Coming back from a month of vacationing, I needed to catch up on all the past financial headlines. But I could care less about the recent China markets situation, or the Canadian Federal bank decision on Canadian interest rate. My mind’s still in vacation mode, I suppose… but the bargain hunter in me loves hearing about good deals, and the fact that PH&N is now making its products more accessible to Canadian investors was a headline I naturally gravitated towards.
I’ve previously blogged on how I loved PH&N - a Canadian investment management firm possessing a terrific reputation. On July 2nd, PH&N will launch B and F series of their funds. Their elitist minimum investment restriction lowered to $5,000 from $25,000. Compared to its Canadian peers, its funds bear MER costs that are well below the industry standard. Isn’t that a refreshing concept to hear from an investment company?
Solid Performance At A Lower cost
I’m really tempted to drop $5000 and open a PH&N account myself. Though I’m a stock picker at heart, I also engage in some mindless mutual fund dabbling for the portions of my portfolio I don’t want to fuss about. It’s my way to diversify by style; to ensure that I don’t totally ruin any chances of future retirement through bad trades. And no, I don’t suffer from lack of confidence if you haven’t noticed. Ha-ha..
No grand arguments here about how PH&N have the best funds. But you should take a look at the fund performances they boast - solid across the board. The majority of these funds fit my criteria: long history, steady / above industry peer performance, no extreme dips and swings in style, performance and management. Most mutual fund investors aren’t the types to constantly worry about their funds. The PH&N principals have proven they’ve got what it takes to give you that piece of mind with their conservative yet winning style. And why not also offer it at a lower price than most of their competitors?
A Strategic Shift - Paying Advisors
If you had a Canadian financial advisor who was recommending PH&N funds to you before, chances are that’s a good advisor who’s not in it for the money as PH&N never paid advisors. Accordingly, if PH&N wants to reach a larger investor population with its offerings, partnering up with these distribution channels was a no-brainier decision.
Reading the article above, you might also be curious about “trailer fees“. These are how most financial advisors get paid. Advisors don’t simply draw commissions from your initial investment load fee, but are also paid a tiny % of the MER annually for their continuing service of your accounts. This is precisely why many advisors want to build a large investment capital portfolio under their management because these trailers are their version of “passive” income.
Will More Follow?
Taking the high road served PH&N for quite a while, but coming down to help the common man is its own rewards. By leveling the playing field and making its services more accessible to Canadian investors. PH&N is only helping to rebuild the battered image of mutual fund companies. I’m hoping that more companies will follow PH&N’s example and rethink their marketing strategy, and MER cost structure.
You are your best investment vehicle. You are the engine that runs You, Inc. You have a job, you drive yourself to work, you do the job. You, you, you. But most people leave it there. You shouldn't because some of your best investment opportunities happen after work. Like fixing up your house.
Read the article below but we will concentrate on the return on investment.
Summary--the article talks about the things YOU can do to fix up your house to sell it. The reverse works as well--if you are looking for a house to buy look at the one that stinks and figure out how to fix it. And how to fix it yourself because that is where the returns are.
Here is the takeaway from the article on DIY projects.
TILE A FLOOR
Your cost $265
Contractor Cost $1,000
ROI=377%
PAINTING CABINETS
Your cost $135
Contractor Cost $1,200
ROI=888%
BUILD BOOKSHELVES
(I'm not sure about this one and it has the lowest return but...)
Your cost $700
Contractor cost $1,200
ROI=171%
DINING ROOM-REPLACE OVERHEAD FIXTURE
(Warning--this one is harder than it looks. Not the electric part, just the working with your hands up in the air part and trying to get bolts and nuts to line up.)
Your cost $150
Contractor cost $700
ROI=466%
You might quibble with the ROI calculation--it is early and I don't feel like doing a bunch of math but even if the returns were half, you get the idea. AND DON'T THINK YOU CAN'T DO IT-WHEN WAS THE LAST TIME YOU SAW A RHODES SCHOLAR WALKING AROUND A CONSTRUCTION SITE? LEARN HOW TO DO IT AND REAP THE REWARDS.
My wife asked a few years ago how much we have saved/made by doing projects ourselves. Being a cheap bastard and not afraid to saw off a finger or two, we have done a lot of projects. Off the top of my head I threw out "$300,000." I think I figured low.
Good luck.
Make your home more appealing to buyers (and yourself) with these easy indoor upgrades you can do on your own.
