Hi Everyone,

I’m extremely close to being a national bestselling Canadian author.  Thanks for everyone who has supported me.  I love y’ all.

If you haven’t yet bought a copy of I (Heart) Money then please run out and buy two.  I’m almost over the 5,000 copies mark which makes me a bestseller.  Here are ways to buy! Keep loving your money.

Indigo and Chapters Stores

Most Indigo and Chapters stores have a few in stock!  Here are the stores with the most copies:

Vancouver – Robson & Howe  – 8 copies

Toronto – Eaton Centre – 5 copies

Toronto – Yonge and Eg – 19 copies

Toronto – Yorkdale – 36 copies

Richmond Hill – Indigo -  11 copies

Mississauga – Square One – 25 copies

Milton – Indigo – 11 copies

Indigo.ca 24% off!

If you buy from Indigo you’ll get 24% off right now here is the link below!

I (Heart) Money at Indigo.ca

Book Signing

I’ll be at Chapters at Square One on June 2nd from 12-5pm.

Hi hi hi,

I get tons of comments about my budget strategy to only use cash for day to day items like clothing, coffee, lunches and getting my hair did.  Readers always say that they keep to their budget and don’t over spend and therefore want to use their cards to pay for their day to day expenses.  By using the card instead of cash they can reap the benefits of the award cards!

The reason I get people to use cash is so that we have a stronger connection with the physical cash.  Using cash generates that sense of loss when you actually part with it.  So that you think twice about plopping down $200 for some clothing or a dinner that maybe you don’t really want.  (Decide before you’ve eaten because it’s hard to get out of dinner after you ate it).

I recommend everyone trying to use cash for three months and compare it to the previous three months that they put on their credit cards.  Compare and see how you do.  Statistics say that people spend 20% less with cash than they do with credit cards.  The points or cash back entice you to spend but just losing those $20 bills offsets that desire to buy more shoes, etc.

If you do find that you spend around the same then try paying the card first.  If your miscellaneous spending is  for example $2,000 a month.  Drop $1,000 a pay cheque onto the card and then spend down.  Keep track of it with mint.com on your smartphone or in a paper bookie and make sure that you stop at $1,000.  You’ll keep your focus on how much you have to spend which is better than just knowing how to swipe.

If you come across your next pay cheque and you still have money left over you can deduct that amount from your next $1,000 and bank it in a savings account.  The point, which is lost on most of us, is not to spend everything in our account every time we get paid!  Feel the joy of saving some of it. Saved money is freedom, security and respect for yourself.  You’re a pretty good reason to save. I know it!

If you are good with your account you can, stay on budget, save a ton more, and get the rewards on your total spend at the end of the year.  Win, win, win.  The moment you fall off the credit wagon and go over budget – promise to go back to cash.  It takes discipline to put everything on your cards.  There isn’t a correct way to budget and spend but there is a WRONG way to do it!

Have an awesome week,

Dave

Ken messaged me to tell me about a new Capital One Aspire World MasterCard.  Here is how it would turn out based on my monthly spending as per below. Thanks Ken!

It has a one time bonus of $100 once you make a first purchase.  I didn’t include any of the first time “deals” in my calculations because they are a one time hit and I’m looking for a card that will keep paying me back based on my spend for the long haul. I’m all about long term relationships.

MY MONTHLY SPEND

Groceries/Pharmacies              $500

Fuel                                                $200

Utilities/Insurance                    $200

Mobile Phone/Internet            $100

Miscellaneous                            $1500

Total Spend of $2,500 on the card a month

Capital One Aspire World MasterCard: Total cash back $450 a year

1% cash back on everything

.5% anniversary bonus based based on you total spend

You don’t have to worry about gas, grocery or pharmacy spending!

No annual Fee

You can redeem when ever you want.  No minimum or maximum and they’ll credit it to your card or send you a cheque.  Very flexible those vikings are at Capital One.

Based on my spending the #1 cash back card is Scotia Momentum with $489, #2 is MBNA Smart Cash with $468 and the new third is Capital One Aspire World MC with $450!

