Update: Solar Energy Investment

Whatever happened to our solar energy investment?


Back in May, I’ve mentioned how we’ve decided to invest directly into solar energy production in Ontario by investing into Solar Income Fund. This great company specializes in developing, acquiring, and management of solar farms. Some of them are simple rooftop operations, and some are major solar energy farms taking up acres of land.

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Investing in Mortgage Investment Corporation (MIC)

Mortgage Investment Corporation 16

What is mortgage investment corporation (MIC)?


Lately, mortgage investment corporations have been getting an increasing amount of media attention. Yet if you’re interested in investing in general, there’s very little information out there on what mortgage investment corporation (MIC) is and how one can benefit from them. I’ll try to explain it to the best of my abilities and even share my personal experience with one.

MICs are investment vehicles that focus primarily on mortgages. Thousands of investors pool their money together. Then a newly formed MIC starts lending out the funds to qualified borrowers. MICs are professionally managed by a management team that is compensated with management fees and incentified with a partial cut into profits.


Mortgage Investment Corporation

Mortgage Investment Corporation


In reality, mortgage investment corporations are just like banks. Banks borrow money from depositors and lend money out to borrowers. The difference between the amounts of money they make from lending and interest they pay to depositors is their profit.

Somewhat similarly, mortgage investment corporations raise their capital from investors, lend the money out, and funnel the profits back to investors. Some of them choose to also borrow money from banks at low interest rates - but not all of them.

There are many MICs currently on the market, some private and some public. The amount of money flowing into them from investors attracted by very reasonable yield is always exceeding previous years numbers.  Largest players in this market include Firm Capital, MCAN Mortgage Corp., Timbercreek Senior MIC and Trez Capital MIC.

While the amount of capital under management and lending guidelines vary from company to company, the general business model behind generating income is very similar between them.


Why I’ve decided to invest my money into MIC:


I’ve stumbled into MICs almost by accident. At the moment, I wanted to park some of our money in a investment with good returns, but at the same time somewhat liquid - meaning we’d be able to get the money out even if it meant paying a penalty.

High interest saving accounts offered by major banks do not offer meaningful returns these days - you’ll be lucky to get anything over 2%. On the other hand, putting money into an index or mutual fund  (even with stable history of returns) didn’t seem appropriate for this money. Hey, I like mutual and index funds just like any other guy, but we all know they can go up and down rather wildly.




Through our financial advisor, we’ve found Crossroads DMD - a Calgary based mortgage investment corporation. They’ve been in business for a number of years, and pride themselves on delivering outstanding returns to their investors while operating a portfolio of many millions under management. This includes first and second mortgages, bridge financing, and construction loans.

Unlike conventional mortgages, these types of mortgages come with higher interest rates. While some people might say it’s because the risk is greater (and honestly, I tend to agree with them to some degree), one must understand this area of financing is very under-served and thus the amount of capital available is limited. Big banks that come with big capital prefer to deal with conventional mortgages, so smaller companies like Crossroads DMD are able to capitalize on small and medium-sized loans in this specialty market and command higher interest rates because of it.

When they lend out investors money, borrowers put their properties on the line. This means these mortgages are secured by real hard assets thus minimizing the risk to investors. They won’t lend out more than 85% of the asset value - which means even if the borrower goes belly up, the investment corporation will be able to recover the funds.

Over the last several years, Crossroads DMD delivered on average over 10% to their investors in form of dividends. Since inception, the average rate of return is 10.6% per annum.

This particular investment also features hurdle rate - a specific target for return on investment that must be reached before the profits are distributed to shareholders. Investors get paid first! Investors also get a 10% share of the profits above the hurdle rate thus benefiting from great performance of the management team. What a great incentive for the management to deliver good returns.

While the investment is liquid and money can be returned to you upon request, an early exit fee (sometimes called “retraction fee”) will apply if money is withdrawn before 3 year mark.


Here’s a snapshot of our investment:


Amount invested (Nov. 17, 2011): $19,200 split between two TFSA accounts.

Investment balance (Mar. 31, 2014): 24,192.15


Mortgage Investment Corporation

Mortgage Investment Corporation


Mortgage Investment Corporation

Mortgage Investment Corporation


Return on investment: 10.44%

Personally, I’m quite happy with this investment. While some index funds showed outstanding gains over the same period of time, I feel like this is a more stable investment for me. The returns are stable even through tough times! The management team does a great job taking care of investors’ money, and the dividends keep dripping steadily into account. Also, while I might have to pay an exit fee, I have the access to these funds at any time.