THE ENTRYWAY: TILE THE FLOOR
Do-it-yourself: $200 for tiles (four feet by four feet); $65 for tools
What you'd pay a pro: $1,000
Skill level: 2/4
Time: 1 day
"The foyer is the buyer's first impression of your house," says Sid Davis, author of Home Makeovers That Sell. "If people walk in and see a bad floor, they're going to wonder, 'What else is wrong with this dump?'"
Do this if... Your neighbors all have tile entries and you don't. And definitely if you have carpeting or linoleum, says carpenter Rick Crowe of Albany, N.Y. "The cheapest ceramic tile has more curb appeal than the most expensive linoleum."
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For many of you, aside from receiving the Financial Tip of the Week, you may not know a lot (anything?) about what other educational efforts we’re involved in. Let me share more with you about our Office for Financial Success (OFS).
History.
About two years ago, several ingredients came together (an open faculty position in the Personal Financial Planning Department/ College of Human Environmental Sciences; generous funding from State Farm Insurance to remodel office space; and me [Dr. Mark Oleson]. I had been at Iowa State for the prior 6 years running their Financial Counseling Clinic when the opportunity came knocking). The OFS officially opened its doors in fall of 2005 with two primary missions in mind: (1) Provide training opportunities for undergraduate and graduate students in the Personal Financial Planning Department; and (2) Provide educational services and resources to the University and University Community. The OFS is in place to provide unbiased information to individuals at all stages of life [with the obvious primary target being college students]. We provide resources in all aspects of personal finance: remedial issues (debt management, bankruptcy, credit card, student loan problems, etc.); productive issues (investing, insurance, homeownership, etc.) and all areas in between. This service function is the one that I will outline in this weeks tip …
Financial Tip of the Week.
The weekly blog, our most visible service [tens of thousands of subscribers nationwide], has received national recognition for its educational efforts. I’ve been sending a “Financial Tip of the Week” for over seven years (about 10 months in the blog format). The weekly tip is the primary springboard directing people to OFS services (classes, workshops, etc.). You can view current/ past tips and in a ‘topical’ format.
Individual Counseling Services.
The OFS offers personalized financial counseling services [free to students]. We offer counseling face-to-face, over the phone, and via e-mail. We try to make our services as accessible to as many as possible. The OFS houses one of the MoTAX (Missouri Volunteer Tax Assistance) offices that assisted over 1,000 people [in the OFS – more were served in other parts of the State] with taxes this past season. We are also the only University-run program in the country approved by the US Dept of Justice to provide the pre-filing financial counseling required for those seeking bankruptcy.
Group Workshops/Seminars.
We regularly provide information [on a myriad of topics] to different groups: residence halls, fraternities/sororities, professional student groups, classes, summer/new student orientation, community groups, etc. Workshops can be requested via the OFS website.
Personal Finance Courses (Financial Survival/Financial Success).
The Personal Financial Planning Department offers many valuable classes on a wide range of personal finance topics. Since arriving at MU, I have added two 1-credit courses to that curriculum (designed for non-majors). Financial Survival is written as a ‘front end’/underclassmen course: understanding student loans, credit/ credit cards, financial pitfalls, etc. Financial Success is designed to be a class taken on the back end [as one approaches graduation] to address issues such as managing debt after graduation, 401(k)/IRA plans, general investing, insurance, homeownership, and other post-graduation financial issues. Both courses [currently] are available fall and spring semesters; Financial Survival is also available this summer.
Web Resources.
Most people today use the Internet to gather information. The OFS website was created to provide a resource that could direct consumers to useful financial information. Information about budgeting, debt management, credit/credit cards, investing, taxes, insurance, student loans, and a lot of other issues are all available on the OFS website.
I am pleased with the great things the OFS has done in such a short period of time. The Personal Financial Planning Department, the financial backing for the OFS, deserves much of the credit for its early successes since their support is the reason we exist!
OFS CONTACT/RESOURCE INFORMATION.
Director – Dr. Mark Oleson
Student Assistant – Sam Miller (2006-07)
Website – http://financialsuccess.missouri.edu
Blogsite – http://financialtip.blogspot.com
E-mail – financialsuccess@missouri.edu
Phone – (573) 882-2173
I tend to not try and dwell on things I can't do anything about but stumbled across this post about surviving a nuclear bomb attack. This isn't the attack from another nation, it is a terrorist attack, a suitcase bomb though the suitcase would have to be pretty big.
