Investing and Managing Wealth

Even for young people, it is important to start learning how to invest at an early age. There are many reasons for its importance. The trend of rising costs of living means that staying alive after your working days are through is going to be expensive - more expensive than today. Furthermore, the trend towards nuclear families means that the burden of your retirement will likely not be completely born by your children. Investing and wealth management is how you bridge the gap.

Sadly, this topic isn't something that everyone gets a chance to learn. Yet, it's something that everyone needs to know. When should you invest? As long as you have an income, you should be investing and managing your wealth. Do you have a part-time or full-time job? Do you have some extra money left from that interest free student loan? Have some allowance from your parents?

How do you do it? Everyone's got a slightly different situation, but I'll recommend a framework that you can use (assuming you live in Canada)

Long Term Investments
I'm assuming here that you're still in your teens or your early twenties. You have decades of your career ahead of you but you can start investing in your retirement. You can afford to have a higher risk tolerance than your comfort level when talking about long-term investments. Why? Because over the long term, almost all investment products has an upward trend. This investment doesn't have to be an RRSP. Unless you make more than $10K in taxable income, there's really no point to put this money into RRSPs. RRSPs are only good for reducing your tax burden at the cost of locking away your money in something not very accessible. There are many investment products for this: funds, stocks, bonds, etc. Do some research and find a comfortable product for you. Be aware of the service charges. Service charges can severely hamper your investments.

Short Term Investments
This is your rainy day savings - the portion of your savings that you cannot afford to lose. You should keep this in a guaranteed income investment like a savings account or a term deposit. Make sure this money is very liquid (i.e. you can draw from it anytime you're in trouble without penalties or losing interest).

Diversifying and Dollar Cost Averaging
For your long term investments, you should look to diversify your investments. This means investing into various different industries and/or markets. You should also take advantage of dollar cost averaging. This means that when you have a larger sum of money available, break it up into smaller amounts and invest it regularly over a period of time rather than one lump sum. These strategies reduce your risk for long term investments. Don't bother doing this for your short-term guaranteed income investments.

Proportions
How much of your income should you save? That depends on your budget. Please refer to my blog on budgeting to find out how much you can save.

How much should go into short term investments and how much should go into long term? While you're still young, you can put a larger portion of your savings into long term. Say, 90%. As you age and as your need for rainy day money grows, you should lower that percentage down.

Wedding Planning Gotchas

In spite of the countless number of resources for wedding planning, there always seem to be some nasty gotchas that still catch unsuspecting lovers unaware.

So even if you're following some kind of a wedding plan and you have all the logistics worked out, here are some things that can still come and haunt you.

The Head Table
Particularly if you're marrying into a different ethnicity, it's very important to understand the culture you're marrying into. What's worse, your partner might be as unaware as you are about his/her own culture if they are second generation immigrants. Make sure you clarify with your future in-laws what their expectations are of the seating plan at the head table.

The Seating Plan
I want my friends up front. No, my parents want my relatives up front. You get the idea. You never know what's important to which parties unless you ask. It's better to be aware of this ahead of time rather than publishing a seating plan and distributing it only to find that some parties aren't happy about it. Talk this through with your partner, your immediate family and your partner's immediate family before inking in your seating plan.

Zilla
This is just the most difficult to deal with. Your partner turns out to be a zilla who is anal about some details that ends up butting heads with you, your family, her family and your wallet. Best to manage your partner's expectations way up front... maybe even before getting engaged.

Wedding Day Management
On your wedding day, you will have too much on your mind to have to deal with details. Appoint some managers to handle the details and to manage the hiccups. Make sure all your volunteers know who to go to when in trouble.

Finances
Who pays for what? How do you split the cost or do you split it at all? Also, who takes the monetary gifts? How is it split? Is there a dowry? Make sure you discuss this up front as well.