All in all, good place to park the money for 3 to 5 years with fairly predictable outcome.


Mortgage Investment Corporation is not for you if:


- You are not comfortable with taking risk


Let’s be honest, the great market crash of 2007 is still not that far behind us. Lots and lots of real estate investments went belly up or taken a serious hit, so some people might not be comfortable with the idea of investing into a mortgage company. I know my first reaction was like that! But after reviewing company’s strict lending rules and their historical returns on investors’ money, it became clear to me that the management in charge of investors’ money is absolutely top notch.

Here’s a snapshot of returns investors received over 10 years:


Mortgage Investment Corporation

Mortgage Investment Corporation


Notice how returns have not changed much during our last real estate crash? Yes, the returns went down by 0.4% but never dipped below their hurdle rate of 10 percent. This means their lending practices are very conservative, and their performance doesn’t correlate with real estate market performance in general.

But I’m not going to sit here and tell you this investment is completely safe. The risk is always there, and you have to be comfortable with risk. This is not a magic investment that combines higher than average returns and low risk! Mortgage investment corporations can and do go out of business, so approach this type of investing with caution. Do you homework, read the memorandums, and do research on past performance and current management team.

Check out this awesome checklist for picking MIC to see what you should be paying attention to while considering your options.


- You’re looking for an “exciting” investment.


Putting your money into a mortgage investment corporation is not very exciting. There are no stratospheric returns to brag about. Mortgage investment corporations are not widely mentioned on the news like latest Facebook IPO. You simply put your money in, and it starts dripping dividends into your account in a form of cash distribution or reinvestments. You won’t hear from them unless you receive a statement with your earnings. And if you’re trying to impress your friends with this investment at the next cocktail party, most likely you will put them to sleep explaining what they do.

Some investment can be exciting. For example, one of our investments in solar energy is truly exciting to me because of the difference it will make in Ontario. Green! Solar! Energy! Sounds pretty cool, eh? Mortgage investment corporation on the other hand is a very predictable and boring investment that simply drips dividends into your account. Yawn.



Investing in solar energy

Solar Energy Investment 6

Save Invest your money!


I’m a big proponent of investing money. While a lot of personal finance books and blogs usually focus mainly on cutting down your expenses and living within your means, I don’t think anybody ever got to financial independence solely by clipping coupons.

No, I’m not saying you should not save money. Saving money is great, but I think it’s just a part of the puzzle. If we ever want to reach financial independence, we need to wisely invest our money so it multiplies many times over. This is why I’ve always thought that part of our income should go towards investing.

This is way we’re putting down $10,000 (holy crap, that’s a lot of money!) as an investment. The documents have been signed and mailed, cheque cleared, and soon we’ll receive share certificates along with our first monthly distribution.


Investing in solar energy?


My investment of choice is Solar Income Fund.

Solar Income Fund (or SIF) plans on acquiring/developing and operating a number of solar energy farms, mostly in Ontario. Some solar farms will be brand new, some will be existing operations. Just like income-producing rental homes, once built solar farms can be bought and sold by companies involved in investing in solar energy.


Investing in Solar Energy

Investing in Solar Energy


In case you’ve been living under a rock, solar farms are awesome and environmentally friendly way of producing electricity. An array of solar panels is installed on rooftops, farmland, or just open space to convert solar energy into electricity. Electricity then gets transferred into provincial electricity network and the owner of the farm gets paid for the amount of electricity produced. Solar panels don’t need to be maintained and are very self sufficient. They’re even insured against catastrophic events which would stop them from producing electricity and thus income.


Investing in Solar Energy

Investing in Solar Energy


The Solar Income Fund management team will select solar farms based on their viability, location, power-purchase agreements in place, and long term sustainability.

What makes investing in solar energy in Ontario appealing is the fact that Ontario government guarantees their feed-in rates for 20 years. This means once the purchase rate for a solar farm has been established and the system has been hooked into the system, the price Ontario government will pay for the electricity produced is guaranteed for two decades. Power purchase agreements (PPAs) remove a lot of risk associated with investing in solar energy simply because it makes the investment very predictable.

Why would Ontario government do this? This was part of Green Energy Act that was passed in 2009. Basically, Ontario plans to get away from energy produced by coal to solar energy because solar energy is much cleaner and efficient. They already shut down 19 coal units and remaining coal plants will be shut down by the end of 2014. The energy they have been producing will have to be replaced by solar energy farms. This is where third-party investors such as Solar Income Fund come in and invest their money into solar energy installations and start producing electricity.



