Couples and Money Management

In the last month or so, JP and I have been revisiting our life goals. Since relocating and finding work, we now have a better grip on our financial situation and therefore can make better projections on our finances.

We basically wrote down our goals in order of importance and plotted them along a timeline. Our plans are quite ambitious but within the realm of possibility. We figured how much money and time we’d need to achieve each goal. It’s not that we haven’t done this before, but after going through a big transition like moving, it was good for us to check in to see whether we’re still on track. When life gets busy, it’s easy to forget your ‘why.’ If you wander too far off from your plans, your spending gets sloppy and problems arise from there. It was a good exercise in getting refocussed on what we want.

We also made adjustments to how we monitor our spending. We created a shared spreadsheet on Google that we can each access on our phones and computers. Whenever we buy something or pay a bill, we enter it on the spreadsheet. We considered using mint.com to track our spending and savings, but it can’t properly factor in all of our investment accounts where we put all of our savings. I don’t really mind having to do things more manually as it’s more interactive. Doing things this way encourages us to talk more about our expenses, which ultimately has led us to make huge improvements in our strategies.

Couples have their own ways of managing money. Some couples split every shared expense down the middle to the cent, and save and spend the rest how they see fit. Some couples rely on one spouse to do most or all of the money managing. We try to do everything together. There isn’t one right way to do this, as long as it works well.

JP and I try to account for everything. When we want to buy something extra, we pitch to the other one like it’s Dragon’s Den. This, I recognize, is not how most people want to operate! Keep in mind that we normally use up all of our savings to invest. Anything frivolous takes away from each other’s ability to buy stocks, so it better be good. We still treat ourselves, as long as we budget for it. As much as we like talking about stocks and the markets, talking about our financial logistics is just as important.

Within days of determining that one of our goals is to invest in a snowbird property within the next year, we booked ourselves to go to Costa Rica to start looking around. I love goals!

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Having said all that, we both just transferred money to each of our TFSAs. We spent this morning looking for some decent picks, but we can’t find anything worth investing in this week. The only good ones were in the gold sector, but right now neither of us is interested in the goldies. The market has gone straight up for almost two months and needs to take a breather. If the market resets on the monthly or weekly charts, we might find better picks — at least we’ll be funded and ready for when the opportunity is there.

 

 

 

 

 

 

 

The Transparent RRSP: Share Prices & Flash Crashes

Action taken the week of June 5
  • Bought 20 shares of TransAlta (TA.TO) for 7.74. This cost me $154.80 + 0.20 cents of commission. I now have 45 shares of TA. There is $16.90 in cash left in the RRSP account.

If you buy a stock at different times and at different prices, then it makes sense to figure out the average cost of the shares. The previous 25 shares of TA were purchased at $7.63 per share. I’ve worked it out below:

  • 25 shares * $7.63 = $190.75 + $0.25 commission = $191
  • 20 shares * $7.74 = $154.80 + $0.20 commission = $155
  • $191 + $155 = $346
  • $346 / 45 total shares = $7.69

This is also known as the adjusted cost base, or ACB. I use the share price of $7.69 to determine how much I make in profits (or losses) when I sell the shares at a different price later on.

If I want to determine just the average price of the shares, I can do the same thing, only I leave out the commission fees. It works out to be $7.68. It doesn’t seem like much of a difference, but that’s only because my commissions are extremely low.


Flash Crashes

Yesterday the Canadian market closed positive. We traded sideways all week. Not much action, which I prefer. The US market, mainly the NASDAQ, however, experienced a flash crash. I saw the charts and so I had to see what the news had to say about it. They explained that the mega-cap tech stocks (Facebook, Apple, Amazon, Netflix, Google – aka FAANG) were starting to sell off. They weren’t the only ones selling off hard before the crash. The semiconductor stocks (SMH is a semi-conductor ETF in case you’re interested in viewing its chart) were selling off heavily after noon. It had been a long while since the tech sector had shown any major weakness.

