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Nelson Smith

Freelance writer. Contrarian investor. Watcher of baseball. Owner of financialuproar.com. At least my mom thinks I'm funny and/or handsome.

Mar 302015
 
"I prefer the term 'little investor.'"

“I prefer the term ‘little investor.'”

You know how all the politicians talk about the middle class like they’re a group of people who can turn broken monitors into delicious pizza? The media does the same thing with small investors. “Oh, the financial industry is so bad! Only the rich can navigate it successfully! Whatever will we do with the small investors?!?!?!?” (hits fainting couch).

Okay, it’s not that bad. They do have a point.

Let’s say you’re just starting out and you have $10,000 to invest. Your options include:

  • Go to a bank and plunk it into some mutual funds.
  • Go to a fee-only financial planner and get them to tell you what to do.
  • Ask your smart friend what to do with the money, hoping your smart friend doesn’t just talk a big game.
  • Find some website and do whatever the guy there says he’s going.
  • Put it all into dividend stocks which are guaranteed to go up and probably turn into millions. That’s the power of dividends.

Most people are likely to choose option A. They go to the bank, ogle the attractive young lady selling the funds, and a half an hour later they walk out the proud owner of some balanced fund. It’s easy, but maybe not so effective.

There are downsides to this, of course. Mutual fund fees are worse than cancer in puppies. That 1-2% fee will result in thousands of dollars in losses over the lifetime of a portfolio. So we tell small investors to do something else, like visit a fee-only financial planner.

I don’t want to disparage what the fee-only folks do, because I’ve met a few of them and they’re really quite pleasant and knowledgable. But dear God, there’s no way a small investor should be stepping into the office of a planner that charges more than $100 per hour. It’s just not worth it. “What should I invest in” turns into a question that costs $500, complete with charts and pie graphs and other things that aren’t adding any value. There’s a place for fee-only planners. Telling 23-year old recent grads what to invest in isn’t one of them.

So what’s the solution? Traditional financial advisors rip off small investors with funds that cost too much. Fee-only planners aren’t the answer either, at least until the small investor becomes more than that. And for every piece of good content online about investing, there’s 14 more that suck worse than the guy who bought Danier Leather.

Here’s what I propose we do to help the small investor.

Nothing.

We live in this world where we believe that we can just transfer our problems to someone else. Too lazy to count out your change? Dump it in the dumbest invention in the history of the world, a Coinstar Machine. Too busy to ensure you’re not living in filth? Just hire someone to show up and clean up after you. We refuse to learn to do things because we’re either too lazy or too busy, even though we binge-watched 14 episodes of Deadwood on Netflix over the weekend.

Like with anything in life, you have to learn the hard way. And if you’re not interested, expect to pay dearly when it comes to getting someone else to do it for you. It’s easy to build your own portfolio using ETFs — provided you know how. If you’re a financial newbie, it’s a lot tougher. It’s not impossible, but it will involve some reading and some paperwork. If you’re not willing to do that work, then you deserve to pay high fees. 

In a world where literally any piece of information is available to you in a matter of seconds, you have no excuse about your lack of education in something, whether it’s investing or learning how to cook a piece of chicken. I have all the sympathy in the world for someone who screws up trying something new, provided they actually tried. I have zero sympathy for someone who just gave their money to a banker for twenty years without lifting a G.D. finger to Google the alternatives.

No, the banker didn’t rip you off. Your laziness ripped yourself off. There’s a big difference between those two statements.

It is not a bank’s job to “take care” of your investments. That’s your job. The bank’s job is to a) lay out the terms of the agreement and b) not outright defraud you. If they say they’re going to charge you 10% per year and you sign off on it without knowing the consequences, that is not the bank’s fault.

I’m not saying to never go and see a professional, because they exist for a reason. But here’s the typical exchange between investor and advisor:

“I don’t want to lose much money.”

“Okay, we’ll put you in a nice balanced fund. Lots of bonds, with some equity exposure.”

“Great!”

(Five years later)

“WHAT THE ACTUAL HELL IS WRONG WITH YOU? I’M GETTING CRUSHED BY THE MARKET. YOU ARE USELESS AND I HATE YOU.”

“But it’s a bull market in equities. That’s the nature of the fund. In fact-”

“EAT A BAG OF POO AND DIE.”

We end up with a bunch of small investors who don’t really understand what they’re investing in, and blame their portfolio underperformance on anyone but themselves. They transferred the risk to the advisor, so it’s not their fault. But it is their money, and they should be a better steward of it.

A little bit of education goes a long way, especially when you’re first starting out. That’s really all you need in order to set up a passive portfolio that’ll do pretty well. If you’re not willing to put in the small amount of work it takes to set something like that up, I say you deserve to have a lifetime of underperformance. Small investors do get screwed. But most of it is self-imposed.

Mar 272015
 
"I had two wives, so this isn't really anything I can't handle. My place at 8?"

“I had two wives, so this isn’t really anything I can’t handle. My place at 8?”

You know how I make fun of other PF folk for having a giant hard-on about Tangerine savings accounts and paying down debt? Well now the shoe is on the other foot. Might as well get this over with.