Returns and exit strategy


- The investment pays 9% annual return on investment paid out monthly via cheque or direct deposit. This is what’s called “hurdle rate” - until the company pays this out, the management of the company doesn’t get to enjoy the profits. In other words, it is in management team best interests to exceed the 9% rate of return on investment.

- Any income in excess of 9% is split between the investors and the management team with investors getting 60% of the extra income (while management gets 40%). The excess income is distributed annually to investors.

- This is not a liquid investment that you can buy and sell any time you want. Unlike public company stock that can be bought and sold on the open market, this is a locked investment. Once the capital is raised, the fund is closed for further investments and money is put towards purchasing of solar farms. The management plans to sell the fund to an institutional investor (bank, investment company, pension fund, or anyone else looking for a stable income producing investment), and return the capital to investors with an upside profit.

- Income produced with this investment is very tax-efficient. Capital gains are another story though.


Risks and concerns


Just like any investment, Solar Income Fund comes with risks and concerns. After mulling them over, I still went ahead with the investment since I think risks are well managed and thus minimized. But here are a few things that crossed my mind:


- Ability to produce consistent income.


This was my first concern about this investment. Nine percent return seemed high comparing to other dividend paying companies, right? But after looking at some numbers, nine percent looked very attainable. Solar power installations are money making machines! Once they’re built, they don’t require any expensive maintenance. Solar panel manufacturers guarantee their performance. The amount of money solar farm can produce can be predicted in advance given location and technical data.

Once the solar farm has been purchased or built, the money just keeps flowing in. Imagine being an apartment building landlord with extremely predictable tenants. Also, imagine that the government of Ontario guarantees that rent checks will keep getting mailed to you. All of a sudden, the risky business of being a landlord becomes very predictable and profitable.


- Flavor of the month investment?


As soon as I heard “solar energy”, I thought I’m about to hear a lecture on how green this investment is and how awesome it is for the environment. Solar energy has been around for ages by now, and always been a bit of hype. But solar energy in Ontario is there to stay. Ontario government guarantees their solar energy rates for 20 years, so the income that can be produced with solar energy isn’t going anywhere any time soon. Yes, it is a green investment, and will make a huge difference on Ontario’s environmental footprint. I’m super excited to be investing in solar energy because it’s green and pollution-free. But it will also produce income and hefty return for investors in the mean time.

Since 2003, Ontario reduced their coal-fired power use by 90%. By the end of this year, they plan to shut down remaining power plants, and make up for the loss in their energy output with solar farms. Almost 90% of solar farms installed in Canada are located in Ontario. Given all of this, investing in solar energy doesn’t sound like flavor of the month, more like a fundamental change in energy business in Ontario (with rest of Canada to follow, I hope).

By the way, the biggest players in solar energy market in Ontario are TransCanada and Enbridge. I don’t think they’d invest over one billion dollars combined in solar energy if it was just a flavor of the month investment 🙂

Heck, even Dragons Den moguls agree that they missed out on a great opportunity when it comes to investing in solar energy (scroll to 10 minutes 30 seconds mark):


- Experienced management team?


You can have a great business model and awesome prospects for profit, but an inexperienced team can ruin any business and you’ll kiss your money goodbye. After watching enough Dragons’ Den episodes, the role of the management team seems like a paramount factor in business success. This is why you should only invest in companies that have excellent management teams with lots of experience.

It just so happens that these cats have plenty of it. This is not the first solar energy fund they’re starting in Ontario. Including this one, they’ve started five solar energy funds; some of them already exited (have been purchased by an outside investor) with hefty returns touching on 18-19% (not too shabby!). While past performance doesn’t guarantee future results, this still instills confidence in their management team for me. I think my money is in good hands!


What’s next?


Now we’re just looking forward to receiving monthly checks in the mail that will put to use by investing it further into something else. When the fund exits and gets sold to an institutional investor, there should also be an upside return, which will come back to investors along with principal. It might take a while, but it sounds like the money will be hard at work all this time.

Also, next time I’m in Ontario, I really want to visit some of these solar power farms in person just to see my money at work! If this ever happens, I promise to post a picture of me right next to a solar panel! 🙂



Three things I wish I knew before investing in mutual funds

Investing in mutual funds 2

Investing in mutual funds is a great idea


One of my core beliefs is that you have to put money aside and invest it to make it grow. Mutual funds were my first choice for investing back when I’ve started educating myself about investing money in general.  Simply saving the money in your bank or purchasing GIC’s is a sure way to lose money because of inflation. Inflation will slowly eat up your savings, and Guaranteed Investment Certificates (GIC) returns are extremely low and won’t protect you.