Have an awesome week,

Dave

I’ve crunched all the numbers for the top cash back cards and it looks like they are close to each other rewards while.  My thinking is if I only get an extra $50 a year and I have to add a card to my credit rating and get hit a few points for the credit approval – it isn’t worth it.  Plus I like the fact that my cash back card is from my bank so I don’t have to check another online banking site for my real time balance.

I crunched the numbers with the following average spend.  I don’t include the interest rates because I never run a balance.  I’ve also deducted the yearly fee from the cash back amount highlighted.

MONTHLY SPEND

Groceries/Pharmacies              $500

Fuel                                                $200

Utilities/Insurance                    $200

Mobile Phone/Internet            $100

Miscellaneous $1500

Total Spend of $2,500 on the card a month

American Express Gold Card:  Total cash back towards airline purchases $234 a year

I just found out that American Express gold cards have a cash back option. Earn double points for every $1 in eligible travel purchases charged to the Card, including flights, hotels, car rentals, cruises, etc.. The benefit is you can use points or cash back on the same card.

Earn double points for every $1 in eligible gas, grocery and drugstore purchases charged to the Card. You’ll also earn one point for every $1 in card purchases everywhere else.

You can apply the points as a cash back against your balance once you have more than $50.  10,000 points equals $100 cash back and you get 15,000 free points when you open an account plus the first year’s $150 fee is waived.  If you apply the points towards flights that you’ve charged it works equals to a 1% cash back on everything else and 2% cash back on gas grocery, flights, travel and drug stores.

MBNA Smart Cash: Total cash back $468 a year

3% cash back on gas a grocery purchases

1% on everything else

No annual Fee

Once your total equals $50 they’ll mail you a cheque at the end of each billing month.

Scotia Momentum Visa: Total cash back $489

4% cash back on gas and grocery store purchases

2% cash back on drug stores and recurring bill payments

1% on other eligible purchases

$99 yearly fee

BMO CashBack Master Card Premium: Total cash back $299

3% cash back at Shell Stations for gas

1% on everything else

$49 yearly fee

Scotia is the big winner but not by a huge margin.  If you have one of the other cards I’d see if it is worth changing based on your spending habits.

Have an awesome week,

Dave

Hi Everyone,

Here is an article on the commodity ETFs with the commodity covered call strategy from Morningstar.  I LOVE these products and wanted to share with you.  Their income streams were just announced and as I suspected they are nice and juicy.  Sold option premiums are taxed as capital gains and as you know commodities don’t pay dividends like some stocks do.  Outside of your RRSPs or RRIFs they are taxed better than bond, rental or salary income.  They will fluctuate with volatility around the commodity so keep that in mind.  You can see the Natural Gas premiums are much higher than the Gold, Silver an Oil because of the fear of Natural Gas continuing to drop.

Here are their projected distributions from Horizons:

HNY Horizons Gold Yield ETF                        10.22%

HGY Horizons Silver Yield ETF                      10.47%

HZY Horizons Crude Oil Yield ETF              11.61%

HOY Horizons Natural Gas Yield ETF         15.16%

By Rudy Luukko

Horizons Exchange Traded Funds Inc. today launched three commodity-based ETFs with a distinct twist: they’re designed to provide monthly distributions.

The new Toronto Stock Exchange-listed offerings — with exposure to silver, oil and natural gas — follow on the heels of Horizons Gold Yield. The latter has a similar cash-flow mandate and began trading a day earlier, right after having been converted from a closed-end fund.

The ETFs, which will employ covered call options, are available in two classes of units. (See table below.) Class E, the cheaper of the two classes, pays no advisor compensation. Management fees for Class E range from 0.60% to 0.85%, and also cover fund expenses. The Advisor Class pays brokers a trailer fee amounting to 0.75% annually, and charges management fees that are correspondingly higher.

Though they employ no leverage, these specialty funds are nonetheless highly volatile. Investors can expect sharp upward or downward moves at times, as net unit values reflect changes in the price of their underlying exposure.

Two-thirds of the portfolios will be exposed to changes in the price of the underlying commodity, hedged to the Canadian dollar. This exposure may be obtained through commodity ETFs, the commodity itself, or commodity futures.

But because of the use of covered calls to generate premiums, the ETFs will in effect partly hedge their commodity bets. Covered-call writing will generally be employed on the remaining one-third of the portfolios.

