December 31st… It’s my eldest daughter’s birthday. She wants everyone to know it’s her birthday, and she’s turning six. She also learned how to earn money this year, and why it’s important – So she can buy food. Long story short, she went to school one morning after refusing to eat any food I would offer her, knowing full well the school was serving breakfast, albeit for $1. My daughter happily ate some plain toast (yes, plain toast for $1! don’t get me started) and when she arrived home, mom saw the $1 receipt in her lunch box instructing me to pay up. Now, I don’t judge how French Quebeckers raise their kids but this mom is not ‘un guichet automatique’ aka GAB or ATM as it is known in the rest of the world. I gently explained to my daughter that things cost money and that I wasn’t going to pay for this bill because I had already spent all my money at Costco 😉 (technically true, I buy a lot of food). I told her that in order to pay for it, she would have to earn $1 through work. When dad got home, she did a handful of kid sized chores for 25¢ each and brought the money back to school the next day. The following week I asked if she had any money left in her purse and she said no… she bought more $1 toast at school. So, moral of the story is… I taught my kid how to earn money but not how to spend it wisely. That will be my task for next year.
In other news…
I made one last purchase this year. On December 5th I purchased $1140.88 minus $5.31 in fees of Transalta Renewables (RNW), 102 shares for $11.19 each. We all know what happened several days later in the Canadian and American markets. However, I am still pleased with the dividends this company pays. This purchase should add $7.98 per month in dividend income for a total monthly dividend of $14.65 (Whoot! Whoot!). It is also crazy to think that the extra $140.88 was from dividends sitting in my cash account!
So, how did I fair this year? Drum roll please!!…..
Well, I hit my annual dividend goal of $750! As of December 31st, this stay-at-home mom brought in $1008.69 in dividends. I surpassed $1000! The good news is I kept my fees below 2%, and yet I missed making 2 purchases. One in October and another in November. However, I’m not disappointed about missing these purchases since prices have come down since then increasing my purchasing power momentarily.
A few months ago on a fellow dividend blogger’s site (I can’t remember the name! If you know the name comment below so I can credit them), he broke down his dividends into an hourly wage. I thought this was ingenious. Although I don’t receive an hourly wage (solely the Canadian and Quebec Child Benefit – which fluctuates with each tax season), I still work pretty darn hard. So, if I worked 40 hours a week for 48 weeks of the year (2 weeks off in summer and 2 weeks off at Christmas), I would be working 1920 hours per year. So, $1008.69 dividend by 1920 hours = 0.52¢ per hour (roughly). Almost the equivalent to the American minimum wage of the 1940s. Hopefully, next year I can give myself another hourly pay increase that will propel me into the 1960s!
Here is something else you might find interesting…
My 7 year old made $105.52 in annual dividends. My 5 year old made $48.69 in annual dividends. My 3 year old made $18.83 in annual dividends. My 1 year old made $12.15 in annual dividends.
My newest baby is 2 weeks old as of today! I should be starting his first DRIP in the coming months, it will most likely be a share of BMO like his siblings.
Also, I only contributed $50 in optional cash purchases to each of their accounts this year. However, pretty much since my oldest got his first share as a newborn he has had fairly consistent annual dividend increases.
So, that’s it for this year. I still need to think about 2019. There are a lot of details to go over in terms of how much I should contribute and competing priorities. As of January 1st my husband is officially incorporated as a “Société” and has started his paternity leave, we are looking at putting our eldest back into some much needed therapy and my parents estate will be officially complete sometime this coming year.
I am very pregnant right now. Like a breathless beached whale. However, even though I waddle around slowly like a penguin, my money is still working for me.
This September I didn’t purchase any new companies but I focused on bulking up the ones I currently own and hold in my TFSA.
I purchased 23 shares of Laurentian Bank at $44.40 dollars, for a total of $1026.23 including commission. This is all in keeping with my 2018 goal of $1000 per month in new month and keeping fees below 2%.
Lately Laurentian Bank has been trading lower than my original purchase price average. With this month’s buy, it brings my holdings in Laurentian up to a similar dollar amount compared to the other companies I hold in my TFSA.
My new total holdings in Laurentian Bank is 38 shares. The great news is that earlier this year Laurentian increased their quarterly dividend from $0.63 to $0.64.
So far, this company has proved to be a good holding.
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” – Paul Samuelson
When most people think about investing, they conjure up the image of a day trader, hedge funds and options traders glued to their monitors filled with complex graphs or the raucous New York Stock Exchange trading floor.