Hi, my name is Nelson, and I have a Warren Buffett obsession. I would like to quit this obsession, but I cannot. It’s probably the closest my life will ever come to that show Intervention, which I will admit I actually used to watch.

I’ve written about Buffett approximately 3,291 times on this here blog. I busted some Warren Buffett myths, had a mock interview with him that ended very badly, and I examined his ten-year record here. There’s more Buffett stuff in my archives, but let’s stop before this turns into the financial blog version of a 12-year old at a One Direction concert.

And so it’s because I <3 the man so much that this next sentence brings me a great deal of sadness. But I’m beginning to be so over Warren Buffett.

Generic Debt Blogger approves of that last sentence.

Have you watched a Buffett TV appearance lately? God, it’s painful. It’s the business equivalent of watching a sports interview, but with a few more jokes thrown in. Buffett is entertaining as all hell, but he doesn’t actually say anything. The only company I’ve heard him say negative things about is Tesco, and it’s way over in BadTeethLand. Nobody in England gives two craps if Buffett talks badly about Tesco.

So you get him on TV cracking jokes and saying such profound things like he’s bullish on U.S. stocks. HOLY CRAP HOW WHATEVER THE OPPOSITE OF GROUNDBREAKING IS. It’s entertaining, but I’m not sure how valuable it is.

(By the way, if you’re looking for entertaining and valuable, I suggest listening to Charlie Munger. That man has no filter and it’s hilarious.)

Look, I’m not saying you should disregard Buffett altogether. One of the reasons why I’m writing a post like this is because I’ve spent a lot of time studying him over the years. There’s only so much you can learn from one person before they start to repeat themselves, me excluded of course. Buffett also tends to dumb down his advice a little so it can have an impact on more people. If 18-year old Nelson was hearing some of it for the first time, he’d probably think it was pretty profound. But 31-year old Nelson is pretty bored with it.

So why write this post, whiner? 

HEY. WHO ARE YOU CALLING A WHIN- oh wait.

Among all the vague platitudes and his folksy wisdom that doesn’t actually say much, there are some real gems. And surprisingly, my favorite Buffett-ism isn’t even really about investing. Take it away, Warren:

“The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard. I always look at it this way. I say, ‘Lookit. Would you rather be the world’s greatest lover, but have everyone think you’re the world’s worst lover? Or would you rather be the world’s worst lover but have everyone think you’re the world’s greatest lover?’ Now, that’s an interesting question.”

I think most people answering Warren’s question would pick the first choice. They’d take having the skill over the prestige.

But reality tells us that no matter how many people answer that the opinion of their peers isn’t important to them, the fact is perception is very important to them. How many people do you know who claim to value travel above material things that still have nice things? I know more than a few, that’s for sure.

When it comes to the inner scorecard, most of us are hypocrites. We not only care about what our peers think, but we care deeply. Even if we just pick and choose the spots where we try to keep up with the proverbial Joneses, the fact is we’re still falling into that trap, albeit in a small way.

By the way, who are the Joneses trying to keep up with? Maybe they’re the ones with the solid inner scorecard and they’re just doing whatever floats their boat.

We’re not getting any better at this problem either. I don’t know about your Facebook, but mine is 90% full of people bragging about their lives with 27 people encouraging it because it’s more polite to hit the Like button than admit you’re jealous as all hell. Suddenly, your normal life looks pretty crappy in comparison, even though you’re comparing your normal life to everyone else’s Facebook lives. That’s not just comparing apples to oranges, it’s more like comparing apples to turds.

Buffett very much just found what made him happy and went with it. Getting rich was always the desire, but it was really just a byproduct of being really good at what he chose to do. As long as he knew he was on the right path, all was good. As you learn more about Buffett’s life, you come to realize that he cared deeply of what people thought, just not enough to conquer the inner scorecard. That’s the important lesson. Let the inner scorecard be your guide, and everything else be noise.

Mar 252015
 

In Canada, balanced funds are more popular than poutine drizzled with maple syrup all while watching the hockey game and saying aboot. Stereotypes are also pretty popular, at least in this corner of the interwebz.

This is especially true for the 96.7% of Canada’s population that are Baby Boomer age or older. This group of people want exposure to the equity markets, but accompanied with large portions of bonds and other safer assets. It’s a smart portfolio move to make when you get a little older, and the income spun off from these funds is pretty essential for someone who no longer goes to work.

So they buy a balanced fund, with typically consists of a 50/50 mix between equities and bonds. Let’s take a little closer look at a couple offered by big Canadian banks, starting with Bank of Montreal.

All info from Morningstar, which is the best when it comes to stuff like this.

All info from Morningstar, which is the best when it comes to stuff like this.

So you’ll notice a couple of things. First off, the management expense ratio (MER) is just 1.57%, a fair bit lower than the usual 2-3% Canadians are always said to be paying. That’s hardly cheap for a management fee, but it’s not outrageous, y’know?

The fund’s largest holdings include the usual suspects — government bonds, a couple of ETFs (Canadian Dollar hedged, of course), and banks that aren’t Bank of Montreal, because apparently this fund manager WANTS to get fired. According to Morningstar, the fund has a yield of 3.5%.

