Top Three Retirement Moving Mistakes

Avoid These Retirement Relocating Mistakes

As you are not tied to any location once you are retired, it opens up endless possibilities to move to any place of your choice. However, jumping too conclusions too fast without considering a variety of things can cause lots of trouble. Here are some common things to consider before moving to your dream place.

Moving to An Unknown Place – Moving to a place where you don’t know anyone sounds like adventure, but consider the drawbacks as well. You will be losing your support groups like friends and family, known health care providers, familiar stores, car mechanics, home contractors, and so on. In case of emergency, when you need someone to fix something or for other assistance, you will have a much tougher time getting the help you need right away.

Buying vs. Renting – Do not buy a new place in a new community without finding out more details and spending enough time at that location. If your new destination is near your current home, you can find out a lot more without living there physically. However, if it’s a place far away from your current location, it makes sense to rent for a while and experience how things are there without buying a place.

Don’t Forget These – There are many other things to consider before moving to a new place. Here are some of the most important things you need to check out: cost of living, climate, outdoor activities, indoor activities, what sorts of people live there, if it is a high-tax or low-tax area, how safe the neighbourhood is, how far it is from a major city, how far from an airport or a train station, what types of public transports available, and so on.

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Why Aren’t American Express Cards Accepted Everywhere?

Why Aren’t American Express Cards Accepted Everywhere?

Leaving Home With Only American Express Is Not A Good Idea

We often hear that there are so many places that won’t accept American Express (Amex) cards. If Amex is such a big name then why they are not universally accepted like VISA and MasterCard?

There are a myriad number of reasons why some merchants won’t use Amex. However, if we dig down to its basics, there are a few I came up with.

American Express offers both conventional credit cards where you can carry your balances and charge cards where you are required to pay in full every month. Unlike other major credit card companies who rely on high volumes to make money, American Express relies on higher margins to make profit by targeting affluent customers. Its affluent customers are spending a lot more money in lower volumes as opposed to higher volumes with smaller transactions.

Retailers pay much higher fees to provide American Express services than other credit cards. Also, other credit cards use a 3rd party to facilitate their services (like an issuing bank, trust company, etc.), but American Express does it all by itself and keeps all charges for itself for higher profits. For some retailers, it will not make sense to pay higher fees to American Express as they may not be able to make money on fewer transactions. However, merchants who have businesses where they can make a lot more money with fewer transactions (as affluent consumers will spend lot more than average consumers) will be glad to offer American Express.

There are other reasons for merchants not to accept Amex, but what I have discussed above are the most common deciding factors on accepting American Express.

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The Standard of Living in China

China’s Standard of Living

China, one of the most fascinating countries on Earth, has existed for more than 5000 years and is currently the second largest economy on the planet. This country is going through a remarkable and rapid change with widespread economic reforms. Before 1949 China was characterized by extreme poverty, income inequalities, and insecurity. By 1987, the average national life expectancy has more than doubled with increased living standards.

Starting in 1980, due to economic reforms, the standard of living started to climb beyond the basic level. The general population had adequate food, clothing, and housing, and ordinary families could eat a variety of foods, wear stylish clothing, and indulge in luxury items such as electronic appliances, furniture, and shiny personal vehicles.

The level of poverty fell from 84 percent to 16 percent from 1981 to 2005. The infant mortality rate and maternal mortality rates have fallen 39 and 41 percent from 1990 to 2005. The access to telephones increased 94-fold to 57.1 percent of the population having telephones.

China may be a huge economy, but its per capita income is only $5,400, which puts it 90th in the world. Also, China has the second largest number of poor people in the world, only after India, with more than 170 million people living below $1.25 a day international poverty line. Ten percent of Chinese population still live in extreme poverty.

Although the living standard in China is rising in general, the differences between rural areas and big cities, and the eastern seaboard and deep inland remain strikingly high. The World Bank once said that China is one of the most unequal countries in Asia. Although the majority of Chinese feel that they have a higher standard of living than their parents, there are rising concerns over inequality, corruption, and consumer protection.

Even with these problems, China is relentlessly working hard to fix them and reduce the gap between the rich and the poor. The former president of China, Hu Jintao, predicted in his speech that China is aiming to double its 2010 GDP and per capita Income by 2020 for both rural and urban residents. As the years go by, things are looking brighter for this amazing country.

