Saturday, August 30, 2008

What do I really want to count in my financial inventory?

Question of the day, do I want to reconsider whether or not I want to put money into real-estate investments? With my father passing away, I suddenly find myself running a real-estate holding firm. Granted, I still don't own any of it. Though once probate is done, real-estate investments will probably be well over 2/3rds of my net worth. The firm doesn't have a history of providing returns to shareholders, or repaying their interest free shareholder debt. While I may be handling the day to day aspects of the business, I do not have a controlling interest and I do not trust the other shareholders to sufficiently represent my interests on major decisions, such as payouts. This being a small firm, the shares are also completely illiquid. Do I really want to consider this when I decide on my asset allocation? It feels kind of silly. This is more like a part time job that I don't get paid for than an investment right now. Oh and with regards to that, my brother keeps telling me that I should put this on my resume. Somehow I don't feel it's really something to brag about right now. If I were to describe my accomplishments thus far, I managed to increase expenses by 30% without the company going broke in the first month. In a slightly more serious tone, I suppose I'd say that I started catching up with maintenance, and properly insured the one building in the firm. That probably puts it in a better light.

Thursday, August 28, 2008

Big Up Day In The Markets

Well that was quite a surprise when I got home today. Big market movements and I'm up nearly 5% in one day. That's over $1000 in my fledgling portfolio. Granted, there's down days as well and overall, it's hard to see the way things are heading from all the day to day ups and downs. Though it is easy to see that some things are considerably cheaper on some days.
The big thing I care about though is income and long term growth, which I then view as something I can convert into income. Q3 earnings are in. I haven't really reviewed my holdings yet, but that's on my to do list.

Tuesday, August 26, 2008

Topping off My Pay Cheque

Well, I've agreed to go for overtime two weeks in a row. By my calculations, this will give me roughly $250 more on that pay cheque. Regularly I get about $1000 for 8 days work, or about $125 a day. It feels kind of strange that comparing what I take home on average and the marginal rate, I don't feel like I'm making more on those extra days. Also kind of makes me wonder how many people think about marginal rates vs average rates. I wonder how many of the people I work with understand the idea of marginal tax rates well enough to make decisions based off them. I know there's some fairly financially uneducated people there. Though I also know that there's a bunch of fairly bright people there who just aren't fluent in english.

How Will Market Recoveries Affect My Plan?

This is something I find myself frequently asking. Right now, I'm enjoying the current situation. Stock prices are relatively low, yields are good and valuation is proving to be attractive. I certainly don't expect this situation to persist in the long run though. I kind of expect P/E multiples to increase again and yields to decline. On the other hand, I also expect short term earnings growth to increase though, which is not horridly meaningful while I'm saving. For the next several years, I still expect that the bulk of my gains will be from new money being introduced into my portfolio. Afterwards, I suspect that this will be little more than one of many blips in long term growth.

Sunday, August 24, 2008

Do I Care More About My Cash Flows Or My Net Worth?

The interest rates on my loans float with the prime rate, however, the amount that I pay does not get adjusted. So, question of the moment, supposing the interest rate changes, how much do I care? Clearly I'm not completely indifferent about interest rate changes. For now I've gone heavy into equities and have done only the minimum for debt repayment. It's my general feeling right now that investments are going to have a greater return than debt repayment. Does this question really depend on how much free cash flow I have though? Again, it's hard to say. I've spent many hours trying to compute what would happen if I shifted more of my investments toward income again and used that money to invest. I also kind of have to reassure myself that going for net worth is the logical thing to do since I do have significant excess cash flow right now. It's a bit of a change from where I started.

Different perspective on yields and interest rates

While I was idly thinking about things at work one day, I came up with this simple idea. Why don't I stop thinking about interest in dollars and start thinking in terms of hours of work?
That lead me to 40hr x 3% = 1.2hr/year and eventually, I got to
100% of employment income = 1 year's pay/3% = 33 1/3 years
70% of employment income = .7/3% = 23 1/3 years
50% of employment income = .5/3% = 16 2/3 years
and in the last category, what I mean by 33 1/3, 23 1/3 and 16 2/3 years isn't that I'll need to work that long. I need to have the equivalent of that much money put away. Clearly this simplification does not include any investment growth or compounding of interest or that I won't be saving 100% of my income. So the point of all this math is that it looks interesting on screen. Whether you think in terms of dollars or how much hard work you put into getting them, the end calculation really doesn't tell you much. At least I sure hope I can get this all done and over with in less than 16 years.

