Great West Life – GWO

Well I’m happy to report that I’ve received another raise courtesy of one of my perennial dividend paying favourites, Great West Life (GWO). They announced yesterday that the quarterly dividend would be increased by 5%. They now payout $0.3075/share quarterly, which gives them a current yield of about 4.1%. It’s not a huge raise but in this environment I’ll take it.

U.S Housing - Just Walk Away...

Well if you’re in the market for a house in Las Vegas or Miami they all just went on sale for 28% off. I’m not suggesting that they’re good value, just cheaper than they were. Compared with the previous year house prices in both Las Vegas and Miami dropped a whopping 28% last month. These markets sagged a full 12% lower than the national average, which saw declines of approximately 16%. With declines like these it is no wonder that the delinquency rate is rising. In many markets it’s now cheaper and faster to simply default on your mortgage and walk away from the house than it would be to pay off an inflated mortgage. In the amount of time it would take to pay off the value that you’ve lost on your home you could have saved enough money for another house and rebuilt your credit. For example, if you purchased a house last year in Las Vegas or Miami for $350,000 you would now be down a whopping $98,000 in equity. At that point the only financially responsible thing to do would be to default on your mortgage. Why not just walk away?

CDN REIT Sector Index Fund – XRE

ABOUT XRE

“The iShares™ CDN REIT Sector Index Fund seeks to provide long-term capital growth by replicating, to the extent possible, the performance of the S&P®/TSX® Capped REIT Index through investments in the constituent issuers of such index, net of expenses. The Index is comprised of securities of Canadian real estate investment trusts ("REITs") listed on the TSX, selected by S&P using its industrial classifications and guidelines for evaluating issuer capitalization, liquidity and fundamentals.”

HOLDINGS

RIOCAN REAL ESTATE INVST TR (REI.UN) - 25.33%
H&R REAL ESTATE INVSTMNT-UTS (HR.UN) - 14.77%
CAN REAL ESTATE INVEST TRUST (REF.UN) - 10.36%
BOARDWALK REAL ESTATE INVEST (BEI.UN) - 9.32%
CALLOWAY REAL ESTATE INVESTMENT (CWT.UN) - 7.49%
CAN APARTMENT PROP REAL ESTATE (CAR.UN) - 6.98%
PRIMARIS RETAIL REAL ESTATE (PMZ.UN) - 6.10%
CHARTWELL SENIORS HOUSING (CSH.UN) - 4.90%
COMINAR REAL ESTATE INV-TR (CUF.UN) - 4.42%
INNVEST REAL ESTATE INVESTME (INN.UN) - 4.01%
DUNDEE REAL ESTATE INVESTMEN (D.UN) - 2.72%
EXTENDICARE REAL ESTATE INVE (EXE.UN) - 2.58%

OTHER RELEVANT DETAILS

Mer: 0.55%
Annual Dividend: 7% (paid quarterly)
Single holdings are capped at 25%

HISTORICAL PERFORMANCE (EXCLUDING DISTRIBUTIONS)

5 year: up 20%
4 year: up 15%
3 year: down 3%
2 year: down 10%
1 year: down 24

Turbulent Markets

Anyone with even the slightest interest in the markets is now fully aware of the recent turbulence in the both the Canadian and American markets. Both the housing and financial markets have been in a virtual free fall for most of 2008. The analysts and newscasts have also switched from optimistic to doom and gloom. Consumer confidence is falling and the general feeling about the markets and housing is now very negative. On top of all that it looks like inflation along with interest rates may start to rise. All in all it’s not really a pretty picture. Given the dismal outlook on the economy what’s an investor to do? That's a great question that I certainly don’t have the answer to so...I’ll defer to my response to an investor who’s been here before.

WARREN BUFFET

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

“Our favourite holding period is forever.”

“Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years”

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market”

“A public-opinion poll is no substitute for thought.”

“Lethargy, bordering on sloth should remain the cornerstone of an investment style.”

Keeping those quotes in mind tomorrow I'll be posting about a name that I'm planning to add to my portfolio.

What Exactly is Personal Disposable Income?

This is just a follow up to yesterday’s post and will hopefully clarify the definition of Personal Disposable Income that was used yesterday.

According to Statistics Canada personal disposable income is :

“the amount left over after payment of personal direct taxes, including income taxes, contributions to social insurance plans (such as the Canada Pension Plan contributions and Employment Insurance premiums) and other fees. It is a measure of the funds available for personal expenditure on goods and services and personal saving for investments as well as personal transfers to other sectors of the economy.”

So basically personal disposable income = income – taxes

Canadian Household Debt On the Rise

The level of household debt has been steadily increasing for the last 20 years in Canada so it should be no surprise that it continued to rise again this quarter. The average Canadian household now has an average of 19.6 cents of debt for every dollar of networth and household debt is averaging about 123.8% of personal disposable income.

This is a frightening figure at this stage of the financial cycle as it is much more likely that interest rates will be rising than decreasing. An increase in interest rates will of course make managing this debt much more difficult for many Canadian households. How does your household debt compare to your personal disposable income?

How satisfied are you?

