Sunday, 28 December 2014


TFSA - Tax Free Savings Account, it sounds simple enough, and it really is. It's a type of savings account that is exempt from tax. You can use it for investments in stocks and bonds, or as a cash deposit account. All gains are tax exempt and all losses are not eligible for tax deductions. There is an annual contribution limit of CAD$5,500.

So how best to utilize it? A high risk/reward or low risk/reward investment strategy? Myself personally, am investing aggressively for two reasons. I'm young and can afford to take a financial hit if things go wrong and high profits in a tax free environment mean greater returns. But whether you choose an aggressive approach or a conservative one is something I could not care less about.

What I do care that you do is not use it as a storage space for cash. Do not put cash into a TFSA and let the bank give you 1% compounded monthly. Inflation was about 2% for 2014. Bond yields are between 0.96% and 2.55% at the time of writing. An ETF that tracks debt issues will provide a dividend upwards of 2% - on a monthly basis. $ZMP has a dividend of 3.32% - paid monthly.

Now I'm not saying use your TFSA to day trade leveraged inverse ETFs. But I am urging you to harness the power of your TFSA. Put some of your savings in a low risk investment vehicle. Don't let inflation devalue your savings.

Saturday, 27 December 2014

Laid Off

In the beginning of December I was laid off. Since I work in construction seasonal layoffs are to be expected, it wasn't at all surprising to me. Knowing the potential of seasonal layoffs loomed, I had prepared.

To ensure I wouldn't have any financial problems when laid off I started saving 10-20% of every pay check. This did two things for me, it created savings to spend on expenses in the future and it forced me to reduce unneeded spending.

By reducing my spending I had effectively lowered my standard of living, going out less, less discretionary spending, and preparing more of my own food. When most people lose their job it is followed by a drastic life style change. For myself nothing has changed, I continue to live as I did minus the working part.

Now I am eligible to collect EI, however I prepared as if I was not. A good move on my part EI is a huge bureaucracy. As of now it is estimated to take upwards of 5 weeks to process my claim. To be honest I couldn't care less how long as it takes. Provided I do in fact get to submit claims from the insurance I'm forced to pay for.

If you're not already, save money that will be able to cover all your expenses for at least 6 months. Not only is the financial security awesome, but the feeling working because you want to - not need to is irreplaceable. It also makes a layoff into a vacation especially in the holiday season.

Saturday, 20 December 2014

Drop In Oil and Diversification

Over the past few week the price of a barrel of oil has decreased by almost 50%. What does this have to do with my personal finances?

I currently hold five different stocks in my TFSA (Tax Free Savings Account), Canadian National Railway ($CNR), Canadian Natural Resources ($CNQ), Capital Power Corporation ($CPX), Cominar REIT ($CUF.UN), and Magna International ($MG). Three of these five stocks are strongly effected by the price of oil.

Canadian National Railway ships large quantities of bitumen crude from the oil sands in northern Alberta to refiners. Bitumen crude is significantly more expensive to extract and process when compared to sweet crude. Which means with a drop in the price of oil it quickly become unprofitable to extract bitumen crude, let alone ship it.

Canadian Natural Resources is a company that extracts oil and natural gas, 67% of its revenue from oil and 33% from natural gas. With the declining value of oil its not a secret that the company would reduce production from its now unprofitable wells.

Capital Power Corporation doesn't extract, ship, or process crude oil why was it negatively affected? Capital Power generates electricity, the fall of crude prices makes energy as a whole cheaper.

These three stocks made up approximately 60% of my portfolio. Fortunately when oil started its tumble the remainder of my portfolio was positively affected by the decline in oil prices. While I certainly need to remedy my energy sector overweight problem, diversification has protected me from significant losses.

Essentially this was a really long worded way for me to say don't keep all your eggs in the same basket - diversify your portfolio, learn from my mistake.

Monday, 15 December 2014


I'm Matt, this is my blog about my experiences with personal finance.

But first a little bit about myself. I'm 20 years old, I work in the rail industry installing signals and communication infrastructure for class 1 railways, and the occasional short line.

I didn't take the usual life path of high school to university to workplace. When I finished high school, I attended a trades college for one year then started working. After six months of working full time I decided to peruse a Bachelor of Commerce degree at TRU, through correspondence. The idea behind that being to take my operations experience and combine it with a thorough knowledge of business works.

The benefit of being 20, working full time, and in the trades no less, is I'm rather well paid. Rather then be reckless with my money like so many do, I've chosen to dedicate myself to a life of financial responsibility. My friends, my peer group, at the earliest are to graduate from university in a year and a half, this gives me a little head start on building my fortune.

I hope to use this blog as both a journal of my own experiences and a guide to people who are looking to follow goals similar to mine.