By Sheryl Smolkin

Even on a vacation cruise in South America for the last several weeks it was difficult to avoid media reports about the plunging stock markets in both the U.S. and Canada and the drop in value of the Canadian dollar.

On the Financial Independence Hub, Ermos Erotocritou, a Regional Director with investors Group Financial Services Inc. reminds readers that it’s reasonable to monitor day-to-day events, but it’s imperative to keep in mind that daily, weekly, monthly, even quarterly market movements are often little more than noise for an investment portfolio that likely has a time horizon of many years. That’s why it’s so important to practice patience and discipline by remaining in the market, as opposed to abandoning it or believing that is the best way to preserve wealth.

Dan from Our Big Fat Wallet shares Lessons from a Financial Downturn from the perspective of an Alberta resident. First of all, he says “cash is king” because the more cash you have, the more flexibility it gives you. He also notes that with stock prices and housing prices falling in some areas, the emergency fund has suddenly taken on more importance. And finally, he acknowledges that investing is emotional but suggests that investors who are able to separate their emotions from investing have the potential to make impressive returns in a downturn.

In the Toronto Star, Gordon Pape also agrees that “cash is king” in times like these. He says it’s fine to be all-in when markets are positive, even if the growth isn’t robust. But in times of great uncertainty and high volatility such as we are currently experiencing, he likes to have some cash in reserve to cushion any stock losses and to deploy as buying opportunities appear.

It’s an economic downturn — not the Apocalypse, Alan Freeman reminds readers of iPolitics. He says, “This isn’t 2008, when we were facing the very real threat of the global financial system collapsing entirely. This is just an old-fashioned economic downturn — even if it will be quite painful for some in the short term.” Freeman comments that because Canadians depend on resources for a big chunk of our economic activity, we shouldn’t be surprised that we’re at the mercy of commodity prices. “Oil and metal prices that soar to unsustainable levels inevitably crash; they’ll recover this time around, as they have in the past, though perhaps not for a few years,” he concludes.

And finally, many people who do not have investments may be less worried about the stock market slide than the plummeting value of the Canadian dollar. In a Canadian Press article published in the National Post, Aleksandra Sagan reports that for every U.S. cent the dollar drops, food like fruits and vegetables that are imported will likely increase one percent or more in cost. While the increased costs have dealt a blow to everyone’s wallet, they have had a more pronounced effect on Canadians living on a tight budget or in remote regions, where fresh fruit and vegetables are more expensive than in more urban areas.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

Back from two weeks of vacation and back in the saddle! While it’s hard to get re-establish anormal routine, it’s not difficult to find many interesting personal finance stories and blogs to share with you because all of our favourites kept on blogging when I was away.

On Boomer & Echo, Robb Engen wrote about The Evolution of Loyalty Cards. Scanning weekly flyers and clipping coupons is a great Canadian tradition but he says that like the landline telephone, VCRs, and analog TV – coupons and flyers are on their way out. Retailers are moving online and developing smart phone applications to get more personal with their offers.

In Is Paying Down a Mortgage Underrated? on Our Big Fat Wallet, Dan says the real value of paying down the mortgage isn’t the interest savings. With rates as low as they currently are, the interest you save will likely be minimal. He suggests the best approach for anyone looking to use extra funds to pay down their mortgage is to consider a ‘hybrid’ approach – using the money to reduce the mortgage and then putting more money each month towards investing.

Blond on a Budget’s Cait Flanders has finally finished her year-long shopping ban. In a herculean 6,000 word blog The Year I Embraced Minimalism and Completed a Yearlong Shopping Ban she explains why she did it and how it changed her life. Flanders says, “There is nothing I need right now that could make my life better than it already is and that’s a great feeling to end this year-long challenge with.”

Globe & Mail reporter Ian McGuigan agrees that accumulating wealth is a challenge but he says that “decumulating” it can be trickier still. In a recent article he refers to the paper Making Sense Out of Variable Spending Strategies for Retirees written by Wade Pfau, a professor of retirement income at American College in Bryn Mawr, Penn. McGuigan notes that spending only 4% a year works out pretty well if you don’t want to outlive your money. It also keeps your spending at a constant level, in after-inflation terms. However, it’s not so good if you’re interested in being able to live as well as possible in retirement.

Guess who’s saving for retirement? The kids  reports Adam Mayers at the Toronto Star. While we often point the finger at young people as having limited interest and understanding of their personal financial affairs, Sun Life finds that’s not so. Younger workers know a good deal when they see one and like all smart consumers they’re snapping it up. Only 40% of those in their 40s and 50s are taking full advantage of matching Registered Retirement Savings Plan or pension money in plans Sun Life administers. On the other hand, 90% of those in their 20s (presumably new employees) are opting in.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

This week we picked up a series of interesting blogs from both bloggers who have previously appeared in this space and several who are new to us .