Famous last words... Most of the gotchas come from poor expectation management. Make sure you discuss expectations with your partner, your future in-laws, and your parents. Do it early and do it often. People appreciate the fact that you're trying to think from their perspectives even if you cannot always accommodate them. Be willing to compromise. Don't hold too many things hard and fast. Pick your spots and stand firm on what's really important to you. Keep in mind that what will benefit you most in the long run is maintaining your family relationships on both sides.

Engagement Rings

So you think it's time to propose, eh? Well, the next step is to get a ring. What are the things that you should be thinking about when getting an engagement ring?

First off, Weddings are going to be expensive and engagement rings likewise. So it's a good idea to start saving up some dough. They say the guideline for the price of the engagement ring should be at least 2 months salary. So you need to save at least that much but you should save more. The rest can be put toward the wedding to come.

Next, you'll have to think about what kind of engagement ring to buy. Diamond rings are the most popular. However, it may not be within your budget. Regardless of whether it's a plain silver band or a diamond ring, you should put the effort into saving up for and buying something for your bride-to-be. That effort is a show of commitment. For most, the show of commitment, particularly in an engagement, shows that you're serious about your promise. Having said that, talk with your girl and ask her what type of ring she wants (they're normally reasonable) and try your best to do slightly more than expected - without breaking the bank, of course.

If you do end up looking for a diamond ring, educate yourself about the 3C's - cut, clarity and colour. There are plenty of resources online. Then go and look at a few diamonds to see what they look like. Pick the one that looks best to you within your budget. Of course, shop around and ask around for a good jeweler for quality and price.

Some women actually want to pick something out themselves. In that case, a token ring will do for the proposal and then, a trip to the jeweler that you've scoped out beforehand.

Lastly, give yourself time to prepare for the actual proposal. This again is another way to showcase your commitment to the cause. Any ounce of effort you put into the preparation for this won't go unnoticed.

Resume-Writing Tips

A resume is an important piece of communication for you to start or progress in your career. Think of it as a personification of yourself as a prospect for a job. For the hiring manager, the resume is their first impression of you.

Given that, it's really important to put your best foot forward in your resume. Here are some tips to help you get started.

Start with content. Leave your formatting to the end.
Resume templates with a lot of fancy formatting sometimes gets distracting when you're trying to paint a picture of yourself in words. So distracting, in fact, that you may end up with a fancy looking resume that actually gives a poor reflection of you. Focus on the key messages you want to deliver first. Add the splash later on.

Use Section Headings.
In a resume, it's good to have some section headings such as Education, Experience, Skills, Objectives, etc. Not only does it make the resume easier to read, it provides a framework for you to deliver your message as well.

Strongest Sections First.
Many ask whether to put Education ahead of Experience or Skills after Education. There really isn't a fixed template. For these 3 sections in particular, rank them. Which section gives the best impression of you? Put those sections in front of the others.

Volunteer and Values
For those starting out their careers, they often do not have much to put down for Experience. In that case, it is useful to put volunteer experiences down. This can be enhanced with some prose that reflect how the experience has instilled soft skills and/or values in you.

Highlights
It's a good idea to put an Highlights section up at the top of your resume. Pull out some of the highlights of your skills, experience, accomplishments. Limit it to 3 items or less. This allows the reader to see in a glance the best qualities about you. This is the section where you answer the question "what are the 3 reasons I should hire you over the other candidates?" If you're just starting out your career, these could be community and/or academic accomplishments.

Hope this helps you get started.

Small Groups

For today, I wanted to share a few positive experiences about small groups. When I say "Small Groups," I'm talking about a small group of people gathering to form something like a mini support community. Support groups have always been a very effective way to share ideas, to gain accountability and to support each other through rough times.

If support groups work for alcoholics and smokers trying to break a bad habit, then why not extend the concepts to the regular guy next door like you and me who do get into sticky situations every so often?