Buy low, sell high. Someone wins, someone loses. Big wins, but also so many, many thunderous losses.
This is also no different than going to the casino and gambling. I’d rather keep my money, thanks!
However, what if I told you – you never have to sell your shares in order to make money? It’s true.
But first, in this post let’s go over the basics. I’ll touch on 3 topics:
The importance of time
The power of compounding interest
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” – Peter Lynch
Recessions happen. However, when you invest for dividends you are in it for the long run. Just like the four seasons, after winter spring is just around the corner. the economic cycle starts all over again and markets recover. Just be sure you are still around for when things go back up and you don’t leave when a downturn occurs.
I am not a fortune teller. I can’t tell you when the next recession will happen. The last one was in 2008, 10 years ago. So no matter what, there will be another recession. A mini one or a big one, I don’t know, but it will happen.
Remember, it is not the timing of the market that is important, but the time spent in the market. This will all make sense when we take a look at compounding interest and dollar-cost-averaging next.
The Power of Compounding Interest
What is compounding interest? Sweet and simple, it’s literally interest on the interest. Once your money earns interest and is reinvested, that interest earns interest etc. Compounding on itself – thus compounding interest.
Why is it important? Your money grows faster and faster over time. The more time you allow your interest to compound the quicker you accumulate more money.
Check out this cool illustration over at Direct Investing. They even have a nifty calculator to see how much you can earn over time.
Now, onto dollar-cost-averaging…
Yep, more math. But I promise, it is not hard!
All dollar-cost-averaging is, is putting in small amounts of money on a consistent basis (like once a month or once a quarter).
By buying shares in a company slowly, you are in turn buying the stock at different price points. Sometimes high, sometimes low.
Here is a nice example.
If you are putting in the same amount each time, lets say for simplicity sake $100 per month, and the price this month is $50 per share. You will end up buying 2 shares. Next month the price drops to $25, with the same $100, you buy 4 shares. Then the price jumps to $80 by the third month, you only buy 1.25 shares.
After 3 months you would have 7.25 shares and spent $300 total, at an average price of $41.38 per share. If you bought $300 worth at $50 the first month, you would only own 6 shares. At $80 per share, you would own just 3.75 shares! Dollar-cost-averaging can help you buy more shares, which will earn you more dividends in the long run.
If the price is high, you buy less. When the price of the share is low, you buy more. Over time the price at which you purchased your shares averages out to be a bit lower.
Neat, eh? Besides, I really love it when the things are on sale 😉
AND… the cool thing is, if you reinvest your dividends automatically you are already putting dollar-cost-averaging and compounding interest to work! Easy-peasy.
That’s it for this post!
Join me next week for Part 3, where I get into the nuts and bolts of how to buy your first share.
To make our money work for us, instead of us working for money.
Easy to say, right?
Basically, if we don’t do it for ourselves, we should not anticipate that others will do it for us. Whether they be our spouses, government social security or company pensions. Sounds grim? Allow me to go on…
Besides this point, there are a few other stats to bring to your attention. Although not all women are the main breadwinners of their family, they control a large portion of the financial decisions that go on in a household. (See debatable stats here) I am of the opinion that those stats are higher particularly if there are children in the household. We yield much of the responsibility of where and how the family income is spent, and therefore should not shrug off our responsibility to wise fiscal management.
Another, but rather sad statistic here in Canada, is that women are more likely to be in ‘low income after tax’ in the later stages of life compared to men. Although the reasons vary for why this is (I can only assume – job type, no pension, child rearing), this stat would hopefully provide more reason for women to invest.
Generally speaking, as women, we also tend to have different long term goals when it comes to saving and investing. Through my observations, many men tend to focus on #FIRE, or financial independence retire early. That’s not a bad thing, but for most women that might not be the primary concern. I can’t speak for all women, as there are plenty of women interested in #FIRE, however, I am more concerned about the well being of my kids and our quality of life. In my mind, sometimes I think to myself… “Why would I want to retire early? I’m already at home all the time! Let me afford to do something enjoyable.”
As well, I can’t emphasis enough the importance of wanting financial security. Let’s face it, life happens and someone has to deal with it. For example, instead of posting this article yesterday, DH was at the emergency all day for septic bursitis… fun. No limbs lost yet! Real life means a disability, job loss, sick kids, temporary illness, bereavement, care of the elderly… and much of this falls on our shoulders. It also makes our financial situation more precarious. These situations greatly impact our current and future income as women.