Let’s look at another one, this time from RBC.

Screen Shot 2015-03-24 at 12.09.54 AM

This one has a 50/50 split between equities and bonds, with the largest holding being Royal Bank’s stock. FINALLY, someone is toeing the company line. You NEVER see that with banks. The yield is a little less than the competing BMO fund, but the MER is a little lower and that fund is a 60/40 equity to bond mix. Essentially, you’re getting paid a little more to take more equity risk.

Let’s keep going. This is the TD Balanced Income Fund. Not to be confused with the TD Balanced Growth Fund, or the TD Comfort Balanced Growth Portfolio, or the TD Emerald Balanced Fund. TD knows who butters their toast, apparently.

Screen Shot 2015-03-24 at 12.48.51 AM

TD, guys. We gotta talk.

This fund… it sucks. Like, it’s the worst fund in the world. Not only has it gotten crushed by most other funds over the last while (hence the Morningstar 1-star rating there), but the MER is 2.24% and it only has a yield of around 2.5% even though it’s a 50/50 split between bonds and equities. Whatever you do, don’t own this.

(Looks at assets under management)

(A single tear slowly rolls down my cheek)

Okay, one more. Y’all LURVE Tangerine, so let’s take a closer look at its Balanced Income Fund.

Screen Shot 2015-03-24 at 12.55.53 AM

 

That’s not a bad fund at all. Morningstar ranks it 4-stars, and it only has an MER of 1.07%, the lowest of the group by far. It also tends to do about as well as the index, probably because the fees are so low. The only issue is the lack of yield, but that’s pretty much comparable with the others. Overall, it’s a solid choice for a balanced fund, right up there with BMO’s.

How to build your own

It turns out that building your own is ridiculously easy. Are you ready?

Just buy equal parts of:

  • iShares S&P 60 ETF, XIU, which yields 2.6%, and has a MER of 0.17%
  • iShares Canadian Universe Bond ETF, XBB, which yields 2.9% and has an MER of 0.33%

And that’s it. You’ll get a fund that:

  • Has a management fee of 0.25%, a whole $25 per year per $1,000 invested
  • A yield of 2.75%, better than many of the balanced funds we looked at
  • A return that’s virtually guaranteed to beat those established funds, especially the TD one
  • Is so easy to manage that Air Bud could do it in between games
  • If you’re worried about interest rates, swap out some of the bond ETF for XSB, the short-term bond ETF

And that’s about it. Rebalance once per year by selling the winner and using it to buy the loser, and you’re in business. Yes, this fund is all Canadian, but a) so are most of the bank-based competitors, and b) if you’re looking for income, it’s best to not screw around with currencies.

More yield?

How about a fund with more yield, but is still simple? Okay, but you’ll have to buy some REITs and preferred shares.

  • 50% XIC, which yields 2.5% and has an MER of 0.27%
  • 25% XBB, which yields 2.9% and has an MER of 0.33%
  • 12.5% XRE, which yields 4.6% and has an MER of 0.60%
  • 12.5% CPD, which yields 4.8% and has an MER of 0.49%

In total, we’re looking at a yield of 3.15%. If you want to increase the yield, give more weighting to the the REITs and preferred shares. You could even add in some high yield U.S. debt, which I think is pretty safe if you buy an ETF of it, but you’d be exposing yourself to currency risk.

International diversification

I’ll build one more model balanced fund, this one with international diversification.

  • 25% iShares MSCI World Index, which yields 1.6% and has an MER of 0.46%
  • 25% XIU, which yields 2.6% and has an MER of 0.17%
  • 25% XBB, which yields 2.9% and has an MER of 0.33%
  • 25% VBG, which is so new it doesn’t have a 12-month yield and Morningstar says it has an MER of 0.00%

I’m not a fan of Vanguard’s Canadian funds, at least for people who need the income. See why here.

You’re looking at a yield of a little over 2% if you assume the new Vanguard fund yields 1.5%, which is the yield of the U.S.-based fund it holds. I can’t say I’d recommend this for someone looking for income now, but it’s not bad if international exposure is something that floats your boat. The fees on this fund would be about 0.30% per year.

If you’re looking to build your own balanced fund, it’s not that hard. Just buy a few ETFs and rebalance once per year. And you’ll save 1-2% per year in fees, which really add up over your investing lifetime.

Mar 232015
 
"I was clean shaven when I went in. Damn, those lineups are long."

“I was clean shaven when I went in. Damn, those lineups are long.”

It ranks right up there with the worst cliches that your mother repeated ad nauseam.

“Take a sweater, or you’ll catch a cold!”

“You lose 90% of your heat through your head!”

“You can be anything you set your mind to!”

“Your father and I don’t love you anymore.”

At best, these expressions are BS half truths and don’t tell the whole story. At worse, they’re just blatant lies that have no business being uttered. No, you can’t be *anything* you might want to be. I’d like to be the starting 1st baseman for the Toronto Blue Jays, but Edwin Encarnacion can do that job much better than I can, even in my wildest fantasies.

Another logical fallacy we need to put to bed is this garbage that you should “buy what you know.”