Investing in mutual funds

Investing in mutual funds

Investing in mutual funds sounds like a great idea for beginners, and in most cases mutual fund investing is a very appropriate choice. Mutual funds are extremely easy to purchase - if you can do online banking, you can purchase mutual funds. They’re diversified and in general it’s hard to lose all of your money with mutual funds. And what’s most appealing to me - you don’t need to manage them. You basically buy into a fund that is managed by a professional team; you personally don’t need to do anything but open up statements once in a while and watch your money grow (hopefully).

These were the reasons why one day I’ve decided that mutual funds are the best thing since cheese you put on sliced bread, and searched for a mutual fund company representative in my area. After sitting down with him, most of my savings that were sitting in the bank were used to buy mutual funds, and for the next little while I felt like Gordon Gekko in the making - after all, I now owned tiny pieces of some very large companies and large pieces of very tiny companies.

And in all honesty, it was a good learning experience for me - but I wish some of the things I’ve learned later were known to me before I bought my first mutual funds.


Mutual fund salespeople have to get paid


When you walk into a brokerage company ready to start investing money in mutual funds and start talking to an agent, make sure you know how they get paid. While it might be an awkward question to ask, I think this is one of the most important questions that need to be answered before any transaction takes place because not all mutual funds sales reps are created equal.

Quite a lot of them are paid on commission - these are usually employees of larger brokerage firms. They won’t charge you anything to do an analysis of your financial situation, and will purchase mutual funds for you through their company. Now, since nobody is working for free, the question is how do they get paid? They might receive a salary from the brokerage company, but in most cases, the majority of their income comes from commission paid by mutual fund companies for recommending their product. In some cases, sales commissions are their sole source of income.

This is where things get interesting -  depending on the mutual fund their commission may vary. Some mutual funds choose to pay a higher commission for recommending their products, which in turns creates a conflict of interest, at least in my mind. If product A pays me $5,000 commission and product B (which may or may not be a better product) pays $2,000 commission, can you trust my opinion? My spider sense is tingling, and so should be yours.

Others are “fee only” consultants which means you pay them an up-front fee for doing an analysis of your financial situation, and making recommendations - which funds to purchase or how to re-balance your portfolio. This is more a “do-it-yourself” approach as then you can purchase recommended mutual funds through an online broker (which isn’t that hard) or your bank. Personally, I’m more comfortable with this approach because one might argue the advice you get from an independent consultant isn’t affected by commission payments.

If I was to go back in time and start investing in mutual funds all over again, I would try to deal with “fee-only” consultants simply because of trust issues. It is my personal opinion (underline “personal opinion”) that when somebody gets paid a set fee, their recommendations will be less biased, and geared towards products that are better for me, not the ones that pay higher commission.

Word of advice: when investing your money in mutual funds, make sure you know how your broker or consultant is getting paid. While it might be an awkward question, you must know this and keep it in mind when making your purchasing decisions. 


The fund management needs to get paid too


All actively managed mutual funds charge for their services. After all, people who make buying and selling decisions around the fund can’t do it for free. They also need offices, marketing budgets, and fancy coffee for visitors. In most cases, mutual funds pay a percentage of their assets to a management team and that amount is called MER (management expense ratio). You can find the percentage paid to management in the prospectus document given to you (or find it online). Here’s a typical breakdown of management fees:

Investing in mutual funds

Investing in mutual funds

You have to be aware of the MER charges when investing your money in mutual funds because they do affect your returns. After all, if your fund gained 10% last year, your actual return would only be (10% - expense %). Some funds have higher expenses, some have lower ones. For example, index mutual funds almost always have lower expense ratios which make them far more appealing than mutual funds pushed by big brokerage companies, sometimes as high as 2.7%. You might not think this is a huge amount, but over the long period of time even 1% difference in MER charges makes a huge difference on your overall portfolio. If you feel like playing around with numbers, check out this calculator to get an idea how MERs can affect your portfolio performance.

Also, keep in mind that fund’s management team gets paid either way. Whether your fund loses money or makes money, the MER amount is being taken out of the mutual fund and transferred to mutual fund management team. While some people might say that actively managed mutual funds deliver better results and thus make up for higher expenses, a number of studies find that only a minority of mutual funds beat the market.

Personally, I wasn’t aware of management expense ratios when I was taking my first steps into investing world. To me all funds sounded the same, and the only number that mattered was their performance. If I was to start investing in mutual funds all over again, I would stay away from funds that charge high MER and instead look into cheaper index funds or ETF funds.