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Interest Rate Stays Unchanged in Canada

Interest Rate Stays Unchanged in Canada

Low Interest Rate Is Expected to Continue Throughout 2013

Bank of Canada, Canada’s central bank, keeps its overnight policy rate unchanged at 1 percent. This rate is in place for the last two and a half years – making borrowing and spending attractive for consumers.

A slacking economy and low inflation influenced Canada’s central bank not to tinker with interest rates at this point. Although there were slight expectations that a high level of household debt might cause the central bank to edge up interest rate, this did not seem to affect any policy making decisions, at least this time.

Data points out that Canada’s economy grew by only 0.6 percent in the fourth quarter at a very slow pace. Bank of Canada expects Canada’s economy to pick up its pace throughout 2013 and beyond. As things look at this moment, it is widely expected that interest rates will stay low at 1 percent for the remainder of 2013. However, Bank of Canada hinted a future rate increase, which could come as early as mid-2014.

For those who have consumer loans, you will have some extra time to catch up on paying off loans. For those who have a mortgage or investment loan, more months on saving money from lower interest payments could help to save some money.

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My Top Favourite Free Financial News Smart Phone Apps

My Top Favourite Free Financial News Smart Phone Apps

My Top Favourite Free Android Smart Phone Financial Info Apps

In the past, I talked about Android Financial Apps. Today, I will go over some financial news apps that will make your news quest in the financial world a lot easier and you will have the latest news at your fingertips instantly.

Bloomberg for Smartphone by Bloomberg LP – View financial news, market updates, and stock quotes with this app. This app can provide so many categories for financial news that it can overwhelming and hard to decide how many categories you want to set for your phone. The best feature this app has? You can watch live Bloomberg TV and video clips. Picture quality is unbelievably crisp clear. After installing this app, I started watching Bloomberg TV on my phone regularly for important highlights.

Google Finance by Google Inc. – This is somewhat a simple financial app compared to Bloomberg. There are only 3 tabs: Markets, Portfolios, and News. On the news tab, you can’t pick any categories. It shows all news at same place. The drawback with this app is that it does not support the Canadian market or stocks. If you have created watchlists for Canadian stocks under Google Finance Canada, it will show only the names of your watchlists, but will not show any individual stocks on the Canadian market.

Yahoo! Finance by Yahoo! Inc. – Very similar to Google Finance, but it supports Canadian markets and stocks. And its news section even shows Canadian business news. Very simple layout and easy to use.

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Why Does McDonald’s Give Free Coffee?

Free Coffee at McDonald’s

No, McDonald’s or other coffee retailers do not give away free coffee because they are nice folks. The old adage “there is no such thing as free” still applies in modern days. Although it looks like retailers are giving away coffee absolutely for free, their Return on Investment (ROI) is fetching more money in the long term than they are losing money for offering free coffee in the short term. Today, I will simplify free coffee giveaway campaigns so you can see behind-the-scenes reasons for giving away free coffee.

Brand Awareness – Think of it as an advertising campaign to promote brand awareness. Most people know McDonald’s for Big Macs and McNuggets – hardly anyone knows them for their coffee. And brand awareness is even more important when McDonalds is comparatively a new player in the coffee war in a country like Canada where people are religiously loyal to another coffee chain like Tim Horton’s and don’t mind driving 4 miles in minus 40 degree Celsius extreme cold weather for a cup of Tim Horton’s.

Dramatic Publicity – People love free stuff and the word will spread faster (that there is free coffee) than any other form of advertisement. I noticed even my 80-year-old dad somehow found out about it when McDonald’s ran their free coffee campaigns and started going to McDonald’s twice daily to grab his free coffee. The publicity and attention you get by giving away free coffee is priceless.

Habit Forming – It is possible that if you do something for a few days, it becomes a habit and then it becomes even harder to break the cycle that you have been doing for the past few days. When McDonald’s is making you take a trip or two daily for one to two weeks to pickup your free coffee, a good percentage of customers will not be able to discontinue that trip once the free promotion is over and will become long-term or lifetime customers.

