Every month some of my cash mysteriously disappears. Usually about $20-50 just falls through. I write it off as “Miscellaneous Household”. Granted, it’s a small amount, but puzzles me because I usually collect all the receipts, and I mean ALL receipts. It’s making me crazy because I haven’t been able to go at least 1 whole month without this weird loss. A year ago it was much worse though, I used to “lose” $100-150 and my memory was completely blank as to where the money could’ve gone.

So at least my attempts to keep track have made these undetectable losses smaller. Next month I’ll try to do without cash at all and have every transaction recorded in our checking/credit accounts.

For a lot of people this post will sound very naive, but I’m just starting to figure this out for myself, so please bear with me (and correct me if I’m wrong!).

I was interested in investing since I was 16, but was either too busy or too clueless to do it. Measly $2,300 worth of stocks are really nothing to brag about (I’m including a chart of our current stock holdings anyway, because I like illustrations).

This year I decided to systematically approach investment planning, and I’m putting together a list of books I’ll be reading on the topic of investing and wealth planning in general.

So far all I found out with any degree of certainty is that a portfolio must have a balance of CASH, BONDS and STOCKS. The exact balance should be determined by your age (mainly), because it tells you how much risk you should be willing to take to maximize your return on investment in your working years. Then of course there are things like the desired retirement age, current income and expenses, and desired income in retirement.

Portfolio components: Safety, Income, Growth

  • Safety = Cash
  • Income = GIC’s, Term Deposits, Bonds, T-Bills etc.
  • Growth = Equity (Stocks, Mutual Funds)

Okay, so when they talk about Cash, Bonds and Stock, they may call it as “Safety, Income and Growth” – same thing.

Pretty clear on Safety and Income categories. I’m still figuring out Stocks.

And here’s some eye candy:

Stock portfolio March 2 2007

Looks like GST/HST return processing will also be delayed, especially if you file close to or after March 19th. CRA is going to be replacing their current GST/HST system from March 19th to April 9, 2007 (3 weeks!). There’s definitely going to be a service interruption.

This does not mean you can file your return later or put off payments, though. The new failure to file penalty is

1% of the amount unpaid or outstanding for the reporting period as of the return due date, plus 0.25% of the overdue amount times the number of complete months the return was overdue, to a maximum of 12 moths.

We incorporated in 2004, but in May 2006 we reverted back to a non-incorporated partnership. With the final Incorporated tax return we’re dissolving the corporation.

Our corporate tax return was delivered exactly 3 months ago and they’re still working on it. Apparently there’s a huge backlog of returns and they’re processing them very slowly. I was advised to call back in 2 weeks and if I don’t get a Notice of Assessment by then, they’ll put in a search request.

They said the dissolution is NOT the cause of the delay, just a very large volume of work.

Markets fell today, by much. I was reading in disbelief how drastic the losses were, and it was actually very amusing to watch people react to the news. The worse the news got, the lower the markets dropped. I can understand if you’re a day trader, this one-day loss probably matters to you, but otherwise, what’s the worry? Don’t the markets always go up, even if eventually?

Interesting article on CNN/Money, Survive a market crash – and make it work for you, says:

“…there’s such a thing as paying too much attention to your money. In the late 1980s, Paul Andreassen, a psychologist then at Harvard University, conducted a series of laboratory experiments to determine how investors respond to financial news.

He found that people who pay close attention to news updates actually earn lower returns than people who seldom follow the news.”

We own very few stocks, for a total of about $2,300, minus paper loss of just $108 today. Percentage-wise, it’s pretty big. A bit offset by the recent stock run-up, so in reality everything is back to what it was just a couple of weeks ago. I’m not worried. Definitely not going to ignore the news, but not so worried that I’ll put off investing.

Moral of the story? Don’t be a sheep, don’t sell stocks on a day like today.

A lawyer who was closing our condo deal – I can’t truthfully call him “our lawyer” because that was the only time we ever hired him 🙂 – told us about this house he bought in the late 80’s right before the real estate market crash of the early 90’s in Canada (I hope I got the dates right). The house lost about 20% of the value, but the guy held onto the house for the next 10 years, and eventually the price went up 40% above what he paid. I’d say patience pays. Over time, of course, but I don’t think it’s such a bad deal. You patiently wait, and it goes up eventually. You get more for doing less.

If you were going to buy a particular stock, it probably went down in price today along with everything else. If you did your research and the company’s fundamentals are good, as they say, it’s gotta be an even better deal now. See the lemonade in this lemon’y market. That’s my plan for the week. I don’t think it’s over yet, so I’ll try to watch for the bottom and buy the stocks I’ve been watching for awhile. They say market-timing doesn’t work, but I think significant drops like this may be one of the better opportunities for trying to time it.

5 minutes later (!). Just got an email from CNN:

Selling is across the board as Japanese investors react to the major decline in U.S. markets.

U.S. looks at Asia, Asia looks at the U.S. and where does it stop?