I was particularly interested in Four reasons you should still take CPP early from Jim Yih at Retire Happy. In his example comparing twins, one who takes CPP early and one who waits until age 65, he calculates the “break even age” as 74.4. Keeping in mind that the earlier years of retirement are when retirees spend the most, he thinks that money in hand now is better than money received later in life.

Eric Ravenscraft’s blog on Lifehacker suggests that you treat savings like a tax so you do it. In other words, have your savings taken off at source by your financial institution so you don’t get a chance to spend the money on something else first.

The Froogal Student’s guest blog Setting goals like the wealthy on the Canadian Budget Binder recommends that you set goals, plan ahead, have career goals and anticipate failure in an interview. While life is far too complex to predict, he says adversity hits everyone. The difference between success and failure lies in preparation.

What I Learned About Money from My Wife by Barry Choi on Money We Have is intended to make it easier for people in relationships to talk about money. For example, Barry likes to put every expense on a credit card to get the points. However he respects his wife’s decision to spend cash wherever possible because she says this approach helps her to control her spending.

Finally, on Our Big Fat Wallet, Dan discusses the pros and cons of prenuptial agreements. While anticipating a possible future divorce may take the shine off your sparkling new ring, the fact is the divorce rate in Canada is about 40%, so it doesn’t hurt to think about how you would deal with your financial affairs in advance if the marriage doesn’t last forever after.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere?” Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

In our eternal quest to link you to the best in personal finance blogging, once again this week we combed the web looking for great stories that will incent you to watch your nickels and save more for retirement.

On Boomer & Echo, Robb Engen discusses his experience  Breaking Subconscious Money Habits. Something as simple as eating weekend breakfasts at home instead of at Tim Hortons saved his family over $500/year.

Sarah Milton writes on Retire Happy about how Impulsive spending can derail your finances. While it may be tempting to buy something on sale because it’s a bargain, it’s only a bargain if you need the item and will use it within a reasonable period of time.

Automated arrangements where money comes out of your account to pay bills or amounts are regularly charged to your credit card are a great idea until something goes wrong and you don’t catch the error. That’s why Mr. CBB on Canadian Budget Binder says it is essential to review automated bill payments every month. That way you can discover and rectify inadvertent overbilling, duplicate bills or amounts incorrectly charged to your account.

If you really want to decrease the amount of income tax you have to pay, Big Cajun Man, Alan Whitton tries the idea Work Less and Pay Less Tax on for size. He says he’d rather take an extra 10 weeks of vacation off than go down to a four or three day work week, because he probably would have to do the same amount of work in a shorter period of time. Nevertheless, rather than working less, he would be more inclined to try to earn more money, so the tax hike didn’t hurt as much

And finally, Dan on Our Big Fat Wallet discussed what everyone loves to hate – bank fees. In I Hate Bank Fees, So I Bought the Banks he admits being frustrated by all of the bank charges he pays each month. So he decided to buy bank stock. The big 5 Canadian banks have had stellar capital gains and paid great dividends over the last five years.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.

By Sheryl Smolkin

This week there were several interesting blogs about life insurance I’d like to share with you.

On Brighter Life, Kevin Press discusses Understanding life insurance. First of all he gives basic information regarding term, permanent and universal health insurance. But for Kevin, the question was never “term or permanent.” It was, “How much term and how much permanent?”

Robb Engen from Boomer & Echo outlines The 4 Best Strategies for Successful Life Insurance Applications including preliminary inquiries, multiple applications, a covering letter and an insurance broker who is knowledgeable and up to date.

In a Toronto Star column I wrote about Eight red flags when you apply for life insurance. If your application reveals you have or had a serious or life-threatening illness the insurer may charge you higher premiums or postpone coverage for specific conditions until you can show the condition has stabilized. Or, the insurer may refuse to cover you. However, you still may be a good candidate for a “simplified issue” policy.

In an archived article Retire Happy blogger Jim Yih tackles the question, Do you need life insurance in retirement? Several of the situations where he says life insurance makes sense for retirees are to:

• Pay off debt
• Cover taxes at death
• Cover final expenses like funeral expenses
• Provide income for dependants
• Leave a larger estate
• Equalize your estate
• Business continuation
• Provide for charities

And finally this week, thanks go to Dan on Our Big Fat Wallet who introduced his readers to The Secret Pension Plan: Saskatchewan Pension Plan. He gives a great summary of the main features of the program.

He says the Saskatchewan Pension Plan is great for anyone looking to invest but not quite comfortable with DIY investing. It’s also useful for the self-employed who have no desire to handle their own investments. The costs of the plan are low and they offer lots of flexibility. You can also get potentially-lucrative cash back rewards for all contributions if you make them on your credit card.

Many employers also offer this easy-to-administer pension plans as an employee benefit. You can get more information on the Saskatchewan Pension Plan here.

Do you follow blogs with terrific ideas for saving money that haven’t been mentioned in our weekly “Best from the blogosphere. Share the information with us on http://wp.me/P1YR2T-JR and your name will be entered in a quarterly draw for a gift card.