Word of advice: when investing your money in mutual funds, be aware of management expense ratios (MER), look for them in prospectus documents, ask your broker about them, and keep them in mind when choosing between funds.


 Some funds have deferred sales charges (DSC)


Most mutual funds have sales charges associated with them. Sometimes they’re charged right away and taken out of your investment thus reducing your buying power (these funds are known as front-loaded). Others charge you a sales charge when you decide to sell (back-loaded) and the amount  is prorated to the length of time you’ve been holding your investments in this particular mutual fund. Believe it or not, there are also no-load mutual funds that don’t charge sales charges when you sell them.

Here’s a typical deferred sales charge (DSC) schedule for an actively-managed mutual fund (keep in mind that numbers might differ from fund to fund):

Investing in Mutual Funds

Investing in Mutual Funds

What does it mean to you? This means that if buy $10,000 worth of back-loaded mutual fund and decided to sell it the next day, you will get charged 6% of your investment. Most of this sales charge pays for the commission the mutual fund paid out to your broker when you put the transaction through.

Now, is this a big deal? If your investment horizon is several decades and you’re in for a long haul, the deferred sales charge might not be a big deal to you. But if you’re just starting investing in mutual funds and you’re not sure how long you want to hold this particular fund, you might want to go with no-load funds. In my case, I had to pay deferred sales charges when I’ve decided to change my investment strategy and ended up selling my mutual funds.

Word of advice: before you complete the transaction, make sure you’re aware of any DSC charges attached to funds you’re purchasing. Ask your broker - are these funds back-load, front-load, or no load at all? If your investment horizon is short, you might want to look into purchasing no-load mutual funds.



Can An Average Person Become a Millionaire?

Lottery is the only way to become a millionaire for an average person!


Become a Millionaire

Become a Millionaire


This is the message being repeated over and over in today’s media - rich people are getting richer, and poor people are getting poorer. If you’re not born wearing a top hat and a monocle, your destiny in life is to be poor, and to work till you drop dead. Lottery and inheritance are the only legit ways for an average person to become wealthy and retire with dignity. The only way around is to get lucky and get yourself a union job with pension unless you can invent Google or Facebook. You won’t become a millionaire unless you start your own business.


Rubbish. Poppycock. Nonsense.


Your chances of winning a lottery are virtually non-existent. Inventing Facebook is kinda hard because it’s already up and running. Union jobs are scarce these days, and they are slowly going away, unfortunately. Inheriting money does happen - but do you really want to wait for it? Not to sound morbid, but do you really want to live your life waiting till your well-to-do uncle decides to expire? Besides, it still requires a well-to-do uncle with no kids - and he has to like you!


I must say, I’m amazed at the amount of this misinformation flying every which way in our society. We hear it from newspapers and magazines. In turn, we tell it to our kids and chat with neighbors about it. In our minds, there are two worlds - world of poverty and average everyday struggle, and a magical world of wealth. And nobody can cross the bridge unless they get “lucky”…


Let’s take an average Canadian


Here we have an average 20 year old young male, let’s call him Arthur. He may or may not have a degree. May be decided to take a couple of years off after high school to find himself - whatever that means. Arthur works at Starbucks serving your  everyday morning fix - large caffee latte with a yummy blueberry muffin (can’t you tell I’m hungry?). Not exactly a high paying glamorous position, but Arthur is a down to Earth guy and isn’t high maintenance.  No rich uncles, no union jobs for Arthur, and definitely no prospects of starting another Google. Can our average guy Arthur become a millionaire?


Let’s say Arthur decides to save $100 a month - nothing huge. What’s a hundred bucks to Arthur? Not a big amount of money, average young adult pays a little bit more in cell phone fees these days. Arthur takes $100 every month (or $50 every time he gets paid), and puts it into mutual funds. He’s not a financial nerd by any stretch of imagination, he simply buys them every month without changing his lifestyle or making big sacrifices. And he keeps doing it so for 45 years - through out his adult working life.


He loses his job at Starbucks for dropping muffins on the floor, and starts working at Home Depot - but every month he habitually puts $100 into mutual funds. Arthur goes back to school, picks up a trade and becomes a plumber - yet still every month puts away that hundred bucks into his investments. He even moves out, and meets a very special girl named Cindy and they settle down, have babies, move a few times, have a few fights but make up, go on vacations, fill up a few albums with photos, and finally turn 65.


How much money does Arthur have in his investment account?


By the end of his working life, Arthur is just a bit shy of being a millionaire - he has $996,202.87 sitting in his account to take care of his retirement expenses. Arthur, the average kid with no special skills and very questionable skills of handling muffins, no rich parents, no lottery winnings or Google fortunes, retires as a millionaire and lives happily ever after with Cindy occasionally visiting his kids. The only thing Arthur had going for him was time - and time turned his monthly $100 into a million bucks.