Return the Love - By nature, we humans are emotional and prone to return the love and kindness given to us. After enjoying free coffee for a week or two, some of us will be psychologically inclined to develop a brand loyalty because the coffee restaurant treated us nicely and generously by providing free coffee.

So you see, what seems to be a simple cup of free coffee on the surface is not that simple at all. Retailers know how our minds work (they have highly-paid psychologists and behavioral scientists working round the clock to get inside consumers’ minds) and they are right to assume one cup of free coffee today will turn into many cups of paid coffee in the future.

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Canadian Oil ETFs

Oil ETFs Canada

The International Energy Agency (IEA) recently predicted that during 2013 the total consumption of crude could reach 90.5 million barrels a day and by 2016 it could reach 95.3 million a day. In the next two decades, China and India’s oil consumption will grow at 7.5 percent and 5.5 percent annually to meet their high demand for energy.

Although Canada holds the world’s second largest oil reserve (as confirmed by the statistical wing of the U.S. Department of Energy), if you are in search for oil ETFs on the Toronto Stock Exchange, you will have difficulty finding a handful of them. Most of the ETFs I have come across are oil company ETFs, rather than crude oil future ETFs tracking crude oil performance. Today, I will discuss some oil ETFs I have found that I like trading on TSX. For more information on ETFs, please visit A Dawn Journal ETF Section.

Horizons BetaPro NYMEX® Crude Oil ETF (TSX: HOU, HOD) - HOU uses Light Sweet Crude Oil Futures contracts and rolls over its contracts to the next month mechanically before they expire into subsequent future contracts – so it does not have to take delivery of physical oil. HOU and HOD are denominated in Canadian dollars and the US dollar exposure is hedged daily.

Horizons Crude Oil Yield ETF (TSX: HOY) – This is an ETF that provides exposure to crude oil futures and uses covered call option writing strategy to generate monthly income. Before considering this ETF, do understand how covered call works and the risks associated with it.

BMO S&P/TSX Equal Weight Oil & Gas Index ETF (TSX: ZEO) – This ETF tracks the S&P/TSX Equal Weight Oil & Gas Index. Nexen, Husky, TransCanada, Talisman, Canadian Oil Sands are some of its top holdings.

BMO Energy Commodities Index ETF (TSX: ZCE) – This ETF tracks the S&P GSCI Energy Enhanced Capped Commodity Index. As of this writing, WTI Crude Future, Gas Oil Future (ICE), and Brent Crude Future are its top three holdings.

BMO Junior Oil Index ETF (TSX: ZJO) - This ETF tracks the Dow Jones North America Select Junior Oil Index. If you like junior oil companies, this is the ETF to go with. But keep in mind that junior companies can be very volatile.

The iShares S&P/TSX Capped Energy Index Fund (TSX: XEG) – Tracks the performance of the S&P®/TSX® Capped Energy Index. Some of its holdings are the same as ZEO mentioned above. However, XEG holds about 52 stocks while ZEO holds 16 stocks.

Disclosure - This article is for information purposes only and No information is intended as investment, tax, accounting or legal advice, or as an offer to sell or buy or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security, ETF, or fund. The author assumes no liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. You bear responsibility for your own investment research and decisions, and should seek the advice of a qualified financial professional before making any investment decision. As of this writing, I do not own any of the ETFs mentioned here.

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Canada Economy Slows

Canada’s Economy Slows

Sluggish Global Economy Slows Down Canadian Economic Growth

Statistics Canada reports that Canada’s economy slowed to 0.06 percent in the third quarter. In contrast, the second quarter of 2102 showed a GDP of 1.7 percent gain. A steep drop in business investment, exports, and declining home construction, among other factors, are to blame for the decline. Business investment, exports, and residential constructions declined by 2.2, 2.0, 4.4 percent in the third quarter.

However, consumer spending and a rise in inventories showed some unexpected growth that were able to offset even further slow down. Consumer spending and inventories rose by 3.8 and 1.6 percent in the third quarter.

Paris-based The Organization for Economic Cooperation and Development (OECD) states that weak global economy is keeping Canada’s economic growth in the slow lane and it is likely to remain slow until mid-2014. OECD expects Canada’s economy to grow 1.8 percent in 2013 and 2.4 percent in 2014.