From experience with my own small support group, I have found great friendship and great support through my good and bad times. With my group, I never feel alone through any troubles and because the group is small enough, you don't forget one another and you remain accountable for each other's well being. Overall, I think the support group has helped me to remain on an even keel at all times. I am a better person as a result.

So for those who are thinking about being intentional in starting small support groups, I highly recommend it. Groups of upto 8 seem to be most effective.

Simple Budgeting for Youth in Debt

I've previously talked about things like how much you can borrow and what youth should do when they've borrowed too much. One of the step I mentioned before was to reduce your spending. To do that effectively, you need to plan your spending and follow through on your plan. This is called budgeting. There are several different budgeting methods described on the Internet but I will cover the one I have used to help some friends out of debt.

Step 1 - Calculate how much you make.
This is fairly simple. Find out your take home on each pay cheque (i.e. excluding the tax, CPP, or EI deductions). Multiply it by the number of times you get paid in a year. Don't forget to add your other sources of income, e.g. rental income. Also don't forget those odd income sources such as bonuses.

Step 2 - Calculate how much you spend annually.
Think about what you spend on. I normally organize my thoughts based on payment frequency. What are the things I pay annually? e.g. Car insurance. What are the things that I pay semi-annually? e.g. Property taxes. What are the things I pay bimonthly? e.g. Hydro. So and and so forth down to what I pay for weekly? e.g. Lunch, Coffee. Don't forget to add a miscellaneous expenses item.

Step 3 - Add your debt servicing into your annual spending.
If you have consolidated your debts already, you will know what amount you need to pay to service your debt on a monthly basis. Add this amount to your annual spending. If you haven't consolidated, go do that.

Step 4 - Balancing your budget.
Now you know how much you make in a year and how much you spend. Subtract your income from your expense. What's the difference? If the difference is positive, then the budget is done. If it's negative, then you have some work to do, so read on.

Divide your expenses into 2 categories: Must Have (Necessities) and Nice to Have (Luxuries). Your debt servicing is a Must Have, by the way. Then start taking away luxuries that you are willing to give up in order to service your debt. This is where your life style starts taking a hit. Keep chewing away at the luxuries until the difference between your income and expenses is positive. Then, you're done with the budget.

If you've given up all the luxuries and still come up in the red, you'll need to move on to step 5. Otherwise, skip to Step 6.

Step 5 - Calculate Your Assets
Take into stock all the major assets you have - everything that you can sell for some significant value that can be used to service your debt (real estate, vehicle, piano, etc.) . Sum this all up. Then try to rebalance your budget by selling off these major assets. Sell off more assets until the difference between your income + sold assets and expenses is positive.

Step 6 - Executing Your Budget
Once the difference is positive, you have budget - a plan on how to spend for the next year. Stick to your plan. Make sure you only spend on the things that are still in your expense budget. Make sure you sell the assets you said you were going to sell for at least the price you put in your budget. Make sure that you make at least as much as your income budget. Repeat this budgeting process every year until your debt is under control. Even if you've paid off your debt, you can easily convert that debt servicing amount into savings or investments. Those are topics for another day.

Now, if you've taken away all your luxuries and sold all your assets but the difference is still negative, you need to seek pardon for some or all of your debts. This is outside the scope of this blog but there are several debt/bankruptcy services available and you may even find some on the ads in the margin. You'll need to seek help from such professionals.

Your First Job

Going through high-school, I always admired those other kids that got part-time jobs. I never really had one during that era, though I did try a few times over the years. This became a source for discouragement for me. By the time I was in post secondary and really was thinking about the prospect of having to get a "real" job, it really scared the snot out of me. To add insult to injury, the fact that I had no work experience to put on my resume made me look like a loser on paper.

For those of you who in high-school or post-secondary and are contemplating getting a part-time job, I really commend you and encourage you to go for it. Doesn't matter if it's a paper route or flipping burgers or mopping floors. It will really help your confidence and your future prospects of starting your career. However, at this time, don't focus too much on your job. It's a stepping stone for the time being until you can build up enough education to get yourself a proper middle class job.