Become a Millionaire

Become a Millionaire


What if Arthur did few things differently?


  • If Arthur waited till he turns 30 to start saving money, he would only have $376,312.27. While it’s nothing to sneeze at, it certainly shows that time works to your advantage - and more time you have, the better results will be. Lesson here - start early. Preferably in your teen years.


  • If instead of saving $100, Arthur decides to save $200 (or teams up with Cindy by contributing $100/month each for the future of their family), his investment account would hit cool $1,904,937.16.


  • If Arthur decides to inflate his savings goal by 5% each year ($200/month first year, $210/month next year, $220.50/month year after that, etc.), Arthur and Cindy would retire as multi millionaires with $3,318,753.74 sitting in mutual funds. I think they’ll be just fine.


Play around with this calculator and plug few numbers for yourself. See what can be done over time with just small monthly contribution. For the sake of argument, I picked 10% as market return throughout - which is very realistic - and $1200 as starting capital.


Become a Millionaire

Become a Millionaire


An average person can become a millionaire


In my mind, there’s just no excuse for anybody born in Canada NOT to retire as a millionaire. And I’m pretty sure everybody knows that saving over time can turn money into more money, but not everybody understands how drastically time can help you. You don’t have to be a financial nerd to become a millionaire - picking mutual funds is as easy as checking your engine oil. You don’t need to make huge sacrifices and eat cat food trying to save every penny - a hundred dollars every month will do. What’s $100/month to you?


The main point of my rant


Next time you hear somebody going off about how average people can’t get ahead, think of Arthur. How an average young adult with some determination can become a millionaire - just by sacrificing few dollars a day to save that $100 at the end of the month. If Arthur with just $100 can do it, so can anybody. No need for lotteries or rich uncles.

Best Personal Finance Podcasts

What are podcasts?


Well, before I talk about best personal finance podcasts, let me explain to you what podcasts are. Podcasts are digital radio and video shows that are available on your mobile devices completely free of charge. Unlike radio stations, they’re recorded offline, and uploaded for everyone’s enjoyment. Most mobile devices (iPhone/iPad, Blackberry, Android phones, etc.) have an app that allows you to search, subscribe, and listen to a podcast of your choosing. Think about them like your favorite TV show - once a new episode of Top Gear comes out (which happens to be one of my favorite shows), your iPhone downloads that new episode automatically and signals you it’s ready for your enjoyment. You can even listen to them on your laptop or PC, but I prefer a mobile device.


best personal finance podcasts

best personal finance podcasts


There is a mind boggling number of podcasts out there on different topics. Comedy, philosophy, business, education, etc. Basically, pick a topic, and there’s probably a podcast about it - even if it’s raising bunnies for food in captivity:)  Most of them are audio-only, but there are some video podcasts as well. Just hit “Podcasts” app on your mobile device, and you’ll see thousands of them ready to be downloaded. My data plan on my phone is pretty pricey, so I always download all of my podcasts over WiFi. There are settings to manage that aspect on both Blackberry and iPhone.

Personally, I love podcasts. For some reason, it’s easier for me to listen to things as opposed to reading - that includes podcasts, talking to people on the phone, or listening to audio books. For that reason, podcasts are ideal for me. Listening to some of them became almost a ritual to me and a very good habit. Just one of the things I do to keep myself educated.


Why are podcasts so awesome?


First of them, they’re free. Second, they’re educational in nature. Third, they let you transform the time you’re wasting into time well-wasted. For example, one of my habits is washing the dishes and tidying up our living room at the end of the day. It’s almost like a ritual for me before winding down for the day. Instead of simply washing dishes, I listen to a podcast AND wash dishes. Keeps me from getting bored - and also keeps my wife happy as she hasn’t touched the dishes in years.

I also spend considerable time driving sometimes - nothing like having 3-4 hours of entertainment and education saved up for a long trip.


Best Personal Finance Podcasts


Following are some of my favorite podcasts on the subject of personal finance. Hosts of these podcasts are very educated individuals, podcasts are very educational in nature, and bring a lot of value to listeners. Best of all, they’re all free. Some of them have commercial spots, but they’re easy to ignore.


Motley Fool Money


Motley Fool Money is a great resource on investing. They cover major events in investing world, economy, and business news. Their weekly podcast comes out on Friday, and covers major events that took place that week. They also have an interview or two on different subjects, and some rather entertaining banter. After listening for a while, you start to understand how some of the publicly traded companies perform, learn to make educated guess about investments, and simply stay “in” on business news. Highly recommend!