So, heck yeah… I want more security and an enjoyable life.
And nothing brings security or being able to afford ‘divertissements’ (French for fun+entertainment) like consistent and varying streams of income. Passive income streams other than working, such as the dividend income I speak of so often that can come from owning stocks (more on this later in Part 3).
When it comes to income, the media likes to talk about the ‘wage gap.’ I’m not here to debate whether it exists or not for women. However, there is no wage gap in dividend investing. The best dividend companies give raises and do not discriminate against individual shareholders because they are women or men.
I could go on about Canada’s pitiful income growth (Rob Carrick wrote an interesting article), inflation and our current purchasing power but I’ll leave that for another day.
If you are a fellow gal reading this, please consider saving and investing as a means to achieving whatever your longterm goals might be.
Happy investing, Heather
Join me for Part 2 next week where I will discuss ‘Why You Should Start Investing Now‘ and not wait.
I finished Common Stocks and Uncommon Profits by Philip Fraser earlier than expected. (Thanks Audible!) However, I’m not sure how much I retained. My kids have amazing mom-is-busy-radar. “Look, mom is reading. Now is the time to ask her for x, y, z…”
If I sneak off to my bedroom. The door is closed and locked. The kids are at the door. “Mom, the door is locked. Can you get my x, y, z…”
Me, “Go ask your father. He said he would watch you while I read.”
Kids, “He’s already asleep on the couch.”
Husband, “I’m awake. They just don’t come ask me.” (Insert laughing face emoji here…)
The only difficulty I had with Common Stocks and Uncommon Profits was it’s broadness. For some reason my brain was expecting something more practical. However, it still contained good insight for those whom I would consider ‘private investors’, i.e. not me or not me yet.
This month I’m going to reread Stephen Jarislowsky’s Investment Zoo. I inherited it from my dad’s collection of investment books. It’s a short read, so I’m hoping I can squeeze in a second short investment book this month if I’m lucky.
Wish me luck. I might just have to escape to my mini-van to read.
The whole purpose of my blog is to get more women investing and bring you along on my investment journey. There is no better way to get more people investing than to show them how it’s done.
Let me help you get your hands on your first share!
To help you achieve this goal, I decided to create a 5 part blog series on how to start investing, with a particular focus on those who may not have a large amount of disposable income or knowledge on where to start. Which is exactly how I started, so have no fear!
In this 5 part series, I will touch on the following topics:
Why women need to invest…
Why you should start investing NOW…
How to buy your first share…
How to pick stocks easily and where to put them…
Other tips and tricks…
So, without further ado, let’s get this series started!
Happy Investing, Heather
Note: As I publish each post, I will put a link on this page 🙂
I have finally put my dividends onto a graph and seeing the progress visually is very satisfying. I am going somewhere and it is in the right direction. Up, up, up!
Now down to the nitty gritty…
Laurentian Bank – $3.20 (Laurentian had a nice dividend increase last quarter from $0.63 to $0.64)
Emera – $23.17
Inter Pipeline – $11.48
Transalta Renewables – $6.66
Plaza Retail REIT – $6.67 (Plaza had a dividend increase from $0.0233 per month to $0.02333 back in April this year)
Bringing this month’s total to $51.18. Looking at my monthly budget, this would cover my internet bill of $46 plus a couple coffees.
Using Plaza Retail REIT as my guideline, I calculated my family would need $555,000 invested for our dividends to provide roughly $3000 a month, covering all of our current expenses in today’s dollars. This would allow my husband to stop working, and I could go back to work for fun. (See ya sucker! Have fun with that laundry and dishes! Hahaha, just joking he already helps. Or am I? Mmm…)
August Dividend Total
2018 Dividend Total: $462.16 2018 RRSP Dividend Total to $39.13
Holy smokes! Did I go crazy this month? I had money for June, July and August just sitting there waiting to buy stocks. And boy, did I spend it.
I made 4 purchases in my TFSA. Three of which I am happy with and one I am not 100% sure about in terms of dividends and growth.
So, this August I bought…
10 BCE (top up)
10 Laurentian Bank (top up)
43 Riocan REIT
31 Canadian Utilities
Canadian Utilities is by far my best purchase. It has a good track record of dividend increases and the share price growth is nice and steady.