Well, I am including it because today I don't have much time (have to go see a mason about brick work) and some people may need this information. Also, it has something of a nostalgic ring to it as growing up in the '50's we got daily doses of how to survive, maybe, a nuclear attack. And these weren't suitcases, they were ICBMs, inter continental ballistic missiles. Now you know why your parents are neurotic. Scroll down through all the garbage.
How does one rank hypothetical catastrophes? Which would be worse—another Katrina or another 9/11? It seems fitting to begin with the cataclysm we've all been worrying about for more than half a century: a nuclear attack on a major city. With some 27,000 nuclear warheads scattered around the world, and with, shall we say, less-than-ideal safeguards in Russia, Pakistan, and North Korea, some experts predict it is bound to happen sooner or later. They don't keep shuttling Dick Cheney to his undisclosed location (deep under Pennsylvania's Raven Rock Mountains) just for show. Shortly after 9/11, the White House was on high alert in response to a CIA report than an errant Soviet "suitcase nuke" was being smuggled into the United States. That report was eventually discredited, but given the current availability of fissile material and the shocking dearth of effort being spent to reduce it, such an alarm may eventually prove true. "If we continue along our present course," warns Harvard's Graham Allison, "nuclear terrorism is inevitable."
Here's the worst part: You will survive. Get those images of Jason Robards in The Day After out of your head. This is not that. We're not talking here about multiple-entry 20-megaton warheads wiping whole cities off the map in seconds. A single terrorist nuke, more likely in the 5- to 10-kiloton range (Hiroshima was 12 kilotons), will kill tens or hundreds of thousands of people in any big city but spare the rest. In New York, that will leave about 7.5 million of us to sort through the carnage.
Let's consider what would happen. The first 30 seconds or so will unfold like this:
Soon fires will engulf thousands of buildings, and a large, deadly plume of radioactive dust will be carried in one direction or another by prevailing winds.
So, what should you do? For all survivors within 20 miles, the immediate task will be to stay away from fires and avoid the fallout for at least a couple of days. (The vast majority of radioactivity fades away that quickly.) The only two methods of avoiding fallout would be:
A) to take shelter until the radiation danger fades, or
B) if you have time, evacuate the area, heading in a perpendicular direction to the fallout wind.
In either case, it would be a very good idea for everyone in the exposed area to take potassium iodide pills, a relatively harmless substance that prevents your thyroid from soaking up radio-iodine and thus lowers the risk of future thyroid cancer. (Appropriate doses here. Good place to buy the pills here.) It would also be extremely useful to have a key-chain radiation monitor—the one that currently seems to be most effective is here.
Whether to stay put or run away is the subject of some controversy. In all likelihood, many survivors of the blast would quickly find themselves in an eerie simulation of every political satirist's favorite film, Duck and Cover.
What in the 1950s came across as a laughably reassuring response to an overwhelming threat turns out to be surprisingly coherent practical advice for the urban 21st century. Because you are unlikely to be able to outrun the radioactive fallout, the best option in any city would most likely be to immediately find refuge under a thick physical barrier and to remain there for at least a few days. That barrier is your best defense against tiny particles and penetrating rays. Basements are best, followed by interior rooms with no windows. If you are in a tall tower, it's probably best to be on a midlevel floor, in a room close to the center of the building with no windows. You will need to stay there for several days at least, so your temporary shelter should be prestocked with food, water, radio, flashlights, and a makeshift toilet. Ideally, radio messages would begin soon after the explosion to instruct people about the nature and direction of the fallout and whether and how to evacuate. (Those interested in more thorough preparation can go here.)
"This would not be the end of the world," nuclear expert Charles Ferguson emphasized to me as we talked through the sequence of post-atomic events. "We can deal with this kind of horrific attack, and a little preparation can go a long way to increasing your chances of survival." It's a shocking, unnerving reality that one can rationally prepare for a nuclear blast. But all it really takes is a trip to the grocery store, a few clicks on the Internet, and short conversations with your boss and your wife.