In return for a premium paid to the ETF, the option holder has the right to exercise the option to buy the commodity at the exercise price. This is normally settled by making a cash payment to the option holder of an amount equal to the difference between the price of the commodity and the option exercise price.

The exercise of the call options may limit or reduce the total returns of the ETFs, particularly in bullish markets. However, in flat or declining markets, the ETFs should outperform a strategy of simply holding the commodity and writing no options.

The covered-call strategy acts as a hedge against the volatility of commodity prices, since price volatility and option premiums tend to be positively correlated. In other words, the wider the swings in commodity prices, the higher the premiums that the ETFs can collect for writing the covered calls.

The covered-call writing will be managed by Eden Rahim, vice-president and options strategist at Horizons Investment Management Inc., an affiliate of Horizons ETFs. Rahim and his team are responsible for managing more than $500 million in covered-call ETF mandates under the Horizons brand name.

As part of its strategy to generate tax-efficient distributions, each ETF will enter into forward purchase and sale agreements with a bank counter-party. Returns to investors will be based upon the return on a portfolio providing exposure to the underlying commodity.

As part of this arrangement, the ETFs will hold a portfolio of publicly traded Canadian stocks. The distributions will vary, and there are no guarantees that distributions will be made each month. Because of higher fees, the distributions will be consistently lower for the Advisor Class units.

The use of forward contracts will enable the options premiums earned by the ETFs to be deemed to be return of capital, a Horizons ETFs official told Morningstar. (Return of capital becomes taxable only after the adjusted cost base of the investment reaches zero.) In addition, any gains in the net asset value resulting from increases in commodity prices will be taxed as capital gains.

 

	ETF and ticker symbols	Fees for Class E	Fees for Advisor Class
	Horizons Crude Oil Yield (HOY/HOY.A)	0.85%	1.60%
	Horizons Gold Yield (HGY/HGY.A)	0.60%	1.35%
	Horizons Natural Gas Yield (HNY/HNY.A)	0.85%	1.60%
	Horizons Silver Yield (HZY/HZY.A)	0.75%	1.50%
	Source: Horizons Exchange Traded Funds Inc.

 

 

Horizons has just launched four commodity exchange traded funds (ETFs) with a covered call strategy and “I’m as happy as a little girl” to quote the great Mike Myers.

The four new ETFs will be made up of the actual commodity instead of stocks in that industry. For example, before we could buy Canadian energy stocks with a covered call strategy with HEE (Horizons Enhanced Income Energy).  Investors would email me and ask why their oil stocks wouldn’t keep up with the actual price of crude oil.  There are many reasons for this such as bad management, market sell offs, or regional problems.  But now with these pure plays on OIL, SILVER, GOLD and NATURAL GAS, you are investing in the actual commodity and NOT stocks that are in that sector. If the commodity goes up or down you’ll see it reflected in this product.

PLUS, being a lover of options, these commodity ETFs will be selling covered call options on 33% of the futures portfolio.  And yes, you can actually sell options on commodity futures as well as stocks.  Due to the fact that commodity prices can be volatile, the premiums generated from futures options are much larger than if you were selling the same dollar amount on say an energy stock.

The distributions from these ETFs haven’t been announced yet but having traded options on futures in my past, I know that they will be quite juicy, even only 33% of the portfolio. This is the only way to get yield from a pure commodity play because commodities don’t pay dividends.

Here are the symbols for the four commodity ETFs just launched.  You can find out more at  here:

http://horizonsetfs.com

HGY – Gold Yield

HZY – Silver Yield

HOY – Crude Oil Yield

HNY – Natural Gas Yield

Yield from commodities through options!  Gotta love it,

Dave

Hi everyone,

I’ve been asked to be the financial host for a new reality program from the makers of the hit shows X-weighted and The Quan Dynasty.  They are casting for contestants for the show.   The best part is that you’ll have me as your financial coach for FREE.  And we all know I love free.

The show is a new and inspiring television series that will help you regain control of your finances and your life.  They are looking for individuals who are fed up with keeping a secret debt and are ready to finally come clean to the important people in their lives to make a real and lasting change.

In exchange for sharing your story you will receive:

• One-on-one assistance from experienced, professional experts. (Me!)
• A concrete plan for turning your finances around.
• An honorarium to assist in rectifying your financial situation. (Ah-mazing!)
• A new outlook on money, finances and life…and a fresh financial start.

