Kayla from PEI emailed me for some advice about her financial situation.  She is 50 with a mortgage and small RRSP.  She's wondering where she should focus her money as she hopes to retire when she is 55.  Here is more information about Kayla.

• RRSP Portfolio Value: $6,000
• RRSP Contribution: $110/month
• Gross Income: $67,000 (after tax ~$3,220/month) increasing 2.25% per year
• Mortgage Payment: $504 bi-weekly ($50 to property tax) @ 5.4%
• Mortgage Balance: $84,000, 10 years remaining.
• Car Loan: $14,000 @ 5.25% (~$265/month for 5 years)
• Pension can start at age 55 with annual pension income of approximately: $42,000 per year (after tax ~$2600 /month)
• Monthly Expenses (not including debt servicing): $1,400
• Total Expenses: $2,757/month (without RRSP contribution)

With retirement on it's way, Kayla will have to make a few changes.  I'm of the belief that all debt should be eliminated by the time that retirement starts. ...

This is a continuation of a 2 part series on the principles of successful investors.  Here's a quick recap of the first article.

1. Faith

The single most important characteristic of successful investors is faith. This includes faith in the markets, in the future, in our free enterprise system, in the ability of good companies to grow their profits, and in humanity.

Successful investors tend to have this confidence and optimism. They see how much humanity has progressed in recent history and tend to see their optimism as realism. They don't know how things will turn out all right – they just know that they will turn out all right...

2. Patience

The most successful investor, Warren Buffett, often says: "The stock market is a highly efficient mechanism for the transfer of wealth from the impatient to the patient."

Successful investors tend to focus on having high quality investments and/or advice, and tend to stick with them long term.

With the new 2010 Honda CRV released, a renewed interest in a replacement vehicle has occurred in our household. After browsing around the auto makers website, I was curious as to the difference between purchase and lease payments. As someone who likes to pay cash for everything to avoid the interest, I'll reluctantly admit that leasing does have a certain appeal as it reduces the monthly payments.

One thing that caught my eye on the lease payment calculator was that the monthly payment was higher than I had expected. As a lease is basically paying for the depreciation of a vehicle, I assumed that the interest rate quoted is applied to the purchase price minus the end value. However, using a simple loan calculator, the numbers don't match.

So after some digging, I figured out why my calculations were off. The lease payments are calculated a bit different where the deprecation AND lease fee must be paid for.

"There are some people who, if they don't already know, you can't tell ';em." - Yogi Berra

Are you one of those investors for whom things just seem to always work out well? Getting superior long term returns seems to take little effort. Whatever strategy you use seems to eventually work. You don't spend much time or effort, yet most of the time you are feeling quite confident about your investments.

Or are you the type of investor who always seems to struggle? It seems everything you buy goes down right after you buy. When you finally sell, they take off. And the investments you hold long term mostly underperform.

We have often encountered both these types of investors. Struggling investors are far more common. They usually have trouble believing that many investors outperform with little effort. Those that find investing effortless just shake their heads at the frantic activity of struggling investors.

With my debt and savings habits under control, lately my thoughts have been more so on investing strategies. One investment strategy that I believe in, as you may know, is dividend investing.

Dividend investing can mean a couple things. It could include investing for yield or dividend growth. Investing for yield is simply basing purchase decisions on the dividend yield of the stock. The higher the percentage yield, the better. The Dogs of the Dow strategy comes to mind for this one. In my opinion, basing investment decisions on yield alone is a dangerous game. More times than not, an abnormally high yield simply means an unsustainable dividend. When the dividend payouts become too much for the company to carry, dividends are typically cut dragging the stock price with it.

Investing for dividend growth is making purchase decisions based on the history of growing dividend payments over the years.  Although the initial purchase yield may be lower, it's a great strategy for buy and hold investors as it gives raises to loyal shareholders over time.  Buying

The key to better managing your food life is being organized. If you can make an effort to do this then you will save money and time.  As well, you'll probably eat a little better, eat a wider variety of food, and you might even live a little longer. The down side is that it involves a little micromanaging, and is not the kind of subject to talk about at parties unless you want people to fall asleep in front of you.

Making a Dinner List

This might seem simple, but a dinner list is a key step in organizing the food you eat. We keep our list on the fridge and it normally goes two or three weeks into the future. The advantages of making such a list are:

• Organizes grocery shopping, less trips to the store and less food waste.
• More varied menu as you can ensure you don't fall back on old staples, and can try a new recipe every week or two.

As the ranks of self employed Canadians increases, there is a growing problem of employment insurance coverage.  What is the problem?  Self employed business owners previously were not eligible for employment insurance coverage.  As it's especially applicable to the female entrepreneurs, business income could dry up quickly while on maternity leave.  With no business income or employment insurance benefit, the financial situation could get ugly unless there is substantial savings.

This has recently changed however with a new bill introduced for employment insurance for the self employed.  This bill extends to maternity, parental, sickness and compassionate care leave for the self employed.

According to The Telegram, here are some of the details:

..entitled the Fairness for the Self-Employed Act, would provide the following:

Maternity benefits of up to 15 weeks for mothers, beginning up to eight weeks before the expected birth date.

Parental benefits of up to 35 weeks for biological or adoptive parents while they are caring for a newborn or newly adopted child; they may be taken by either parent or shared between them.

US ETFs vs. Canadian ETFs holding US ETFs – currency conversion @ Canadian Money Forum

Is my hand-drafted will valid? @ Thicken My Wallet

How to Find a Good Deal @ Five Cent Nickel

Portfolio Rebalancing Experiment @ Michael James

10 Steps to Declutter and Simplify Your Finances @ Cash Money Life

Carnival of Personal Finance #230 - New Site Edition @ Canadian Finance Blog

Corporate Security Or Freelance Freedom? @ Frugal Dad

Book Review: Understanding Wall Street @ Canadian Capitalist

Bought a Few Stocks Today @ Sun's Financial Diary

Consumer Protection @ Four Pillars

how to manage money @ Brip Blap

Hitting 6 Figures Income at 28! @ Financial Blogger

Reverse Mortgages for Seniors @ Money Smart Life

Rules of Thumb That Will Kill Your Retirement Dreams @ Canadian Dream