Flatland Financial Blog

Investing in Canadian Stock

According to Statistics Canada, Canada’s economy is one of the wealthiest in the world. The claim was made in 2010 when the country’s GDP came up to an impressive $1.574 trillion. Needless to say, now would be a good time for both local and international investors to invest in some Canadian stock.

Of course, investing in any country’s equity can be a mystery to investors if they are new to stocks even if they happen to be locals. Here are some of the basics of trading on the Canadian floor –

How to Invest in Canadian Stock

The country’s stocks and bonds can be purchased in a variety of ways. For example, these can be purchased directly on the –

  • The TSX (Toronto Stock Exchange)
  • The CNSX (Canadian National Stock Exchange)

Investors or shareholders can also purchase Canadian stocks and bonds through ADRs (American Depository Receipts) or ETFs (Exchange Traded Funds).

Toronto Stock Exchange

The TSX is the largest stock exchange in country and the seventh largest of its type in the world in terms of market capitalization. It represents a large number of Canadian businesses and strong economies such as the United States and Europe to name a few.

Canadian National Stock Exchange

The CNXS was approved as an official stock exchange by the Ontario Securities Commission 70 years ago and serves as an alternative for emerging companies and micro cap. In addition, instead of requiring investors to trade on traditional “open outcry” trading floor, the Canadian National Stock Exchange is fully automated and requires investors to create online trading accounts in order to trade.

American Depository Receipts

An ADR or American Depository Receipt represents an investor’s ownership of shares in a foreign company. Furthermore, American Depository Receipts make international companies more accessible which is why this particular resource is such an enticing prospect to investors looking to put their money on successful global prospects.

According global product manager of depository receipts at Deutsche Bank Edwin Reyes, “Depository Receipt trading reached an all time high at $1.3 trillion for the first half of 2007, up 45% year-on-year and surpassing all of 2006.”

Of course, any purchase of security should be treated with a level of caution. Investors should keep in mind that their ADR investments will be exposed to the same risks as their domestic investments. For example, in economies like Canada, the local currency is tied to the price of commodities. This means that the value of the currencies may drop if the price of commodities, like oil drops.

With a strong base in natural resources, a stable monetary policy and a low budget deficit, Canada is considered to be a haven for investors. According to Bloomberg.com, Canadian stocks rose in January 2014; a feat that sent the benchmark index to its best performance since 2010. Of course, investing in any stock exchange comes with its share of risks. However, a few lessons on how Canadian stock exchanges work, the state of the local commodities market and keeping your own personal priorities in mind might be all it takes to invest successfully.

Actual U.S. Debt-to-GDP Ratio is Much Higher Than Official Rate

As the world’s lone superpower and issuer of the world’s reserve currency, the United States holds a prominent position in the world. Its Federal Reserve has one of the most complete collections of economic statistics on the planet. But more financial analysts are noticing a growing discrepancy between the “Official U.S. debt-to-GDP ratio” and the “Actual U.S. debt-to-GDP ratio” (when Unfunded Liabilities and Off-Budget Obligations are added).

The credibility of governments and banks has been sorely tested by admissions of guilt in manipulating LIBOR and other important economic rates. Some politicians might try to “paint a rosier picture” for a bad economy with inaccurate statistics. The actual U.S. debt-to-GDP ratio is much higher than the official rate due to the exclusion of at least three obligations: 1) Unfunded Retirement Benefits, 2) Freddie Mac and Fannie Mae and 3) Military Spending.


Governments Have Best Access to Economic Data


All financial analysts will admit that governments have the best access to economic data due to their power, money and authority. John Williams is an independent financial analyst who reviews published government financial statements to identify anomalies. On December 22, 2010, John Williams wrote in his “Special Commentary No. 340 on Financial Statements of the U.S. Government” that [t]he latter set of numbers [on U.S. debt] reflects GAAP accounting (generally accepted accounting principles), which, at present, excludes the level of and annual changes in the net present value of unfunded liabilities for Social Security and Medicare in balance sheet and income-statement accounting.” He calculates the debt with and without these large programs included.

