How much is your time worth? Have you ever actually calculated what you make per hour? I don’t just mean what’s your hourly rate or yearly income. I mean how much do you make when all work related costs and times are factored in?
I’ve made a list of costs that I think should be factored in:
1. How many hours do you commute each day?
2. How much gas do you use going back and forth from work?
3. Does your job require you to buy expensive clothes?
4. How much do you spend in dry cleaning?
5. How much is your child care?
6. How many extra unpaid hours do you work (both at work and take home)?
7. Do you own an extra vehicle because of work?
8. How much do you spend paying people to do things you would do if you didn’t work so much (ie – mowing the lawn, shoveling the driveway, etc…)
Just a hypothetical example but let’s say an average couple with 2 kids both making $40,000. This would give them an $80,000 pretax household income.
$80,000 / 52weeks / 40hrs = $38.46 hour
Now let’s look at the actual hourly cost based on these assumptions.
1. They each commute for 1 hour a day = 2 hours a day
2. Each do 2.5 extra hours of work each week (ie- checking email from home) = 1 hour a day
3. Have daycare costs of $70 a day:$70 X 49 weeks = $3430/year
4. Have someone mow their lawn in the summer = $500/year
5. Have a 2nd vehicle payment and insurance: $350month X 12 = $4200/year
6. Gas for the cars: $10 day X 49weeks X 5days = $2450/year
7. Parking for work = $1000/year
8. Each spend $600 a year on “work clothes” = $1200/year
9. Conservatively assuming a 20% tax bracket = $16,000/year
New hourly wage (before taxes):
$80,000 / 52 / 43 = $35.77/hr
New hourly wage (after taxes):
$64,000 / 52 / 43 = $28.62/hr
New hourly wage (after taxes and work related expenses):
$64,000 – $12,780 = $51,220
$51,220 / 52 / 43 = $22.9/hr
This means that the real wage of the couple is $22.9/hr or $11.45/hr individually. A far cry from what it initially appears to be. This is just an example, so work it out on your own and see what your real wage is (might make you think twice about frivolous or impulse purchases).
Wednesday, March 14, 2007
Monday, March 12, 2007
Proctor and Gamble
I recently came across this post on the moneysense forum. It was posted by a savvy amateur investor (investor99). I believe him to be competent and have asked his permission to post his comments.
“I decided to bite on PG today, and leave the U.S. financials for another day.
After PG's dramatic 5% fall and recovery I thought I had missed my opportunity, however the stock fell again to the low $62 level where I got in. I've wanted to own this one for quite some time now, but it was never cheap enough. It's still not cheap but I think the multiple is warranted and I like the technical clue that I got when huge amounts of buying came in at $61.25. Obviously there is major resistance at that price so the risk reward was tilted IMO, to the reward side. One dollar down and a fair amount more than that up. If it falls lower over the next few days or weeks I'm going to double my position.
2007 EPS estimate = +15% YOY
2008 EPS estimate = +14.5% YOY
Not bad growth for a $197 Billion company. Their stated goal is 10% EPS growth annually.
I like the play on the developing world including the BRIC countries, and the stability of earnings due to the fact that many of their products are 'essentials'. Everyone reading this post has probably used a P&G product today. Also the fact that they have raised their dividend at a pretty healthy rate (10%+), every year for the last 50 years doesn't hurt either. 10/16 analysts have it as a buy and S&P has it as a 'Strong Buy'.”
Here are some other stats for P&G.
P/E – 22
Forward P/E - 20
Price/Sales – 2.66
Price/Cashflow – 15.5
Yield – 2%
S&P – 5 star, strong buy
Half of it’s sales are outside of North America
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
“I decided to bite on PG today, and leave the U.S. financials for another day.
After PG's dramatic 5% fall and recovery I thought I had missed my opportunity, however the stock fell again to the low $62 level where I got in. I've wanted to own this one for quite some time now, but it was never cheap enough. It's still not cheap but I think the multiple is warranted and I like the technical clue that I got when huge amounts of buying came in at $61.25. Obviously there is major resistance at that price so the risk reward was tilted IMO, to the reward side. One dollar down and a fair amount more than that up. If it falls lower over the next few days or weeks I'm going to double my position.
2007 EPS estimate = +15% YOY
2008 EPS estimate = +14.5% YOY
Not bad growth for a $197 Billion company. Their stated goal is 10% EPS growth annually.
