Thursday, April 23, 2009
Considering that 1st-quarter earnings were stable (at $1.26), this is a signal from the company as to its confidence in the future. This brings the payout ratio to 42%, which is quite reasonable. The dividend yield now stands at about 3.8% (much higher than the 5-year average of 2.3%).
I own some shares of JNJ in my DRiP portfolio. :o)
Wednesday, April 15, 2009
Considering the current economic situation, and probable inflation coming in the next couple of years (as a result of so much cash being infused into the economy), we decided to go with a 5-year fixed rate mortgage. We got a fairly good rate at 4.5% (down from 5.7% we had been paying since last year).
I am well aware that this is going against oft-mentioned statistics saying that a variable-rate mortgage usually (I think the statustuc is 90% of the times) comes ahead in the long run. And the variable rate of 3.25% was also appealing. However, I think we are in that 10% period where a fixed-rate mortgage will come ahead. I wouldn't be surprised to see interest rates climbing significantly in 2010. The big question will be by how much.
In addition to the renewal of the mortgage, we rolled in the heat exchange loan into our mortgage. That was a 10-year loan (taken 2.5 years ago) at a fixed rate of 8.5%. It was an ok rate at the time, but rolling it into our mortgage will decrease that rate by 4%, which is a lot.
All told, even with adding the heat exchange loan to our mortgage, our mortgage payments remain the same as they were before we renewed -- that's a decrease of about $150 per month. :o)
So what we are also doing is increasing our payments by that $150 per month. So our payments are remaining the same, but repayment of the mortgage will be faster.
As you can guess, we are quite happy with that. We could have gotten a better rate elsewhere (ING Direct was posting a 3.95% 5-year rate), but being able to roll in the loan, and saving the trouble of switching bank was good. And our credit union usually kick back parts of the interest paid by members, so our actual rate is lower than 4.5% (probably around 4.2%).
We also have a good relationship with our credit union. We are satisfied with what we got. :o)
Thursday, April 9, 2009
This was the first time I was purchasing a mutual fund using my brokerage account, so I was a little bit nervous. In fact, I initially made a couple of mistakes (thankfully without impact) when ordering the mutual fund. Everything was sorted out in the end, so that was a positive experience.
Usually, I'm not a big fan of mutual funds. I don't like to pay annual fees, particularly since how much you have to pay in fees is hidden into the prospectus. But in this case, I'm just parking money for a couple of months, so I figured it was worth it. My selection process was fairly simple -- I was looking for:
- A short-term parking place -- thus a money market of Treasury fund;
- A fund that had no purchase nor selling fee;
- A fund with a low minimum purchase treshold (only $1000 available);
- A fund that did not impose a fee for short-term trading.
Based on the funds offered by my brokerage, I settled on the RBC Canadian Money Market fund (Series F). The annual fees are fairly low at 0.55%, no penalty for holding the fund for only a short time, and no trading fees. Minimum investment amount is $500, with additional increments of $25. It pays out distributions monthly, and those will be paid in cash into my account. The yield was about 3% last year, but I expect it will be around 2% this year.
I'll keep the money there until I need it for a purchase.
Wednesday, April 1, 2009
It feels good to have a positive month after all those negative months. Much of the increase was due to a comeback in the markets. Things have been much better on the debt side, as I paid back some of my line of credit and controlled spending more tightly on the credit cards. Let's see the details!
Assets ($134 358, up 0.3% from $133 989)
- Bank Accounts $3 789 (down 14% from $4 425)
- Emergency Funds $2990 (down 12% from $3 394)
- RRSP Accounts $30 018 (up 3.5% from $28 993)
- Non-Registered Investments $11 355 (up 5.8% from $10 728)
- Home $86 100 (stable)
Liabilities ($ 65 265, down 4.2% from $68 115)
- Credit Cards $2 964 (down 36% from $4 642)
- Mortgage $54 867 (down 0.2% from $54 989)
- Heat Pump Loan $6 328 (down 0.9% from $6 386)
- Line of Credit $1 000 (down 50% from $2 000)
So my bank accounts have come down from last month, partly due to planned expenses and partly from paying down half of my line of credit. The other big item was credit card debt, which went down substancially this month as a reined in spending. It shows too. so I'm happy with that.
My plan to concentrate on debt reduction for a couple of months is going well. I will keep doing that this month, but I expect May to be harder on liquidities, because of planned expenses for the house (second municipal tax payment and the last payment on the windows we replaced last fall).