Besides these retirement obligations, the mortgage programs of Freddie Mac and Fannie Mae were not included in the official budget figures. Add the CIA, NSA and “black box” military spending of the off-budget list too. For 2010, John Williams calculated that the Official debt-to-GDP ratio was 94% and the Actual debt-to-GDP ratio was 529%.


Cross-Reference of Unfunded Obligations


Credit bureaus and investors must question the financial health of nations that place more “obligations” off-budget. Here is the data from “http://www.usdebtclock.org/” for cross-reference purposes on July 16, 2013:

+ U.S. GDP = $15.8 trillion

+ U.S. Official Debt = $16.8 trillion

+ “Official Unemployed” = 11 million

+ “Actual Unemployed” = 22 million

+ Gross Debt-to-GDP Ratio = 106%

Unfunded Liabilities -

+ Social Security Liability = $16.4 trillion

+ Prescription Drug Liability = $21.8 trillion

+ Medicare Liability = $86.6 trillion

+ Total for U.S. Unfunded Liabilities = $124.8 trillion

The inclusion of “Official” versus “Actual Unemployed” shows that the accuracy of other government statistics are being questioned too. The line for Social Security = $16.4 trillion is higher than the annual GDP of the entire country.

So let’s do the calculations using these figures: “Official Budget Debt” of $16.8 trillion plus “Unfunded Liabilities” of $124.8 trillion equals $141.6 trillion. Divide that by a GDP of $15.8 trillion and the result is a U.S. debt-to-GDP ratio of 896%. So now we can understand why the United States government is placing so many of its debt obligations in the off-budget category.

Loans that continue to become more popular

Sometimes when it comes to financial products, using the types of products that are the most popular is the best move to make. For people in Kitchener, the statistics say that this means payday loans over all other types of financing. Those who are in the market to borrow some loans might want to consider Kitchener payday loans as their loans of choice for certain immediate expenses that they have in their personal life. This can be wildly important to their overall financial health, and it is important to not discount this kind of thing.

When you want to get some loans, it is worth looking into payday loans as a possible option to fix your situation. These are loans that are immediately available to you, and they do not require that you have any type of credit score in order to obtain them. Although they have to be paid back in a very short period of time, they are also well known for getting into the borrower’s account very quickly as well.

Many people have been known to talk about the dangers of payday loans. There are some drawbacks to borrowing this kind of loan, but that could be said about just about any type of loan in the market. If you are going to be fearful of all loans because of some drawbacks, then you are simply never going to be able to borrow money again. That is clearly not the best way to live your life, so just make sure you are not giving in to the hype.

When it comes to payday loans, you should be doing your own homework on a case by case basis with these types of loans. You want to know about the rules and regulations that are placed over these loans. There are a wide variety of these regulations, and they can be very important to keeping customers protected from predatory lenders.

With something as important as payday loans, the government is not going to take any chances. They know that people who borrow these may or may not take the time to learn as much as possible about their loans. Those who are not taking enough time can still be protected simply because of regulations, but you want to not have to rely on this if at all possible. Take responsibility for your own actions and do your research.

Payday loans do serve a purpose in the economy, and you can choose to borrow them or not based on your own personal financial needs.

Bartering To Save You Money In The Down Economy

Like most people, you have probably been hit by this bad economy. While some are worse than others, I have a way of easing the hit on your wallet that this economy is having. I am speaking of bartering ; yes trading your skills for money. The great thing about bartering is that almost anyone can do it. Can you tutor? Can you do odd jobs or cook? Then great, you can barter. You might even be able to find a way of using your on the jobs skills elsewhere.

One thing that can help is finding others who can help you ply your trade. If you live in a big city, you might even be able to find a bartering club. These can be easy to find by doing an online search. If you don’t have one, it might be easier to contact individuals and small businesses. Typically you will not have much success with larger businesses.

Another way of helping your success, assuming you do not already have one, is by starting your own bartering club. This might be hard work, but it will certainly help others out. You can do this by taking out an ad and getting in touch with other interested individuals.

So go help your wallet by bartering!