The one purchase I think I could have done a bit more research on, is Riocan. After looking through it’s dividend history and growth, I think I could have made a better choice. The last dividend increase was in 2013. I only realized later it is not even a Canadian dividend aristocrat. Oops.
Do any of you own Riocan REIT? Am I doomed in terms of growth?
Break open the champagne! Time to celebrate back-to-school with a long blog post! 🙂
I’m sure you’re all wondering, how in the world I put X amount of dollars in investments each month with 4 kids and one more on the way? Everywhere you go, they tell you kids are expensive. However, saving with kids is not rocket science, it’s just different.
Here’s how I approach it (from a Canadian perspective… sorry fellow American readers!)
Try to keep in mind, as anyone who has balanced a budget before, we all know income must equal expenses. Budgets don’t balance themselves. So, we can approach saving with kids from an offensive (earn more) or defensive (spend less) strategy.
I’ve done my best to summarize my approach in 5 points. I don’t do each one perfectly, nor do I have the expectation that others do things this way either.
Yes. I said it. Move.
Don’t hate me.
If you choose to live and work in the urban area, you will have to accept that there is a price to be paid.
Let’s face it. Canadian cities are expensive. I love them. They’re hip, cool and exciting. Many shops are open 24 hrs (I used to do my grocery shopping at 4 o’clock in the morning when I had 3 kids). But after we had our third, we realized Canadian cities are not as kid friendly as we’d like to believe. My tandem stroller won’t fit into my favourite shops and it’s unrealistic to expect my kids to, uh… not be kids.
I had to accept Canadian cities are for single people, or couples without kids. And if you have kids in the city, you’re going to have to pay extra, a lot extra and deal with a higher proportion of people who think children are the devil’s spawn (they are free to hold these opinions!). But that’s life…
So we moved. We moved back to my husband’s hometown. We paid $80k for a tiny fixer-upper on 23,000 square feet of land, in a village with only a dépanneur (corner store), friperie (second hand store) and an ATM machine. No gas station or grocery store. If you do drive the 15 to 20 km to the nearest grocery store, it closes at 10 p.m. on weekdays and 6 p.m. on weekends. Oh, in our town there is no Tim Hortons either.
Granted, we pay more for my husband to commute to the nearest suburb but its not as much as the housing we paid in the city, and we pay cheaper gas prices too.
Side note – Cities are normally built with a dense urban centre and rural rings around it. Suburbs are the first ring. The towns of 3000 – 8000 inhabitants are in the second ring (30 – 60 minute drive to the city) . And the third and fourth rings are the towns of 0 – 1000 inhabitants, i.e. very very far from the urban centre. That’s where we live.
Also, town living was a huge adjustment for me the city girl. I can’t haphazardly offend people (ex. honk my car horn at drivers who don’t stop at stop signs), thinking to myself “Who cares! I’ll never see them again.” I will see them again, they live in my town. Can you tell? I have a strong character. However, in all honesty, it took me a good 2 and 1/2 years to adjust.
But, you know what’s great? Most people who live in the country are simple people. So, you don’t have to impress or compete with them. Just thought I’d throw that out there.
As well, small towns in Canada want families. Almost 50% of my town’s population is kids. Some will even pay your first year of property tax (like some towns in the Beauce region), subsidize your child’s sports activities and provide low cost or even free summer camp. Our town gives us $50 or $100 (I can’t remember) per kid for sports activities, and we only paid $140 per week of summer camp for 2 kids including before and after care! Woot woot! A nice little luxury for this mom.
2 Emergency Account
It’s gonna’ rain. When? I don’t know. But it’s gonna’ rain.
Each pay, we put 10% into a savings account. It’s usually over $1k, but it’s enough to cover any surprises.
However, and there is a BIG however, not everything is an emergency . Christmas? Christmas is not a surprise. It comes every year on the same day. Birthdays are not a surprise either. Nor is ‘back-to-school’ time. It’s coming, at the same time every year. It just takes a little forethought and practice.
Oh, and babies? They normally take 9 months to incubate. So, in our case it doesn’t fit into the emergency category unless there are major unforeseen complications.
3 Keep Monthly Costs Low
Besides our low mortgage payment, we do our best not to carry monthly costs like car payments or those buy-now-pay-later schemes for furniture or appliances. We can’t make our budget work if we are carrying around multiple fixed costs of $300+ a month.
Some things we buy used and other things we buy new. Washer and dryer? Used. Cars? Used. Shoes? New. Mattresses? New. Clothes? A mix, some hand-me-downs, some used and a new outfit for school and at Christmas.