The theory goes like this. It’s hard to beat the market and get one step up on other investors, so you should take a look at the company you work for, the places you shop, the technology you buy, and the fast food you eat to determine what shares you buy. After all, if you like a company, so should millions of others, resulting in portfolio outperformance. It’s such good advice I once heard Jim Cramer give it to the ladies on The View, because if there’s anything I enjoy, it’s a show about women celebrities chiming in on the latest happenings with ISIS. They seem qualified to give opinions on that.

But here’s the problem, by the time morons like us figure out that a company is doing a good job, millions of other people have figured it out first. Your wife likes Lululemon? Yeah, well so does every other wife and most girlfriends too. By the time your wife catches onto the craze, chances are it’s pretty much over. Sorry, but being able to pick out a shirt than goes with those pants doesn’t exactly make her a fashion dynamo.

Buy what you know doesn’t factor in valuation either. Take the Wal-Mart vs. Costco example.

Everyone LURVES Costco. Vanessa and I got a membership here in Korea, because the store is about a 10 minute car ride away and we can get most of our American staples there for cheaper prices than specialty shops, even after the Korean government tacks on a 10% duty because they hate freedom. We intend to continue this membership when we get back to Canada, even though the closest Costco will be an hour away from where we plan to live.

We are not very smart people, apparently.

Meanwhile, everyone hates Wal-Mart. They regularly take their employees to the back room and beat them with shovels, all while paying them $40 per hour less than minimum wage. They won’t give anyone full-time hours, because then they’d be forced to shell out for health insurance. All they sell is cheap junk made in sweatshops in the crummy part of Bangladesh, where employees work until they die, and the carcass is eaten by the guy who takes his place.

So we have a world where Wal-Mart and Costco are selling the same milk, diapers, lettuce, and cans of beans, but Wal-Mart’s version of doing it is somehow evil, while Costco’s is good. Okay, fine. I won’t try and understand this, I’ll just go with it.

But when it comes to investing, these beliefs are a problem.

Because everyone loves Costco, its shares have surged more than 150% over the last five years, compared to just 52% for Wal-Mart. This puts the stock at a price-to-earnings ratio of nearly 30x its trailing twelve months earnings of $5.12 per share. Sure, Costco is growing revenues at 7% per year, but that’s still an expensive multiple.

One of the advantages everyone talks about Costco having is the membership system. At the end of 2013, it had 72 million members who collectively paid more than $2 billion in membership fees. Those fees are pretty much pure profit, since it only takes someone about 5 minutes to sell you a membership.

But delving into the numbers reveals something interesting. In 2013, Costco made $2 billion. If it wasn’t for those membership fees, it wouldn’t be making any money at all. Looking at it from that perspective, maybe Costco isn’t such a great retailer.

Wal-Mart, on the other hand, is only growing revenue at about 2% per year, because it’s hard to grow a company that does half a trillion in sales by more than a token amount. But here’s the interesting part. Out of its $486 billion in sales, Wal-Mart recorded a net profit of $16.3 billion, for a net margin of 3.4% even without the benefit of selling memberships. That’s almost double Costco’s net margins, and you’re only paying 16.8 times earnings for Wal-Mart stock.

After digging into both companies, I pretty easily found a thesis that questions the validity of investing in Costco. There’s probably more if I kept digging, but nuts to that. I have pretty much zero interest in both companies at this point.

Your chances of stumbling upon a great investing idea by going about your life is minimal. Your chances of finding a great investing idea when you actively look for one is far greater. Costco might be a great company, but is it a great investment? You can’t tell that until you research it.

I can read an annual report and come out knowing more about a company than I can by shopping at their stores or consuming their product. And if it’s a complicated company, maybe you might want to spend some time googling other people’s analysis. But the point is this — you can learn about other companies.

Limiting yourself to the largest companies in the land is a good way to become a closet indexer. There’s nothing wrong with indexing; I think most of the people reading this would be better off if they indexed. But it’s silly to try and build your own better index using the largest 100 stocks in the world. When it comes to large-caps, you’re never going to get a knowledge advantage. So stop trying.

Buy what you know is actually great advice, just not in the way it’s presented. You should “know” every company you buy, even if you have no intention of being a customer. But there’s no reason to think you have an edge because you pick up your groceries at the same place as 50 million other soccer moms.

Mar 202015
 

On Monday, I took a look at some side hustles that I thought were good ideas. And then on Wednesday, I told you about side hustles that suck more than winter in Antarctica. If you’re here for the first time, go check those out. Today, I’m going to take a closer look at a couple side hustles I think most anyone reading this sack o’ crap great blog can start and be successful at.

Here’s the deal when it comes to certain industries, especially ones people do part-time. For the most part, the quality sucks. People are mostly content with the money they make from their 9-5, and so they don’t put a whole lot of effort into the side hustle. If something comes up, the side hustle automatically gets the boot. This leads to your customer(s) possibly getting upset and crying, because they are giant babies.

"THIS BABY IS TERRORIZING US ALL BUT HE KINDA SMELLS LIKE LAVENDER!"

“THIS BABY IS TERRORIZING US ALL BUT HE KINDA SMELLS LIKE LAVENDER!”