Minimize Expenses With Essential Grocery Shopping

The weekly trip to the grocery store is a good litmus test for determining one’s budget and surplus. People will usually shop for groceries up to a certain limit, and even during times of self- indulgence, rarely will they spend more than 20 or 30 dollars over their budget. There are of course small ways by which people can save up a dollar here and there when going out shopping.

The grocery list is a good place to start. As with anything in life, if it’s not written down, it’s probably not that important. A grocery list helps people stick to their budget, and makes the shopping experience more efficient as there’s a clear goal for the shopper to see.

Some families purchase a particular item or brand every week. There are times when these can be purchased on sale or at wholesale prices, cutting down expenses in the long run. Coupons can also give amazing discounts when used regularly.

Food items such as vegetables are best purchased frozen as they can be stocked for longer periods. For fresh food items such as fruits, these are cheapest and more nutritious when they are in season.

At home, remember to store all of these items efficiently. The worst way to spend money is to buy items that only spoil because of neglect. Thus, only purchase items when they are absolutely needed.

Grocery Bill: How to Keep it Under Control


Want to reduce your grocery bill, but finding it challenging to bring it under control? Let me share a few simple but effective tips with you.

First and foremost, prepare a list of grocery items that you would require for one week. The list should cater to five meals consisting of different food items such as salad, vegetables, rice, fish and meat. Here you might also include the food that you want to take to your work. The variety in the food items provides you with a balanced diet and prevents your extra spending from eating outside food. The meal plan and the list hold the key to the majority of your saving, so take time to prepare them with thought and care.

Visit the grocery shop on Sunday or Monday every week with this list in hand. Avoid visiting the store when you are hungry, too filled up or emotionally unrest. Better still, try to shop online. This helps you substantially by preventing unnecessary purchase happening through temptation.

Always check the expiry date of the item you purchase. The expiry date should always be after the date you intend to use the item. In this way, you can save money which goes waste when we discard the unusable food items.

Purchase containers of different sizes and label them to store extra food items for later use. Sometimes you can cook food in large quantities and store it in these containers for consumption on another day, thus saving both cooking time and fuel.


How Mortgage Length Affects Annual Payments


Over the past few months, changes in residential mortgage terms are affecting how ordinary homeowners pay for their own home loans. The most recent change is with regards to the length of an average mortgage. Previously, a typical home loan would cover a period of 35 years. Today, it has now been reduced to 30 years. While five years doesn’t seem that long, it can increase a homeowner’s monthly payments by as much as $100 per month.

This increase isn’t such a big concern, especially for those who are already living within their means, but it might be hard for households who are already living on a budget. For those haven’t yet put down their first payment on their new home, they have the option of borrowing from their Registered Retirement Savings Plan. As of now, the limit is $25, 000 from each spouse. This means that the total possible down payment for those who qualify with their RRSP is $50, 000.

Couples who have a Tax- Free Savings Account are also able to take up to $15, 000 in contribution amounts. This can be doubled if both spouses are co- signatories. For those who already have their mortgage going, many banks and cooperatives can offer advice to these homeowners on how it will affect their bottom line. Some of these institutions will even offer some form of debt restructuring if the homeowner is unable to cope with the new change. The new mortgage term will therefore not be as detrimental as some people make out to be.


Improving One’s Portfolio Without Financial Advisors


Building up a financial portfolio isn’t easy, which is why many banks and financial institutions have created financial advising positions to help their clients with their money. In today’s digital age however, building a good portfolio is possible without resorting to these advisors.

The idea of engaging a personal portfolio without expert advice might seem backwards, but it can be more rewarding because most financial advisors stick to the middle path; invest in less risky ventures with little returns. They also advocate the buy and hold strategy which might not be aggressive enough for most people.

This isn’t to say that an ordinary investor should let go of his advisor immediately. It can take several months or even years before he can become confident enough to tackle his finances on his own. In the meantime, he should schedule regular meetings with his financial advisor to learn as much first- hand information as he can, and look up the market’s trend on his own.

The investor can then try investing a smaller amount and see if his instincts pay off. Of course, in this market, knowledge and patience pay off better than instinct, so it’s always best to do thorough research beforehand. This is the key to getting more dividends in the long run without resorting to middle- of- the- road financial advice.