After hitting new highs this week, investors were starting to collect profits and play defence by unloading some shares to be less exposed to a sell-off. Well, if enough investors with large holdings (particularly institutional investors) get the same idea, this triggers a mass sell-off. These sales which began around noon triggered the automated trading programs to sell later on in the day, which led to an overall big sell-off in the market. This domino effect happens when giant stocks fall; sometimes even one giant stock can affect the general market. The NASDAQ market lost its last three weeks of gains in minutes. It recovered partially at the end.

I have shares in a few of these tech stocks and I was thinking this week, “Wow, I can’t believe it just keeps going up! When will it come to an end?” I had sold some shares to collect profits a few weeks ago; I was left with the disappointing feeling that I had acted a little too soon. However, I did so because I was anticipating this. (If you’ve been reading my blogs, then you know this isn’t hindsight commentary.) I’ve lived through enough flash crashes to know that I’d rather make my decisions away from such events, not in reaction to them. I still have some shares left in these stocks, but I’ll see how they do over the next couple of weeks.

The Canadian market came down a bit in reaction, but it came back and closed positively. These flashes tend to be more pronounced in the US markets. Because the US market is so big, a crash can affect the global markets if sustained recovery doesn’t follow.

It’s events like this that could deter people from wanting to ever invest in the market in the first place. These things can happen in any market, though, because people are prone to panic. Rather than cave into your feelings and react out of fear of the worst to come, it’s best to try to be objective: Observe the sentiment of other investors and see how your holdings are doing on the bigger time frames like the monthly charts. There is a good chance that your charts are still looking healthy. A correction here and there is to be expected as nothing ever goes straight up. All I can say to all that is to keep calm and let your stock carry on!

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The Transparent RRSP: Post #5

Actions Taken the Week of January 30th

  • Deposited $150 into the RRSP, which now has $1316.50

The RRSP’s only security so far is ZPR, my ETF darling. It has been steadily going up since I bought it at $10.86. It’s up 0.34 cents as of yesterday, making me $16.50 so far (after paying 0.50 cents in commissions). I have yet to receive my first dividend payment from this stock, but it’ll come soon.


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The charts for ZPR still look healthy. I can’t help but think I should have bought 75 shares instead! The idea was that I wanted to find another stock to invest in late January, but I just didn’t find anything suitable.

The best charts for the right prices were in the gold sector. For me, gold is more of a swing trade to actively watch – I didn’t feel that would be a suitable choice for new investors. I recognize that gold is considered a hedge if you anticipate a drop in the market. After trading gold and silver for years, I can tell you that the market going down isn’t a guarantee that gold stock prices will go up. Commodities aren’t always the easiest trade. So much depends on the supply and demand in their own markets where people actually buy the raw or processed materials.

I’m not saying to not invest in gold or silver stocks. I just think it’s better to start diversifying when you have more money and own enough of the standard securities to give your portfolio a solid foundation.


Another thing I’d like to mention is to never lose sight of your goals. It’s a big mantra of mine. I tell that to myself all the time, particularly when times are challenging.

I’m in the Florida Keys right now on a short vacation. It’s hard to beat lying in the sun, reading, napping, drinking, and just totally recharging. I want my retirement to have plenty of days such as this. As sad as I am to leave this  wonderful place, I’m more motivated than ever to make this goal a reality.

Book Giveaway!

giveaway

I’m giving away FIVE FREE PAPERBACK COPIES of my book, Loonie to Toonie ! I will hold a draw at the end of the month and the lucky winners will receive their very own signed copy!

To enter, CONTACT me and tell me about your biggest financial goal(s) and what you’d like to learn most about investing!

Honour of the Month

Thank you to Tellwell Publishing for naming me Author of the Month! 

 

It has been quite a journey. I just love that beyond writing a book that I can continue to share, motivate, and help educate others on achieving their financial goals through savvy money management, wise spending, and smart investing.

I’m looking forward to sharing more in the new year!