, 2009 12:17 PM
Cleaning out the closet
This weekend, I plan to organize my kids’ closets. The leaves are on the ground and it’s time to put the shorts and tank tops of summer into storage bins. I’ll be taking stock of what items should be thrown away, given away or replaced. It’s so easy for me to get my daughters’ wardrobes into order. When a shirt gets irreparably stained, a skirt rips, or they outgrow an outfit, I quickly part with it. It’s much more difficult to be as disciplined with my own closet.
I’m still hanging on to the tight jeans I wore when I was 18 in the delusional hope I’ll fit into them again soon. My closet and drawers are crammed with clothes in a broad range of sizes, including maternity, that have fit me at some point in the past 15 years. My actual working wardrobe, the clothes I go to everyday, could be neatly stored in a fraction of the space.
Personal finance blog Get Rich Slowly ran a helpful piece this week called “How to stop buying clothes you’ll never wear”. Blogger April Dykman shared her tips on getting rid of clothes you don’t need and buying the ones that you will wear. Here are a few of her suggestions:
Think “meat and potatoes”
Make sure you have the “meat and potatoes” of a wardrobe – these are basic clothing items that will make it easy to pull an outfit together every day. Too many of us have closets dominated by clothes that have a lot of colour, pattern, and sparkle.
Make four piles
Here’s a method recommended by fashion guru Tim Gunn: When you’re ready to start your closet clean-out, divide your clothes into four piles: throw out, give away, repair and soul-stirring. Get rid of the clothes in the first two piles and take the repair pile to a seamstress.
Consider your lifestyle
Don’t buy clothes for a fantasy version of your life, instead of the reality. “You’ll end up with a lot of clothes to store and nothing to wear,” says April. Whether you stay at home with the kids or work full-time in a conservative office, your wardrobe needs to serve your needs.
Fit and fabric
Only buy clothes that fit well and make you feel fabulous. Don’t be swayed by a great deal on the clearance rack if it gapes or pulls. It will end up at the back of your closet with the tags still on.
I’ve committed many wardrobe sins over the years and know I need to clean my closet out soon. As challenging as it will be to take an honest look at my clothes, I’m looking forward to having a pile of suits, skirts and pants to donate to charity. It will also be nice to cut down the time it takes me to find clothes that match and fit every morning. I might have time for breakfast.
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Home Cents Contributors
Chaya Cooperberg
Chaya Cooperberg is living the dream. She’s the mother of two young girls, managing a busy household in the suburbs of Toronto on a tight budget. She’s also managed to build a full-time career in investor relations, running award-winning programs for Canadian public companies. She sits on the Board of the Canadian Investor Relations Institute’s Ontario chapter as well as the National Investor Relations Institute’s virtual chapter.