If you can do your side hustle as seriously as most people take work and there’s a market for it, I guarantee you will be successful. It might not happen soon, but if you stick with it, I know good things will happen. I’ve seen too many people completely half-ass their side hustle and still get success with it to think otherwise.

Buying and selling

You wouldn’t think so in 2015, but markets are still relatively inefficient. There are irrational people everywhere, almost begging for you to take advantage of them. I mean, check this out.

inefficient-markets-2

Is the person bidding just that bad at exchange rates, or do they really have the mental capacity of a 9-iron?

There’s countless opportunities to exploit this. Take the example I told you on Monday, video games. There are a lot of people who have these old games in their attic that are collecting dust, and no way to find the buyers who will pay top dollar for them.

Here’s what you can do. You find these games, and then flip them on eBay. Easy, peasy, and likely pretty profitable if you make sure not to pay too much. That’s step one, which you can take pretty far. You can cruise eBay for stuff that’s undervalued, or put ads in places that old people hang out, like the newspaper.

That’s a fine business, but why not take it up a notch? Go online and build yourself a website dedicated to retro gaming. Keep at it long enough, and you’ll build up a following that will not only buy from you, but will potentially pay you a commission to find them certain items that they’re too lazy to find themselves.

There’s also the potential to open up your own shop on a website like that — using other people’s inventory to supplement your own — or to sell ads. It might not be as potentially lucrative as something like pimping payday loans, but there’s still potential.

This doesn’t just work with video games. If you like fashion, do the same thing with thrift store finds. I’m sure a market exists for sports memorabilia too, or collectable books, or stamps, or coins, or a billion other things. The key is to find something that interests you.

Taking care of old people

I’m going to merge a couple of side hustle ideas into one here, and talk about the potential of becoming someone who helps out old people.

Like I mentioned in the original piece, 99% of the guys out there who will cut your grass or shovel your snow are useless. They don’t show up when they say they will, either because they take on too many clients, they’ve got a real job that comes first, or they’re 11. It’s the same thing with ladies and cleaning houses, because when was the last time a dude ever offered that service?

There are a mountain of baby boomers who are either a) too busy or b) too rich or c) too lazy to clean their own house and cut their own grass. If you can write a professional ad, show up when you’re supposed to, and wear a shirt that doesn’t have a beer logo on it, you’re in business. All it takes is one or two clients and it’ll eventually snowball.

I know someone who was a housekeeper for an old lady for years. She got paid extremely well for her time and I suspect eventually got a cut of the will. Do you think the old lady was coerced into doing that? Hardly. She was happy to pay to make sure things got done. That’s what happens when you get older.

As parents age and kids keep busy, people will be happy to pay somebody for an hour or two per day to show up and cook grandma dinner and keep her company. All you need is one or two of these and you’ll get yourself an easy $1,000 per month.

And that’s it. Honestly, you guys don’t need me to tell you how to hustle. Just get out there and do it already.

Mar 182015
 

Side hustle week continues here at Financial Uproar (where sexy times JUST DON’T QUIT). On Monday I looked at some side hustles you can totally do, and on Friday I’ll dig a little deeper into two I think are particularly attractive. And then I’ll grow tired of the subject and we won’t talk about it for the next 4.5 years.

For the most part, the side hustles I mentioned on Monday are things you can leverage into better things. If you’re a sports ref, you can leverage that into higher levels which pay more. If you’re a bartender, you might end up in charge of the other bartenders. The potential of blogging is pretty clear, and doing someone’s taxes could grow into giving them all sorts of financial advice for an hourly fee.

These next side hustles seem like good ideas, but in reality you’re just temporarily getting yourself a new job, and a crappy one at that. Don’t do them unless you’re desperate for cash. If you can, sell your body first.

1. Cashier at Wal-Mart

I think that more people should consider retail as a career. I’m convinced the sector has potential, but you gotta work hard at it. It probably doesn’t beat engineering, but it sure does beat a lot of other jobs that college dropouts have.

But let me tell you a little secret. Store managers secretly hate people who decide they’re going to work at a store on the evenings and weekends. Between an adult who is already working full-time and a high school student, most would take the high school student any day of the week.

After a few weeks or months of it, the ambitious adult isn’t so vigorous anymore. Suddenly they start calling in sick and asking to go home early. It’s not so much their fault, it’s just that they’ve bit off more than they can chew.

Plus, the pay is garbage. After a while, it’s hard to get motivated for 50¢ above minimum wage.

2. Babysitting

If you’re a mom who just had a kid and you’re looking to run a little business taking care of people’s kids while they’re at work, that’s one thing. It’s not really a scalable business, but it works. Plus, you can write off most of your housing expenses.

No, I’m talking about the traditional setup of going to the kid’s house and tucking him into bed at 9. Although I’m no one’s parent (at least until she makes me take the paternity test… I’ve said too much), there’s no way I’m hiring a 25-year old over a 13-year old. First off, the 25-year old is going to charge more. And secondly, I like the idea of giving some kid money for candy. A $2 tip is thrilling for a 13-year old. An adult is jaded enough to expect it.