If you are thinking about enlisting the services of a full service broker you may want to check out the results of the following survey by J.D. Power and Associates. Their survey measured how satisfied Canadian investors are with full-service investment firms. Based on a 1,000-point scale here are the results:

Edward Jones: 758
Berkshire Investment: 752
Wellington West Capital: 747
Dundee Wealth: 731
Raymond James: 729
RBC Dominion: 728
National Bank Financial: 727
Credential Securities: 726
Desjardin Securities: 724
Canaccord Capital: 723
Industry average: 720
Laurentian Bank: 717
CIBC Wood Gundy: 713
Assante: 709
Scotia McLeod: 699
TD Waterhouse: 694
BMO Nesbitt Burns: 689

High Interest Saving Accounts - Guest Post

GUEST POST FROM http://nocommunism.blogspot.com/

Middle Class Millionaire has foolishly agreed to let me do a guest post. I apologize in advance for the mass exodus away from his blog.... to mine! Ha ha!

Sucker.

Oh, right. I was supposed to make a serious point about something.

Okay, most of us have a very similar problem. We don't have enough money. Even when we get a little extra, we're either using it to pay down debt, or we're plowing it back into our investments.

If you were, say, this guy or this guy, you'd definitely want to place to park your excess cash. But where? Don't worry son, I can help!

Let's start with the big banks, just so we can get them out of the way early. They all suck. The best one offered is RBC, which offers a high interest savings account at 2.75%. The catch is that all you get on that account is online banking.

As for the other big banks? You either need ridiculously high minimum balances, or the rate sucks. Most are 2.25%, and quite a few have a minimum balance of at least $5000.

Now onto some more interesting options.

E-Trade Canada will let your uninvested cash earn 3.05%. This is interesting if you already have an account at E-trade, since there'd be no transferring back and forth. Even though there's better rates out there, if I was an existing E-Trade client I'd just plow my money there.

ING was the company that started the high interest savings revolution, at least in Canada. They offer a rate of 3%, combining that with the promise of zero service charges if you switch all your banking to them. They also have an interesting option for your U.S. dollar cash, an account yielding 1.75%.

PC Financial's rate is a comparable 3.05%, plus a bonus of about .05% on your anniversary date. It sure was nice for PC to remember our anniversary date, cause I, uh, forgot to get PC Financial a present. Guess I'm not getting any tonight.

Manulife offers 3.00% on a pretty standard account. HSBC is the same.

Canadian Tire Financial Services is interesting. They offer 4.3% for the first 90 days, (up to $100k) then the rate drops to a more realistic 3.05%. Still, if you average those out over a year you get 3.32%, which isn't too shabby. No word on whether they pay you in Canadian Tire money, but I'd hope not.

Altamira offers a decent yield of 3.2% for their account. Citizens bank is at 3.15%.

The winner is... ICICI BANK! With an astonishingly high 3.4% interest rate, the boys from India come through on this one. Great job guys. There's just one thing. What's up with that name? Get on that, wouldja?

Upon further searching at Globefund, the average 5 year return on a money market fund is around the 3% range. You could try to cherry pick a better fund, but good luck with that.

Taking the time to set up one of these is actually worth your time. The difference between ICICI and my savings account is 3.15%. (3.40%-.25%) Having a 10,000 balance would get you an extra $315 per year.

Want to Retire Rich? Stay Married

I think everyone out there knows at least a few people who have had to for one reason or another part ways with their spouse. Other than the emotional costs of divorce there is a huge financial burden as well. Let’s just do a little exercise, take all of your networth (including pension) and divide it in half. Before you divide your networth in half don’t forget to subtract the thousands of dollars usually required to legally file for divorce and all of the associated real estate fees that go along with selling the cottage, house etc...Next you’ll want to take all of your shared living expenses, mortgage, heat, hydro, gas, cable, internet, house taxes etc... and double them (because you’ll each need your own place now).

Get the point? Divorce is expensive...so if money is tight it just might be worth working a little bit less (not more) and spend that time with your spouse instead....(especially if you live in Quebec)

PROVINCIAL DIVORCE RATES
Newfoundland and Labrador - 17.1%
Prince Edward Island - 27.3%
New Brunswick - 27.6%
Nova Scotia - 28.9%
Saskatchewan - 29.0%
Manitoba - 30.2%
Ontario - 37.0%
British Columbia - 39.8%
Alberta - 40.0%
Quebec - 49.7%

Source: Statistics Canada, 2003

BCE Deal is Done!

Well the BCE deal is finally going to be done and is expected to close before the 11th of December! I purchased BCE in December 2007 and although I didn’t expect the volatility, or the favourable ruling for the bondholders it is nice to see that my rational for buying was correct. To see my original thesis behind purchasing BCE please click here.

Whether BCE is actually worth $42.75 is a whole other story though....

Requesting Guest Posters

As you can probably tell by the reduction in posts this is turning out to be a very busy summer for me at Middle Class Millionaire. So...I am asking you (readers and/or other blog owners) if you would be interested in submitting a post or two over the next couple of months. I am open to receiving posts on anything related to finances, investing, retirement planning, market conditions etc... I will post it on my blog but will of course give you all the credit for your writing. If you are interested please send me an email at middleclassmillionaire.blogspot.com or just leave me a comment with your email address and I’ll get back to you.

Thanks.

Requesting Guest Posters

As you can probably tell by the reduction in posts this is turning out to be a very busy summer for me at Middle Class Millionaire. So...I am asking you (readers and/or other blog owners) if you would be interested in submitting a post or two over the next couple of months. I am open to receiving posts on anything related to finances, investing, retirement planning, market conditions etc... I will post it on my blog but will of course give you all the credit for your writing. If you are interested please send me an email at middleclassmillionaire.blogspot.com or just leave me a comment with your email address and I’ll get back to you.

Thanks.