For those that can't seem to land that part-time job, don't fret. Look for opportunities to volunteer instead. Volunteering is a great way to build up your experience (which you can put on your resume) and also give back to your community. It's this community involvement part that's an extra icing on the resume cake.

Fortunately for me, co-op saved my bacon. So if you do find yourself in post-secondary in the same situation as I was, then do your best to get into co-op. Even if you did have a job in high school, it's still a good idea. There's no rush to finish school unless you are ready to take on the rest of your life. Landing a job is one of those important life skills.

Importance of Prayer

As a Christian, I pray on a daily basis. But without getting into theology, there are some real physical and spiritual benefits that people get from prayers.

Prayer has been cited as one of the best forms of stress-relief in several studies. Being able to talk things out has always been a good release valve for me. I get to share my highs and my lows with those I love. But when I'm alone, prayer is the way I get my release.

Prayer can also be a good way of encouraging others. When folks are down in the dumps, when I offer to pray for them, regardless of what their religious backgrounds/beliefs are, they usually accept my offer and look visibly encouraged that someone cares.

Practically speaking though, I find prayers to be most effective in the low points of my life. It's in those desperate prayers where I find true source of strength, hope, encouragement and inspiration. When things look more bleak than it had ever been before, a ray of light shines through. Life is like that. It has it's highs and it's lows. If it hadn't been for prayer, I'm not sure if I would've made it in as good a shape as I have or as far as I have thus far.

That's why I think prayers are important. Prayer has been really effective in my life and maybe it could work for others too.

Conflict Resolution

There will come a time when a relationship will face its share of conflicts. It's an unavoidable fact of life. Unresolved conflicts will stress the relationship and may even break it. If you value your relationship with your partner, put some thought into how you will resolve conflicts and discuss it openly so you both know what to expect.

A good starting point for discussion is the Conflict Resolution Style. Everyone seems to have their own particular way of communicating when they are upset. Some will tell it like it is while others will soak it all in and not bring it up. And when it comes to resolving the conflict, some can't sleep until the issue is resolved while others need to sleep on it.

Talk this through with your partners and understand how each other prefer to resolve conflicts. Your conflict resolution styles may not match at all. That's ok, though. At least you're now aware of the differences and are more receptive to compromise. So think of ways that both of you can compromise so that you both can feel secure and comfortable even in a conflict.

Dating & Relationships

Girl says, "Why are all men such jerks?"

Guy says, "All the good ones are already taken."

If this sounds like a familiar refrain, then that's exactly the type of sentiment I want to address in this column. No, I don't have a top 10 list of the best pickup lines or the 3 steps finding your soul mate. What I offer is a suggestion for a change in perspective...

Quips, like the ones I quoted earlier, suggest that there is a lack of good choices out there; hence, the tone of hopelessness. I'd like to suggest that perhaps the problem is not that there is a lack of good choices, but that you might be looking for the wrong person. Most people go with a "gut feel" or "chemistry" when it comes to picking potential partners.

Are you girls always looking for that popular guy with the charms and the suave? Not trying to over generalize it, but aren't those candidates to cause you heartache down the road? No wonder all guys seem like jerks.

And guys, are you always looking for eye candy and physical attraction? Aren't those the very candidates that will be taken since just about every young male wants that? No wonder all the so-called "good ones" seem to be taken.

Those seem to be really rudimentary, almost primal, selection models. Realistically though, are these really the types of people that will be good for you in a relationship? Perhaps it's time for a more thought-out selection process. Who are the types of people that will be good for you in a relationship? Write down a list. Be honest with yourself. Think long-term. Think realistically. Clarify in your mind what makes the best sense for a partner. Then maybe you'll start to see a whole new world of choices open to you.