3. A life coach

Unless you’re:

  • In the top 1% of your field
  • A millionaire
  • Have more to offer than “inspiration”

You have no business giving people tips on how to be successful or live their lives. Even worse is trying to do it as a half-assed side hustle. I’m at the point where I want to pay a couple of life coaches I know an hourly rate to just shut the hell up. Work harder at making your own life successful, and then we’ll talk.

4. A beauty consultant

For some reason, every woman’s fantasy is to tell other people how to do their makeup or what clothes to wear. This leads to approximately 97% of women who either a) seriously contemplate starting a fashion blog or b) post outfit selfies on Twitter/Facebook/Instagram.

I’m okay with the latter, because it amuses me how 97% of the women reading those updates are convinced the original woman can’t dress worth a crap, but will still leave supportive comments anyway. But the former? Nope. You’re not going to find anyone who gives you money for fashion tips.

It’s the same thing with working at the Gap. The only people looking for your opinion on clothes are guys who want to sleep with you. Have fun folding.

5. Making food in your house

It’s all fun and games when you and your BFFs are making cupcakes, but it all comes crashing down when your baking gives someone the runs and they call the health inspector. Hell, someone can call the health inspector just because you look at them wrong. Don’t give random soccer moms that power.

Oh, and spoiler alert: your cupcakes aren’t nearly as good as you think.

6. Mover

You know those muscles you haven’t discovered yet? Yeah, they’re gonna hurt in the morning.

Lots of people will hire guys off Kijiji when they need help moving, because they have friends that are smart enough to know free pizza isn’t nearly enough compensation for moving Bob’s 1,400 pound piano. But you’ll always be undercut by guys looking for beer money, and Bob is going to lose his mind if you put a nick in the wall of his new place.

7. Paper boy

You’re taking some 12-year old’s milk money and you have to get up early every day. I’d rather be poor. What a terrible job.

8. Collecting cans/cardboard/newspaper

Apparently not content to advise competing with children, side hustlers think you should lock horns with the homeless, the craziest members of society. In what world is this a good idea?

From The Simpsons, here’s recycling in a nutshell:

Principal Skinner: A half-ton of newspaper and all we get is 75 cents? That won’t even cover the gas I used to go to the store to buy the twine to tie up the bundles.

Hippie: It sounds like you’re working for your car-r-r. Simplify-y, ma-an!

9. Stupid jobs online for pennies

Yeah, pretty sure you’re not getting rich exchanging minutes of your time for 15¢. There’s a whole world of opportunity online. There’s also a lot of crap and a lot of people who get away with paying wages that would make a sweatshop owner in Cambodia blush. I don’t care how easy the job is, you’re better off holding out for something that takes a little skill.

10. Lemonade stand

Why don’t you just kick a 6-year old in the junk and take his money instead?

 

Mar 162015
 
All ones? Probably a stripper.

All ones? Probably a stripper.

It’s side hustles week here at Financial Uproar. Today’s post will be all about giving you ideas of what side hustles you could be doing, while Wednesday’s post will look at overrated side hustles that you should run away from very quickly. Friday’s post will take a more in-depth look at a couple of side hustles that I think most everyone reading this can do, and easily.

Let’s do this thang, bitches!

1. Referee sports

This is one of my favorite side hustles. Games happen mostly during evenings and weekends, and it gets yo’ fat ass out of the house.

It will take a little bit of time and money to get started, but it’s not a big deal. Just about every sport will have an annual referee clinic for interested parties. They’ll get you certified and into a uniform for less than $100. You might have to buy a new pair of shoes, but that’s nothing in the scheme of things. Plus, you get the pleasure of yelling at high school kids, the worst types of people on the planet.

Refs can easily make $25 per hour, and they’ll pay your milage if you need to travel any long distances. As you become more experienced, you’ll get invited to ref higher level stuff or mens’ leagues.

2. Video games

There are thousands of baby boomers who have junior’s old Nintendo 64 in the attic gathering dust. There are also thousands of hipsters who insist on having these old games of their youth. That creates an opportunity for a guy like you to get in the middle of this.

It’s simple. You buy the old games from the parents for next to nothing, and sell them on eBay to overpaid millennials who are too lazy to do this themselves. The profit is enough for one guy I know to keep his vintage video game habit at a reasonable cost.

3. Be a MLM marketer

Nobody likes those multi-level marketing schemes, but screw it. If you’re looking to make the cash, it’s easy to harass your friends a few times a year. You don’t even have to be an ass about it.

I know a girl who does this in a very non-pressure-y way. She points out on Facebook that the new catalog of whatever is out, and if anyone wants to buy stuff they should hit her up for the info. Out of her 500 Facebook friends, 5-10 always are interested. The other 490 are free to ignore her, and do.

4. House cleaning

RELAX LADIES I MEAN THE FELLAS TOO GEEZ.

Have you seen the Kijiji ads for house cleaners? My god, they’re worse than all of these ads. If you can actually write a decent ad, not give off the crazy vibe, and show up when you say you’re going to, you will get all of the business as a house cleaner. Just about every market is begging for people who aren’t complete morons to come in.