Contact them if you are within an hour’s drive of CALGARY, Vancouver or another major city Canadian city, are between the ages of 18 and 45, and have a financial secret that is getting harder and harder to hide from  loved ones.

Apply today by sending a few sentences describing your story to casting@anaid.com or phone 780-413-9285 and ask for Shantel.

Have an awesome week,

Dave

With all the news around about public and government pensions being bust in the not so distant future, there must be something that we can learn.  Before we had social security and old age pensions what did people do?  Were they fine?  My Grandpa is more than fine.  He has turned 100 this year and I have a lot of money skills to learn from him.

Firstly,  he doesn’t have a credit card or a debit card.  Every Thursday he’ll go to the bank to chat with the tellers and take out his money in cash for the week.  While he is there he’ll pay any bills that he has and then he is done banking for the rest of the week.  No gadzillon trips to the bank machines, endless debiting, or transferring funds.

Ask your Grandpa or Grandma how they saved for retirement and I bet they all have similar stories.  They worked hard, saved a percent of their incomes, paid down their mortgage, probably sold a bigger house or farm to move into a smaller place and then banked the difference.  There weren’t any lines of credits or home owners lines of credit to expand their incomes.  What they had after all the bills were paid was what was they had.  Living through a great depression, two world wars and everything else wasn’t easy.  But they did it!

I bet your Grandparents, if they were investors, bought solid blue chip companies, that paid dividends.  They would receive their dividend cheques in the mail and take them to the bank.  They’d buy and hold stocks and bonds for the long run and their income helped compliment their retirement.  There weren’t mutual funds or ETFs way back then so they had to build portfolios with a broker, investing for income in their retirement in a balanced portfolio.

There is a lot that we can learn from our Grandparents so if you’re lucky enough to still have some like I am, take them out for a drink and learn how they got by.  Looking where we have been can be useful to help us get to where we know want to go.  Using cash, limiting lines of credit and credit cards to only use as convenience and not to extend our income, buying good companies for their dividends and investing for the long haul.  These investing principles are still prudent advice today!  Grandpa taught me to heart money too!

Have an awesome week,

Dave

Hey everyone! Here is the final section of budgeting made fun. We already talked about adding up all of our fixed costs like mortgage/rent, loans, taxes, electricity, etc. We then talked about how we can squeeze our other bills by calling the companies and trying to get a better rate. I hear success stories from clients all the time after doing this! Remember that honey gets more bees. Be super sweet to the customer service rep but demand to match a competitor’s price that you’ve seen or threaten to cancel. All of those savings will now be pumped back into things you love like trips, dinners with friends, or a retirement in Fiji. Whoop.

Take three months of statements and see how much money went to clothing, coffee, lunches out, movies, restaurants, and other miscelaneous areas. I bet this number will shock you! With unlimited swipes of a debit or credit card we normally stop spending when our money is all gone. Today, we change all that.

Look at your last three months statements and figure out how much you spent. Now think if you really enjoyed any of those purchased to their fullest. OR, would you have much preferred that money going somewhere else?

Take your average spending amount on miscellaneous items from the last three weeks and then cut it in half. Then divide by the number of weeks that are in your current month. If you spend an average of $2,000 on dinners, drinks, and good times, now $1,000 will be your monthly amount. If there are four weeks in the upcoming month then divide the $1,000 by 4 = $250. That is your weekly variable spending amount.

On Sunday go to the bank machine and take out your $250. Go get some jars, envelopes or some other divider and now plan out the week. If you have dinner with Aunty Gertrude then you need to have $100 on Wednesday night. If you need $500 totally fierce pumps – you need to save $100 for five weeks to get them. What, you say? Saving before you spend? I know it’s crazy, but you’ll fall in love with your fierce pumps that much deeper when you pay cash for them. You might even pass them up? Ohhhhhh snap.

We now have set you up so that everything that has to come out, comes out, including money towards retirement an your goals. Now you’ve put a cash ceiling on your clothing, dinner and fun times spending. You’ll be amazed how well this works. Love your money and it’ll love you back with an auto fantastic financial life.

Have a super fun all cash week money peeps,

Dave