The Stress of Success

Our parents usually encourage us to do our best or to be the best we can be. In either case, they are thinking for us out of love. Sometimes, this encouragement leads to expectation and expectation leads to pressure. Before you know it, you're forcing yourself to always achieve the results that you know your parents will be proud of, to the extent that you start to expect it of yourself. That's ok if you never miss the mark...

Quite a significant number of very gifted youth become so accustomed to achievement, success, and victory over a long period of time that when they finally don't meet their mark, it becomes a catastrophic failure. The disappointment is so vast that some have committed suicide.

So why does this happen? I'm not too sure but I think the original expectation was set by parents in most cases. Perhaps success brings so much positive reinforcement that it becomes the child's raison d'etre. Maybe there is such a thing as too much of a good thing.

So here are my tips for parents just based on observation. Although encouragement is good, I think it's equally important to assure your children that if they fail, it's not the end of the world and they can still recover. Maybe recognize effort more than results and help your child deal with setbacks rather than condemn them. After all, the people who succeed in life are those that are able to adapt to what life throws at them.

If you are a youth who feels the pressure of achievement, then maybe it's time to discuss this topic again with your parents. Be aware that failure is a learning experience. The only way to learn to cope with failure is to experience it. In future, there will come a time when you miss the mark and it's totally out of your control. Be prepared to adapt and recover from it.

Lastly, if you have just experienced the biggest disappointment of your life because you missed the mark, take a deep breath and a step back. It's time to count your blessings. Calm down. Pray. Then, think about how you can live with or recover from your setback.

Safe Transactions over the Internet

In this blog, we will focus on how to keep your data safe while it is traversing back and forth on the Internet. In today's world, your information is what defines your identity. Every company and public agency you deal with, knows you only because you have some kind of information on their records. On the Internet, stealing someone's information with the intent of impersonating that someone is akin to stealing his/her identity.

In the previous blog we talked about protecting data that's on your machine. This blog will cover how to protect data that's in transit on the Internet or stored remotely on another machine not belonging to you.

• When shopping on the Internet, deal with vendors that do not store your credit card information. This means that you'll have to enter your credit card number each time you purchase - it's a small hassle to keep your data safe.
• When making any kind of a transaction that pertains to private data (i.e. passwords, banking info, SIN, birthdates, phone numbers), make sure that the site address is using HTTPS (https://...) instead of just http. HTTPS means that the data in transit will be encrypted.
• Never login to any application through a login form in an e-mail. This is a common strategy to steal your passwords.
• If you store private information on your PC (photos of your credit cards, SIN card, or a password file), keep it in a password protected file (e.g. password protected ZIP file).
• If you are using a wireless internet connection (WiFi), turn on data encryption so your data cannot be sniffed over the air. Consult your WiFi router/access point manual for how to turn this on.
• Also use a MAC address filter. Consult your WiFi router/access point manual for how to use this.

If your data has already been compromised and your identity has been stolen:

• Reimage your PC
• Change all your passwords
• Notify your creditors and suspend all your credit/debit cards
• Notify Service Canada if your SIN has been stolen
  

Protecting Your Computer

This blog is about protecting your machine from unauthorized access and protecting your stored data for machines that are connected to the Internet.

Every machine has some kind of software on it that receives access requests from the Internet (called daemons) that put your machine and your data at risk. These come included in the Operating System you run (e.g. Windows, MacOS, Linux, etc.) Straight out of the box, you're already vulnerable. There are a few things you can do right away to mitigate these risks:

• Use strong passwords for all your users. By strong passwords, we mean at least 7 characters long with a mix of upper case, lower case, symbols and numbers. Try to avoid using words - "admin", "hello" and "password" are terrible passwords.
  
• Buy an Internet router with firewall capability. Firewall capabilities are available in just about any consumer Internet router you can buy. Please remember to change the password on the router - default passwords are usually the first things hacked.
• Keep your operating system software updated with security patches. All the OS vendors find vulnerabilities with their software and continually patch them. It's best to keep up to date with those patches.