Sunday, August 17, 2008

week in review

Well, It's the start of another workweek for me. I worry about being completely worn out by the end of it. It's kind of different having gotten so many things done during the weekend. I get paid this week, I'm looking forward to finding out how much I'm earning. This week, I think I have to resolve a few things going on with the rental property. Talk to the manager a bit, and figure out what's going on with regards to one of the leases that doesn't expire for a while. There's a proposal for an extension and an increase. I think the price is the important point in that and the terms less important as long as they don't change much. I'd like to standardize the leases. I suppose I'll push for waiting till we renegotiate the lease that is expiring and try to standardize the leases.
As for the expansion side, I suppose I should start looking into what to expand into. There's still a long way to go before that can go forward, but it never hurts to have more information.
On the personal side, I don't know what's on my to do list. It seems quite blank. Gotta move some money to my savings account once the hold clears, that isn't too exciting. I suppose most of my pay will be going into there as well. Maybe my only goal for now should be to simply sleep well.

Saturday, August 16, 2008

plotting the future of the family business

It's just another chaotic day. Wow that mall has a lot of issues. I'm only just discovering the extent to which maintenance has been neglected on the air conditioning units. It's also drastically under insured. Right now coverage is about half what it should be. The record keeping is also incredibly poor. It's something I would like to change. We were recently approached with a hand written note, something that supposedly resulted from a lease renewal negotiation that nobody knew about. I don't have a copy of anything. Things seem to be very old school.
If things were entirely up to me, I'd run the company more formally. Heck, I'd go wit three mandates, running more formally, expanding the business holdings and providing actual shareholder return. Right now we've been ignoring all the shareholders and well, it's been running at very modest gains, a lot of it going into repaying the mortgage. If things were entirely up to me, I'd expand first. Probably either get a franchise or a second property. Right now there's been little incentive to repay debts outstanding to shareholders. We're not on any repayment schedule and there hasn't been any interest payments. If we had to pay that at the same rate as the mortgage we'd have never made a profit. Taking more control would come second. I'd offer to exchange some of the outstanding foreign held shares into an interest bearing debt with a repayment schedule. Then if I think the company will support it, I'll try to clear the balance sheet of the zero interest, zero repayment share holder debt. It just doesn't feel right having that and not providing any return.

Sunday, August 10, 2008

I need a hug

I don't know why movies like that affect me so much, but I suspect that it highlights something that I'm missing in my life. Anyway, just finished watching Charlotte's Web and I need a hug.

Things not as they seem.

I found a note at work on Friday saying something about how they want to start the weekend shift up again next week and they want to hire ten people. That’s quite a lot for the size of our plant. Also, still no sign of the missing pay scale. I’d like to know what I’m earning instead of a vague, more than I was earlier. I suppose I just have to wait till next pay day.
As of yet, I’m not sure which of the shifts I like better. The last two hours makes a huge difference. Though I do love having four days off on weekends. Granted, everything is so pressed for time. I suppose I also like watching the markets on the weekdays. On weekends, I simply don’t know what to do. I guess it’s back to the old ‘I need a hobby’ line.

Tuesday, August 5, 2008

whoo, got a raise

I now have the raise that I was waiting for. They took down the pay scale though so I'm not entirely sure how much I'm getting right now. It was a fairly decent jump, not like a token amount. Granted, this whole thing is still a joke compared to what I should be making. Overall, I'm not sure this really changes much. Keeping expenses down probably has more of an impact right now.
With regards to expenses, I'm not fond of the idea of blowing a month's wage on car insurance. Then there's maintenance and fuel on top of that. Granted the price of insurance should go down once I get some experience.
There's also the trip to europe that my brother wants me to take. I don't know if that's really such a good idea. I think I'll probably be happier with a bit more security in my life. It's a long road and I'm not getting close to the end yet.

Monday, August 4, 2008

As I go back to work, someone dear to me is now homeless, and also unemployed. I'm not sure how to handle this. I've had a friend in a bad spot before, but he seemed to have little trouble finding work. It was more keeping a job that was his problem. I'm not too sure how to handle this, though it does cause me rather considerable concern. Overall, I suppose this increases my concern over my own security and further impresses upon me the need to build resources quickly. Though in the short run, I suppose the thing to do is to grow my cash reserve. That seems to be the universal answer for any situation where I don't know what to do. Wait for information and build cash in the mean time. Then hope that it's not too late to act.

Sunday, August 3, 2008

Life goes on

Back to business as usual now. The investment property is under control again. The assets have been located and once we've got values for things, probating can begin. We also have to calculate capital gains though, which could take a while. On my to do list for today is catching up with July's accounting. This time, it's business. I've decided to just skip over my personal accounting for the month. There were too many transactions made that were split funny for me to really have the patience to deal with. Luckily for me, business does not really involve large numbers of odd transactions. I also had two software packages suggested to me by the accountant who's been handling my father's stuff, quick books and simply accounting. A review of those two packages is probably in order.