Weak foreign export markets due to government austerity programs and high household debts and government cutback in spending at home are to blame for Canada’s economic slowdown. However, Canada’s GDP growth rate is still stronger than OECD average rate consisting of its 34 member countries.

OECD also projects that the U.S. economy will recover faster in the next two years than Canada due to the fact that the U.S. recovery level starts from further behind than Canada. The expected recovery rate in the U.S. will be at 2.00 and 2.8 percent in 2103 and 2014. Unemployment rate is expected to fall below 7 percent in Canada and stay close to 8 percent in the U.S. in 2014.

OECD thinks Canada should start increasing its interest rate from latter 2013. However, as these numbers point out, it is unlikely for the Bank of Canada to start raising interest rates until early or mid-2014. The overall Canadian economic outlook is far better than most other industrialized countries, especially Europe. Europe is going through a recession and is likely to remain in recession until late 2103 to early 2014.

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India Feels Global Economic Crisis Heat

India Feels Global Economic Crisis Heat

And There Is The Possibility of Credit Rating Downgrade

Although the Indian economy showed streaks of optimism in September after the government’s economic reforms program, it did not take long to become sluggish again. India’s stock index and as well as its currency has weakened since October. Finance minister P. Chidambaram was right to mention that India’s economy can not be insulated due to the economic crisis the world is going through.

In 2012, the Indian economy is expected to grow 5.5 to 6 percent. Growth is expected at 7 percent in 2013. Beyond 2013, growth should be back to 8 percent. However, the International Monetary Fund (IMF) slashed India’s growth forecast from 6.1 percent to 4.9 percent.

Industrial output showed slight signs of growth, but not enough to invigorate the economy. High inflation is also a concern – although it seems like inflation has eased slightly recently. The Reserve Bank of India (RBI) has kept interest rates unchanged in last policy review. The expectations that RBI would lower interest rates did not happen. The RBI is to announce its next monetary policy on December 18.

Public sector enterprises have been blaming high borrowing costs for the sluggishness of Asia’s 3rd largest economy. Higher borrowing costs curb consumers spending and lower industrial output. The government has been blaming public sector enterprises for sitting on large amounts of cash without putting them on investments to help the economy grow. And then there is the recent fear that rating agency Standard & Poor’s might downgrade India’s credit rating. However, India’s government is in decline and a credit rating downgrade will not happen as India is taking all the necessary steps to ride through the economic crisis.

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Five Simple Steps Toward Financial Literacy

Five Simple Steps Toward Financial Literacy

November is Financial Literacy Month. This is a special post to participate in Blog for Financial Literacy campaign. 

Financial Literacy Does Not Have To Be Difficult

Financial literacy does not mean you need to have an MBA, CFA, CGA, and so on or you spend hours endlessly deciphering the Wall Street Journal everyday. Financial literacy begins with taking some simple steps and today I will discuss such basic steps you can take right now to build a solid financial future.

Step One – Spend Less Than You Earn – This is the most basic, yet most difficult, step to take to become financially independent. If you can’t do it, any other financial plans will become meaningless.

Step Two – Pay Yourself First – If you have money in your hand, for sure you will spend it and it will be gone. Depending on your affordability, set aside 5 to 20 percent of your income every month and invest it in a low MER, income-generating and less volatile mutual fund or ETF. Do the whole Step 2 automatically so you don’t see this money and it gets deducted and invested automatically each month, year after year.

Step Three – Avoid Accumulation Debts – Avoid the accumulation of credit card or any debt. Use a credit card only when you can pay it off in full each month. Avoid buying a car or furniture on loan. However, good loans to build asset and generate income are okay, such as mortgage, investment loan, etc.

Step Four – Build An Emergency Fund – Have six months to one year living expenses set aside separately in a high interest paying savings account, mutual fund, or ETF.

Step Five – Set Goals and Review – Know what your goals are (such as buying a home, paying off a mortgage, retirement, etc.) and start saving realistically to pursue your goals. At least once a year review your progress and adjust your spending habits to reach your goals.

These five steps are not the end of financial literacy journey; they are only the beginning. Once you kick off your journey with these basic steps, start educating yourself more on financial literacy and flourish to become financially literate and independent.

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