That's not all. There are other software that you install on your machine (knowingly or not) that include daemons. So here are some other things you should do to mitigate those risks:

• Install an anti-virus software
  
• Back up your data regularly.
• Make sure you're installing software from reputable vendors. Usually, if their website has an address (not a PO box), a phone number, a board of directors, you're usually OK.
  
• Update your installed software too with patches. Software you install could have daemons as well. That's why it's a good idea to patch these when updates are available.
  

After you've done all that, there is one weak link that could yet be exploited - the user themselves. Unethical netizens could deceive you to install malicious software on your machine.

• Buy your software. I've mentioned this in the previous blog and there is good reason for this. If you don't have a legitimate license to run your software, you are probably using cracked software or running some kind of a cracker or key generator. Cracked software, crackers and key generators are usually malicious viruses. You would never have known as it was masked as something useful.
  
• Be aware when something is being installed on your computer. When your browser asks you "Do you trust content from XYZ Inc?" it means that it is trying to install software on your machine. If you don't know what that's for, click on "No".
  
• Do you open all those email attachments? MS Office documents, VBS, JS, HTML, WMV, can all hold tiny daemons in them. So don't open them unless you know what it is.

If your machine is completely compromised, your only hope left is to reimage your PC, i.e. reinstall everything from scratch. Best to install your PC while it's not connected to the Internet.

Dos and Don'ts on the Internet

In this blog, we discuss the best practices for users to stay safe on the Internet. All Internet users are the participants in a community of netizens. We can each potentially be either a hunter or a prey... neither are good. So at all times, we need to watch that we do not engage in activities that bring harm to others and at the same time protect ourselves from being victimized.

If we genuinely do not wish to harm others on the Internet, we should talk about Internet etiquette (aka. netiquette) . Here are some simple rules of thumb so don't harm others:

• Don't attempt to hack/crack into machines that you are not authorized to have access to
• Don't attempt to create virus', trojan horses, worms, spyware, etc.
• Don't steal - be careful of this. Intellectual property is so often exchanged illegally without knowing. Identities can also be stolen - don't do this.
  
• Don't forward group/chain emails that ask you to forward to at least x number of people or as many people as possible - ever wonder why sometimes email takes so long to get to you? This is largely why.
• Don't send spam.

Here are other rules of thumb to not harm yourself:

• Steer clear of hate literature/propaganda
• Be careful of who you interact with on the Internet. Tell your family who you're talking to. Always make sure someone in your family knows if you're meeting an Internet friend for the first time. Better safe than sorry.
• Be careful of online gambling. It tends to be habit-forming and doing it on borrowed money (like a credit card) is asking for trouble.
  

This isn't an exhaustive list but it's a starting point. If you can think of more codes of netiquette or how regular people can guard their own psyche to protect themselves from harm, please share in the comments section below.

Mortgages & Loans

Buying a home is one of the most important purchases in life. It is a very expensive proposition, so you're likely to have to look into taking out a mortgage to pay for your home. Borrowing vast sums of money is very threatening so this blog will give some guidelines on just how much you can afford so you don't lose too much sleep over it.

Firstly, you'll need to have an income. Once you have that, here are some guidelines:

• The payments you make to pay off your debts in a year should not exceed 25% of your gross annual income. You can stretch this up to 31% but you'll have to sacrifice your standard of living.
• You should pay off your loan before you retire, so best to use an amortization period that ends before your retirement. You can stretch your amortization to keep your payments low, but you will need to continually push towards higher incomes so you can pay off your loan quicker. Don't stretch if you don't want the added stress.
  

The total debt (i.e. how much you can borrow) will be based on the above 2 factors so it is largely dependent on your age and when you plan to retire. From my own experience, if you plan to work for the next 25 years, you can borrow up to roughly 3x - 3.5x your gross annual income.

Hopefully, these guidelines will help you manage your debt in a way that'll leave you some breathing room to sustain a decent lifestyle.