I like the play on the developing world including the BRIC countries, and the stability of earnings due to the fact that many of their products are 'essentials'. Everyone reading this post has probably used a P&G product today. Also the fact that they have raised their dividend at a pretty healthy rate (10%+), every year for the last 50 years doesn't hurt either. 10/16 analysts have it as a buy and S&P has it as a 'Strong Buy'.”
Here are some other stats for P&G.
P/E – 22
Forward P/E - 20
Price/Sales – 2.66
Price/Cashflow – 15.5
Yield – 2%
S&P – 5 star, strong buy
Half of it’s sales are outside of North America
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
Friday, March 9, 2007
EIT.UN
I purchased a small amount of EIT.UN on Wednesday. As you can tell from my portfolio I’m not a firm believer in the income trust model (and never have been). However, I felt that the valuation on EIT.UN was quite compelling and the risk/reward was in favour of purchasing a small amount for my portfolio. For those of you who are unfamiliar with EIT.UN here is a short excerpt from their site.
“EnerVest Diversified Income Trust invests in a diversified portfolio of income, royalty, real estate investment trusts and limited partnerships listed on the Toronto Stock Exchange. The key components of the Trust’s investment objectives are to maximize monthly distribution relative to risk, provide a tax-deferred diversified portfolio and provide the potential for capital appreciation. The investment manager utilizes a disciplined, conservative approach to investment selection, focusing on quality of management, financial strength and reasonable valuations.”
Here are my reasons for buying:
-trading at approximately 15% under its net asset value.
-current yield of 13.7%
-MER of approx 1.3%
-their current trust declaration allows them to hold common stock.
-diversified holding with only 20% weighting in oil/gas.
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
“EnerVest Diversified Income Trust invests in a diversified portfolio of income, royalty, real estate investment trusts and limited partnerships listed on the Toronto Stock Exchange. The key components of the Trust’s investment objectives are to maximize monthly distribution relative to risk, provide a tax-deferred diversified portfolio and provide the potential for capital appreciation. The investment manager utilizes a disciplined, conservative approach to investment selection, focusing on quality of management, financial strength and reasonable valuations.”
Here are my reasons for buying:
-trading at approximately 15% under its net asset value.
-current yield of 13.7%
-MER of approx 1.3%
-their current trust declaration allows them to hold common stock.
-diversified holding with only 20% weighting in oil/gas.
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
Wednesday, March 7, 2007
Mutual Fund Fees
I just read an interesting article “Do Fees Really Matter” by Duncan Hood on www.moneysense.ca. It was timely as I recently posted on my dislike of mutual funds.
Here is an excerpt from the article that I particularly enjoyed:
“If you bought a cheap mutual fund, wouldn't your performance suffer? Probably not. No one has ever been able to prove that funds with higher fees perform better on average than funds with lower fees. In fact, when Gene Hochachka, a former quantitative analyst for Vancouver mutual fund company Phillips, Hager & North, looked at how fees affected the performance of Canadian funds between 1986 and 2003, he found that for every extra percentage point that was charged in fees, performance went down by a percentage point.”
The article is short and sweet and gives readers a breakdown of how your “real returns” would be affected by both inflation and mutual fund fees. It’s worth a read.
http://www.canadianbusiness.com/my_money/article.jsp?content=20070219_112552_4764
Here is an excerpt from the article that I particularly enjoyed:
“If you bought a cheap mutual fund, wouldn't your performance suffer? Probably not. No one has ever been able to prove that funds with higher fees perform better on average than funds with lower fees. In fact, when Gene Hochachka, a former quantitative analyst for Vancouver mutual fund company Phillips, Hager & North, looked at how fees affected the performance of Canadian funds between 1986 and 2003, he found that for every extra percentage point that was charged in fees, performance went down by a percentage point.”
The article is short and sweet and gives readers a breakdown of how your “real returns” would be affected by both inflation and mutual fund fees. It’s worth a read.
http://www.canadianbusiness.com/my_money/article.jsp?content=20070219_112552_4764
Tuesday, March 6, 2007
Re-Investing Dividends
Should you re-invest dividends or take the cash? You often hear about the benefits of enrolling in DRIPs (and I agree with all of them) but today I’m going to present an alternative view of reinvesting dividend and explain why personally I take the cash.
The main reason I chose cash over the DRIP plan is that I like to determine the price at which I buy a stock. Additionally, I plan on keeping most of my dividend paying stock indefinitely and the DRIP programs would result in many of my holdings becoming too large a percentage of my portfolio. For example, TD is already approximately 14% of my portfolio and I’ve held it for 5 years however if I’d been in the DRIP it would probably be around 17% or 18% (and growing). Instead I took the dividends and reinvested them in other high paying dividend stocks (when I thought they were on sale). If there ever reaches a point where a dividend paying stock falls below a reasonable percentage allocation in my portfolio I will wait for a price I believe is fair and purchase more to bring the weighting up.