Getting the first client is the hard part, after that they’ll tell their friends and you’re in business. The number of people who want a housekeeper is much higher than those who actually do have one, mostly because they can’t find someone worth a damn.

5. Cut grass

I’m of the belief that most anyone can cut their own grass, and in a reasonable amount of time too. You literally just walk in circles until it’s done. But for whatever reason, your lazy-ass neighbors refuse to do it themselves.

All you need is a lawn mower and a way to haul it around, and you’re in business. Hell, half the people you’ll get will have their own equipment. All you need to do is show up and not act like a serial killer. Plus, you can leverage it into shoveling their walk in the winter.

6. Work at a bar 

THIS ONE’S FOR YOU, LADIES.

If you’re even reasonably attractive, you can find a gig working at a bar. You’ll rake in the tips, and maybe even find a fun gentlemen caller amid all the drunken guys pawing at you with all the subtlety of some sort of jungle animal in heat. The key is to lead those guys along until you get your tip, and then let them down gently.

Fellas, you could become a bouncer. Those pretty girls just want to get into the club, but you can pretend they’re flirting because they like you.

7. Write stuff

I hesitate to even mention this, since every side hustle list in the history of the internet just tells people to start a blog. But it’s an idea that you can leverage into bigger and better things, whether it’s selling advertising dollars or writing for better blogs. Just be prepared to spend months (if not years) working for next to nothing. It’s a side hustle for those people who maybe don’t need the money right away, but still want something to do that isn’t Grey’s Anatomy.

8. Do people’s taxes

Most people’s tax returns are incredibly easy. They have a T4, and maybe a little bit of investment income. Maybe they’ve contributed to their RRSP too. That’s about it.

With a little practice, you can do these types of tax returns in about 15 minutes. You don’t need any sort of professional training, and it’s easy money. H&R Block charges something like $60, if you do it for $20 you’ll get all sorts of business after a few years. Cheap people will hire you, and word will spread if you’re reliable.

9. Uber driver

If you have a halfway decent car and the desire for drunk people to ride in it in exchange for money, you too can make extra cash on the weekends. I suggest a barf bag.

Traditional cabs are the worst. Those guys never show up when they say they’re going to, and they intentionally take the route with the most red lights, especially when they’re not busy. Screw those guys. Let them wait in a line at the airport forever.

10. Flip cars

I know a couple of guys who do well buying cars with minor problems, fixing them, and then reselling them online for an easy $1000-$2000 profit.

You have to know the car market, but there are plenty of guys out there who can figure this stuff out without any capital. Offer to partner with a car nut — you provide the capital and the space to store it, and he does the fixing. You split the profit and everyone’s happy.

11. Online poker

The reason why most online poker players are eventual losers is because they get greedy. They enter tournaments with thousands of players looking for a big prize, rather than grinding away at the lowest stakes to make a few bucks per hour. Start small, get good, and only move up to the next level when you dominate your opponents.

This is a lot tougher than it used to be, since all the newbies left the space when the U.S. outlawed online poker. Still, there’s much more potential at this than there is betting on sports, where the house always wins.

12. Rent out extra space

How many people do you know who have an extra bedroom just in case someone comes to visit, even though they have no friends and their mother never comes to visit? I know more than a few, that’s for sure. This happens even though people underestimate just how much having an extra bedroom costs.

It’s easy to start putting your extra space to use. You can either AirBnb out your extra bedroom, or rent it out to someone on a month-to-month basis. Even if you don’t have a spare bedroom, maybe you can rent out your parking spot or even your locker. Hell, if you’re attractive enough, you could probably rent out your lap.

13. Tutor

Chances are you have some sort of talent that high school kids would be willing to pay for. Or even university kids.

Whether you speak a different language, are good at math, or even have a worthless psychology degree, somebody wants to know the things you know. And sometimes, they’re even willing to pay good money for this knowledge, especially if you’re in a place where your skill is relatively unique.

One thing before I wrap it up. There’s 13 ideas here, but really, focus on just one and be really good at it. That’s the smart way to go about it.

And that about does it. I’m sure many of you have your own side hustles, so feel free to comment section that up, yo.

Mar 152015
 

There are a lot of terrible holidays out there (LOOKING AT YOU, COLUMBUS DAY), but St. Patrick’s Day has to be the worst.

What started off as a tenuous holiday at best has quietly devolved into an excuse for the best of our society to act like the worst of the Irish. A great nation gets reduced to dumb stereotypes of binge drinking and making everything green, because those are the first two things we associate with Ireland. No word on whether people eat potatoes and talk like leprechauns to complete the metaphor, but it’s probably being done right now.

Do you think the Irish enjoy the whole world thinking of them as good for nothing drunks? I can’t say I would if I was an Irish guy working hard at dispelling that particular stereotype. For my American readers, imagine if everyone put on fat suits and turned into stubborn, loud, obnoxious morons each July 4th. Do you think America would tolerate that? Every time some Middle Eastern country burns a flag CNN shows up to capture the outrage live. Jimbo in Tennessee would call for OBAMA TO NUKE EVERY ONE OF THEM A-RABS.