I know that most of you would sooner shop for your own casket than stock up on post-nuclear groceries. The great paradox of surviving nuclear terrorism is that probably the most excruciating part is confronting it emotionally, tearing your psyche away from the much more comfortable (and widely assumed) scenario of annihilation. Ask any New Yorker about a nuclear attack and the first thing you'll hear is, "Why dwell on it? I'll be dead." No one wants to hear the muckier truth of likely survival. If confronted, people jerk back with the response, "I'd kill myself." But you wouldn't. A few survivors might, but that's just not what humans do in the face of catastrophe. Ask Elie Wiesel or Viktor Frankl. We've got this annoying survival instinct. You would want to live. You would want to help your family. You would want to help others. You would want to rebuild your life.
Why not face that reality now, in advance? Yes, it's uncomfortable. But an hour or two of preparation might mean the difference between complete misery and relative safety. No one is suggesting a life-altering obsession—Lord knows I'm looking forward to thinking about something else—only that you spend about as much time preparing for this awful unlikelihood as you already have for other awful unlikelihoods. None of us expect to get cancer or watch our house burn to cinders, but we buy health, life, and home insurance just in case. We prepare for the worst and then forget about it. Why not apply that same principle to acts of God or Bin Laden?
Maybe you won't, but I will. Someone has to start the trend. To survey my survival gear options, I paid a visit to Safer America, a disaster-preparedness supply shop on East 54th Street in Manhattan.
General manager Jonathan Elkoubi was waiting inside, ready to show me how, since 9/11, he has helped families and corporations prepare for the next 9/11. His showroom is a survivalist's paradise, stocked with everything from smoke hoods and particle masks to earthquake alarms and skyscraper escape parachutes. ("I'm not going to name any names," he said, "but you'd be shocked by the CEOs who buy these parachutes for their own personal use and buy nothing for anyone else even on their own floor.")
At the end of the full tour, we came to the pièces de résistance: the new, lightweight Demron™ torso vest and full-body radiation suit. For $688 and $1,200, respectively, not only will you effortlessly beat back most ionizing rays—you'll look damned good doing it.
Maybe that's how we turn urbanites around on nuclear preparedness. We make it chic.
Click here for the essential survival shopping list. Next: How to survive an earthquake.
on. Also, it has something of a nostalgic ring to it as growing up in the '50's we got daily doses of how to survive, maybe, a nuclear attack. And these weren't suitcases, they were ICBMs, inter continental ballistic missiles. Now you know why your parents are neurotic.
My philosophy on maintaining this blog site is very different from that of most bloggers. Rather than update it constantly with the latest happenings, I aim to write longer how-to explanations and tutorials that are less time-sensitive and provide useful reference material long after they’re written.
Though my posting rate has declined dramatically recently (this will improve soon), I still receive questions from readers, mainly about using Excel functions. Last week, I received one from a reader named Jae, who asked a Finance 101 question:
I have a problem in my finance class where the annual revenues from a project is $500,000 and annual costs are $300,000. The corporate tax rate is 40% and the cost of capital is 12%. How do I calculate NPV of the project?
The original problem has probably been paraphrased, and lacking other information, here’s how I’d interpret the problem. The project generates pre-tax revenues of $500K a year, and incurs operating costs of $300K a year. The corporate tax rate is 40%, the cost of capital is 12%, but nothing is provided about how long the project will last. For simplicity’s sake, let’s suppose it lasts 5 years and then ends at the end of year 5.
The setup for solving this problem is very similar to another post I wrote on how to calculate net present value (NPV) a while back.
Here’s how I’d set up the calculation in Excel to solve this problem, assuming the project lasted 5 years:
Cash flows are defined as revenues less costs (in this case, $500K per year less $300K per year, or $200K net per year). But we also have to take taxes into consideration, because they’re also a “cost”. Since the tax rate is 40%, we need to deduct an additional $80K per year, which we calculate by taking $200K per year * 40%.
Subtracting the annual costs and taxes from the revenue leaves us with $120K per year. We then use Excel’s NPV function and fill in the cost of capital and annual cash flows, and Excel does the rest:
The NPV for this 5-year project is $432,570.
Another way to approach this problem would be to assume that it’s a project that lasts forever, since there’s no time period given. In this case, we’d use a perpetuity formula:
Annual cash flows are still $120K, calculated identically as we did above, and our rate is our cost of capital of 12%. In this case, the NPV of the project would be a round $1M:
Without more information on the timeline suggested in the problem, we might assume this second solution is what the professor is looking for.
If you’d like to better understand the principle of DCF, which underlies NPV calculations, check out the post I wrote on how to calculate discounted cash flow (DCF).
the survivalist
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