The main reason I chose cash over the DRIP plan is that I like to determine the price at which I buy a stock. Additionally, I plan on keeping most of my dividend paying stock indefinitely and the DRIP programs would result in many of my holdings becoming too large a percentage of my portfolio. For example, TD is already approximately 14% of my portfolio and I’ve held it for 5 years however if I’d been in the DRIP it would probably be around 17% or 18% (and growing). Instead I took the dividends and reinvested them in other high paying dividend stocks (when I thought they were on sale). If there ever reaches a point where a dividend paying stock falls below a reasonable percentage allocation in my portfolio I will wait for a price I believe is fair and purchase more to bring the weighting up.
Monday, March 5, 2007
Canadian Securities Course (CSC)
I’ve received about half a dozen e-mails recently from readers who wanted my opinion on the value of the Canadian Securities Course (CSC) and the value of a BComm. I just thought I’d share with everyone as this seems to be a common question.
To be honest I think that I learned more from my BComm than the CSC. However, I don’t think it’s necessary to have either in order to be a successful amateur investor. Most of what I know about the market and stocks has come from reading on my own (buffet, graham, foster etc…) and from listening to experts and talking with friends who share my interest in investing. In my opinion what you need to be a successful amateur investor is a passion for investing, a defined strategy and a genuine interest in the markets, securities valuation and retirement planning. That being said I would recommend the CSC for people without a background in finance as it does provide a general introduction to securities valuation... but be warned there is also a lot of regulatory info in the course that I didn’t really find very useful. Compared to a University exam I found the course easy and if you put a little time into it I don’t think you should have any problems as the regulatory info is just memory work and the math involved in securities valuation (ratios, time value of money etc...) is fairly simple.
To be honest I think that I learned more from my BComm than the CSC. However, I don’t think it’s necessary to have either in order to be a successful amateur investor. Most of what I know about the market and stocks has come from reading on my own (buffet, graham, foster etc…) and from listening to experts and talking with friends who share my interest in investing. In my opinion what you need to be a successful amateur investor is a passion for investing, a defined strategy and a genuine interest in the markets, securities valuation and retirement planning. That being said I would recommend the CSC for people without a background in finance as it does provide a general introduction to securities valuation... but be warned there is also a lot of regulatory info in the course that I didn’t really find very useful. Compared to a University exam I found the course easy and if you put a little time into it I don’t think you should have any problems as the regulatory info is just memory work and the math involved in securities valuation (ratios, time value of money etc...) is fairly simple.
Friday, March 2, 2007
Retirement Nest Egg March 1 - 2007
Networth at the close of March 1, 2007 (up 6.8% from last month)
TRP - 4.18%
ABX - 4.09%
CSH.UN - 3.80%
GWO - 4.94%
PFE - 4.30%
POW - 4.18%
BA.UN - 0.38%
L - 3.78%
UNS - 2.80%
GZ - 2.87%
TD - 13.26%
MMM - 3.80%
O'Shaughnessy’s Global Fund - 4.02%
American Growth Fund - 1.08%
CDN Value Fund - 3.77%
Small Cap Growth Fund - 3.85%
Deep Value Fund - 10.89%
Health Science Fund - 0.92%
Bond (9% yield) - 5.53%
Money Market Fund - 17.57%
You may have noticed that my networth increased by a large percentage this month. Although this looks good it's not, because all of the percentage gain was a result of contributions and not investment returns.
TRP - 4.18%
ABX - 4.09%
CSH.UN - 3.80%
GWO - 4.94%
PFE - 4.30%
POW - 4.18%
BA.UN - 0.38%
L - 3.78%
UNS - 2.80%
GZ - 2.87%
TD - 13.26%
MMM - 3.80%
O'Shaughnessy’s Global Fund - 4.02%
American Growth Fund - 1.08%
CDN Value Fund - 3.77%
Small Cap Growth Fund - 3.85%
Deep Value Fund - 10.89%
Health Science Fund - 0.92%
Bond (9% yield) - 5.53%
Money Market Fund - 17.57%
You may have noticed that my networth increased by a large percentage this month. Although this looks good it's not, because all of the percentage gain was a result of contributions and not investment returns.
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