They also publish Market Foolery podcast - this is a daily podcast about stock market events. If something major is happening on the stock market, they’re probably discussing it in these very short (10-15 minutes) daily podcasts.


Brian Preston’s “Money Guy”


Brian Preston runs a wealth management company somewhere in the south of US. Every other Friday, they put together a podcast about personal finance and investing. Unlike Motley Fool described above, they mostly cover topics of personal finance and investing from the point of view of average people. They put together podcasts full of useful information. Though their personal finance philosophy is a bit different from mine, I listen to these guys religiously. My only grumble about them - being from US, a lot of their information on taxes and investing is very US specific. But general advice and tips and tricks are absolutely fantastic. I consider it to be one of the best personal finance podcasts out there.


The Dave Ramsey Show


Dave Ramsey is an award-winning author of several books and a host of Dave Ramsey radio show with an enormous and cult-like following. Though not very known in Canada, his books are absolutely fantastic for somebody who is stuck when it comes to personal finance. Motivational value of his books alone is out of this world. His philosophy on money and personal finance is very old-fashioned, and very simple - yet very effective. His daily podcasts are about 40 minute long recordings of his daily radio show and features callers with specific questions and Dave’s advice on how to solve their money problems. Sometimes some of his rantings too!

He can be a bit controversial for some people, but overall it’s a great podcast to listen to keep yourself motivated while fighting through money problems. Nothing like listening to people scream “I’m debt free!!!” to keep yourself going!


Stacking Benjamins (added January 31, 2015)


Here’s what I love about Stacking Benjamins podcast. Two fellas by the name of Joe and OG mastered the perfect balance between a serious show that talks about personal finance and entertainment. A lot of personal finance podcasts tend to be overly dry. Stacking Benjamins on the other hand makes the process of learning about money fun and entertaining.

I love the fact they go outside of the normal financial advice and talk about alternative investing and matters related to personal finance such as career development and education. They don’t try to sell you on services or products, and offer genuinely great personal finance advice.

If you want to pick just one personal finance podcast to listen to, I would absolutely pick Stacking Benjamins. You won’t be disappointed.


Money Plan SOS!


Money Plan SOS is a podcast of  Steve Steward, who is a personal finance coach. His weekly podcasts are more about an average person fighting for his money. He doesn’t touch much on business in general, more on things about how you personally can improve your personal finance well-being. While he closely follows Dave Ramsey’s teachings (being one of his approved coaches), Steve injects a lot of his personal thoughts into his teachings that make this podcast very valuable. Unlike other financial coaches, he shares his mistakes and struggling as well as successes - and it tends to be very personal.


Derek and Carrie’s Better Conversations on Money and Marriage (added July 15, 2014)


Why haven’t I discovered this podcast before? I’ve recently discovered this podcast and just had to add it to my list of best personal finance podcasts. It would make my life so much easier! In all honesty, it took way too much energy and time for me and my wife to work out the best way to deal with money as a family. Heck, I didn’t even know how to talk about money at the beginning. Many days were lost to heated discussions on how to spend money and how we can improve our financial situation. Thankfully, we were able to work out all the kinks without cutlery flying across our house, but there were a few close calls.

Derek and Carrie run a podcast with focus on how people relate to money in their marriages. They discuss topics of talking about money with your spouse, creating budgets, pros and cons of combining finances, and many other topics. If only I knew about this podcast sooner! If you want to improve your marriage and communicate better with your spouse on money topics, this podcast will be invaluable to you.


Listen, Money Matters! (added July 15, 2014)


Sometimes one can find the process of learning a bit tough if they can’t relate with the person presenting the information. For example, I’m a younger person (ok, younger’ish), and I can’t listen to a boring university lecture about compounding interest or mutual funds. In most cases, I’d like to learn from people just like me, who have same challenges, fears, and inspirations.

Well, Listen Money Matters podcast is right up my alley. Matt and Andrew speak about personal finance without holding anything back. They’re not university professors teaching economics, they’re your average everyday dudes who just happen to discuss personal finance and investing world. They speak my language and I can relate to them on many levels. Heck, they even discuss drinks they’re consuming at the moment!

If you’re looking for people you can relate with and learn some valuable lessons about money and investing, give Matt and Andrew’s podcast a try!