We have internet, but no cable tv. We watch YouTube and use Chromecast. My kids… play outside. I am allowed to hang my washing outside, unlike some city neighbourhoods I’ve lived in where it was ‘interdit’. But, I don’t hang my laundry. I’m lazy. And think dryers are a great invention! Our house is heated with wood. (You should see me going to get wood in 4ft of snow, and super pregnant. It’s kinda’ funny.)
Oh yes, food prices in Canada and the ubiquitous winter inflation. The price of some food items, aka fruit and vegetables go up each winter (remember $10 cauliflower?). Food is the largest section of our budget. More than our mortgage. And well, my first tip would be don’t buy food at the dépanneur.
Other then that, keep it simple.
I feed a hungry man. When he does hard labour he can easily consume over 4000+ calories in a day. So, simple for us means meat. Yep, we eat meat. (Sorry vegans!) If we want to save, we cut back in the treat area or make it at home. And soon, it will be cheaper for our family to buy a whole cow, pig or lamb rather than buy it at the nearest suburban Costco.
Dinner? Roast chicken and baby potatoes and sliced cucumbers. Sausages, sliced peppers and some kind of carb.
Breakfast? Steak, eggs or oatmeal. Sometimes we make crepes on Saturday for the kids. If we buy cereal, we can easily go through 3 bags of milk in a day and a half! Burning a whole in our wallet. Our cereal habit is slowly changing.
You get the idea. Don’t over complicate your life. Eat like your grandma.
Sometimes we get free fruit and vegetables from our neighbours who have impressive gardens and cannot consume everything they grow. Once, a family friend of my husband asked us to stop by their farm and pick up several boxes of fancy-schmancy lettuce, part of an order cancelled by a big grocery buyer in the city. Don’t mind ugly carrots? You can get them by the truck load during harvest time. Same with bags of onions. Last year, I didn’t know what to do with all those free onions I got.
I’m sure we could save more money by having an extensive vegetable garden, bees or chickens on our property. We have the space for it, but not right now.
4 Enjoy the Little Luxuries
My husband and I enjoy little luxuries that we once had to give up when we were paying for our son’s medical expenses.
Like grabbing a coffee from Tim Hortons, hiring a babysitter. Which is way easier to do in the countryside. I have a larger pool of mature teenagers to choose from. Or, subscribing to a newspaper and reading it beside the wood-burning stove without interruption (not really, this is a dream. I wish it was without interruption).
Sometimes it’s healthy to deny yourself the little things so you can appreciate them more when you do indulge.
5 Live on One Income
This is honestly the hardest suggestion. Pretend like the second income doesn’t exist and save it. This can only be done if you make sacrifices in other areas. If you can’t live on one income, try to live on one and a half or one and three quarters, and save the other portion.
Since I live in Canada, we receive the Canada child benefit and Quebec child benefit. However, we do not consider either of these to be 100% disposable income to be included in our budget. We learned this the hard way. With each changing government, income changes, and aging children – the amount goes up and down like a roller coaster. (And god forbid you don’t get your taxes in on time, you won’t see that money until Christmas – if your lucky!)
Do what works for you. We do a mix, where some of the money I receive is saved and some goes for the kids.
Anyways, this money is deposited in a separate account and not in our regular chequing account.
If I can’t see it… I can’t spend it.
As a side note, I will always remember this commentary from Elizabeth Warren about the two income trap. You can see a clip about it here.
Basically, if my husband gets injured or loses his job, I can go back to work. And rather than us having to cut our budget in half, my new salary could replace most of his income almost dollar for dollar. We wouldn’t feel the pain too badly.
So that’s it.
The only way the above suggestions work, is if you are willing to be flexible and make changes. My dad’s motto was “max-flex,” or maximum flexibility.
That’s all the advice I have.
I am truly of the belief that kids are not an impediment to living a good life. They add too it! 🙂
I am finally passing the $400 mark towards my goal of $750 in annual dividends and I feel as though I am in the home stretch.
Here is my takeaway for not making June and July purchases.
It’s okay. The world will not end, and I still get paid. My account still grows even if I am unable to add new money. I still get pay raises (as my dad would say), even though I do not technically work outside the home for a salary. And lastly, I got a bigger pay raise this month than my husband, hahaha. Thank you RBC! (I hold RBC in another account which I will post on later in September)