How do I start listening to podcasts?


best personal finance podcasts

best personal finance podcasts

Just hit Podcasts app on your iPhone or Blackberry. At this point, the app will let you browse the entire library of podcasts, or search for specific ones. I highly recommend you to check out these specific shows as I consider them the best personal finance podcasts. Hey, you have nothing to lose - all of them are free. Think of your car as a university on wheels - instead of just driving to work, might as well drive to work and educate yourself. Or wash dishes - whatever is it you’re doing can be used as a chance to educate yourself on personal finance.

I love the fact they go outside of the normal financial advice and talk about alternative investing and matters related to personal finance such as career development and education. They don’t try to sell you on services or products, and offer genuinely great personal finance advice.

Investing in Canadian Farmland

One of my core believes when it comes to money, is that you have to invest your money and make it work for you. I don’t want to work for money for the rest of my days - at some point, I’d like to get the money working for me so I can relax a little. Wouldn’t it be great to only work if I want to? To have a pile of money in different investments that produce a healthy return?

This is one of the reasons why several years ago we’ve decided to set money aside and actively invest them. Before that, we would just save money in savings accounts - but at some point it started to look a bit like hoarding - sure it was nice to have it, but with whopping 1-2% returns on our savings, we were basically breaking even after inflation. We could put money into stocks and mutual funds, but I’ve personally had bad experience with mutual funds before (more on that later), so we started looking into alternative investing options. Some interesting opportunities were discovered - one of them was investing in Canadian farmland (mainly Saskatchewan).

Investing in Canadian Farmland

Investing in Canadian Farmland

Why would anybody think of investing in Canadian farmland?

Well, there are several reasons for it:

  • Investing in farmland provides an excellent security - it will never go to zero. Stocks can go to zero. Banks can go bankrupt. But farmland will always be worth something, it’s a real hard asset, and the value will always be there.
  • Supply of farmland is decreasing which puts an upward pressure on its prices. For example, Wisconsin lost almost 500,000 acres of farmland between 1997 and 2002.
  • It is fundamental to life. We need farmland to survive because food comes from farming. Other investments - for example gold or silver - might sounds like solid investments, but at the end of the day you can survive without them just fine - but try surviving without food!
  • Investing in Canadian farmland represents stable, income producing assets that are going up in value and serve as an excellent hedge against inflation. Average annual return to owners of Saskatchewan farmland is around 10% (1972–2003).

What is farmland worth?


Farmland values have been steadily going up across Canada and US. Recently, in Canada they’ve reached new record highs. The main reason for it is diminishing supply and increased pressure on production. In other words - people need more food, but no new farmland is being made. In some areas, the prices per acre doubled in less than 3 years!

Here’s a picture of farmland values per acre in various states and provinces:

Investing in Canadian Farmland

Investing in Canadian Farmland

As you see, farmland prices in Saskatchewan are still low comparing to other provinces and various states - but they’re going up in value rapidly. In 2012, farmland prices in Saskatchewan went up by almost 20%.

How does one invest in farmland?

It comes down to basically two ways:

  1. Buying physical farm and leasing it out to a local farmer who will pay you a rent payment out of his business. One blogger that I read on regular basis did exactly that! He bought a farm (on credit which I can never understand, but hey…), leased it out to a farmer, and now receives monthly payments. It was very interesting to follow his adventure - from scoping out the location, to putting down the deposit, and to finally getting his first check in the mail. But while it is certainly exciting, this approach is very hands on, and you basically have to score a direct hit - buy an excellent farm, find a reliable farmer, and pray nothing bad happens. It reminds me of absentee landlording and how tough it can be.
  2. You can buy into a private investment fund that specializes in investing in Canadian farmland. That’s exactly what we’ve done a while ago. AgCapita is a Calgary-based investment company that raised $30M and bought 45,000 acres across Saskatchewan. We’ve limited our investment to $15,000 for now, but looking into buying more shares sometime this year. To be honest, I like this approach better - while it’s certainly doesn’t have the same excitement as owning a physical farm, I can sleep well at night knowing that a team of professionals who know everything about investing in Canadian farmland work hard for me by investing my money - they buy good properties, rent them out, and make sure returns are there. Their portfolio is worth close to $50M by now and annual compound returns reached 20% last year!

Some interesting facts about farmland:


  • Saskatchewan contains almost 40 per cent of the farmland in Canada, close to 64M acres.
  • Saskatchewan farmland is of the highest quality with great access to water, and with warming climate its productivity is expected to rise even further.
  • Saskatchewan farmland prices were held down artificially until recently with restrictive laws - and now they have a lot of catching-up to do to reach other provinces.

I’m Financial Underdog, and I could never be a farmer. Something about waking up at 4 am just doesn’t appeal to me…