Young people have this thing where half the holidays are an excuse to get obliterated. Hopefully most of the people who are reading this are old enough to know better, but if you’re not… SNAP OUT OF IT. Grown ups don’t use a day on the calendar as an excuse to drink too much. I’m cool with relaxing and having a good time, but don’t get excessive. Losing your phone or your jacket because you’re drunk is one thing, but getting a DUI will haunt you for the rest of your life.

Song I like and therefore you should too

On the heels of my grandpa inspired rant, it’s a song about drinking!

What? It’s catchy.

The Office quote

Dwight: I usually get hit on by a lot of ladies at bars. So I started wearing crocs to fend them off.

What you might have missed

Based on my current output, we are only a few weeks away from the 1,000th post here at Financial Uproar. To celebrate we’ll have a nice potluck with a sparkling cider. Alert your grandparents.

You know how sometimes people will buy fancy clothes for work and then call it an “investment”? I question their logic in this old post. Not surprisingly, most of the people doing this are the ladies, who really just want an excuse to wear nice things.

Nelson’s so funny

Narrowly beating out the tweet I sent from international waters (WHERE ANYTHING GOES!), is this bad boy. At least one of us found it funny.

I am the only person who knows of this Abraham Lincoln double life as a terrible DJ. As soon as I can exploit this knowledge for profit, I will do so.

The more you know

Hit me up, random Wikipedia article:

Following independence, the World Health Organization (WHO) assisted in the organization of public health services and the training of sanitarians and public health nurses for Burundi. Students from Burundi received medical training at universities in France and in the Democratic Republic of the Congo. WHO coordinated all public health programs and helped in campaigns against smallpox, tuberculosis, and malaria. WHO, the UN Food and Agriculture Organization, and UNICEF also provided aid for nutrition and maternal and child health programs. Following the assassination of the president of Burundi in 1993, widespread violence involving tribal groups uprooted many of the country’s people. Approximately 683,000 people fled to neighbouring countries, rural villages, or towns where sanitation is poor.

Africa bums me out :(

Kevin O’Leary’s stock pick

kevin-oleary

Each week current BNN personality and Shark Tank investor Kevin O’Leary is kind enough to give us his favorite stock pick. 

This week my stock pick is ArcelorMittal, the big European steel maker that’s trading at a 10-year low. It pays daddy a dividend and I can go visit operations whenever I go to Switzerland, which guys like me can afford to do from time to time.

I really don’t have much else to say, so let me use the rest of the space I’ve been allotted to pimp my collection of fantastic O’Leary wines. Every time I mention my own wine I get slightly richer, while you suckers keep buying it just because my face is on the side. You people are dumber than Arlene Dickenson.

Babe loosely related to finance

Eugenie Bouchard, who was once mentioned in this very category, apparently went on a date with Bieber. The hell? YOU ARE DEAD TO ME GIRL I’VE NEVER MET.

Maria-Sharapova

This is Maria Sharapova, my new favorite women’s tennis player. Wait. I’m being told she has been involved with Adam Levine. OH GODDAMMIT.

Time for links

Let’s start things off with Money Geek, which asks if buying Canada’s energy ETF is the best way to play the recovery in oil prices. It’s a great analysis.

If a mutual fund has outperformed in the past, does that make it likely to outperform in the future, even if it’s managed by a STUD like Francis Chou? Holy Potato tackles the subject, and he’s not exactly sure it’s predictable.

Over at Lowest Rates, I took a look at whether it’s a better deal to rent or buy a place. You can probably figure out which is better. First stop, Toronto.

Keeping on the oil topic from about four links ago, here’s a piece I wrote for Motley Fool about Canadian oil companies and their U.S. Dollar debt, which is becoming more and more of an issue as the currency swings against Canada.

More from the Fool, but this time from the U.S. site. Friend of the blog Jordan Wathen writes about the historical spread between U.S. treasury debt and REIT yields. Show this to all your friends who insist that the dependable monthly income stream from Realty Income is worth any price!!!!

Think Canada’s housing market is all hunky dory? Nope. Garth Turner throws some cold water on that myth. A preview: In 8 out of 11 of Canada’s largest markets, prices were down in February.

Over at Boomer and Echo, Marie takes a look at the difference between buying a house in Calgary in 1974 and 2014. The best part is the comments, justifying the insane difference in the valuation with various versions of “it’s different this time.”

If you’re a value investor, you need to be reading Oddball Stocks. His blog is filled with great quotes, but this one might be my favorite: “Buffett quotes are like horoscopes, ambiguous enough that they apply to any investor in any market situation.” The post is called The Value Imposers, but there’s a whole lot of wisdom about looking in unloved nooks and crannies of the market.

And that’s about it. Have a good week, everyone.

Mar 132015
 

And yet all you suckers clicked on it anyway. This is just too easy.

You know how everyone and their dog is on the Goodreads and has some sort of reading challenge going on? (I have also joined that particular site, but only because it gives good suggestions of what I should read next) We’ve taken the leisure activity of reading and reduced it to some sort of challenge that needs to be accomplished, like flossing daily.

Think of it this way. You know the difference between The Bachelor and a Frontline documentary on PBS? One of those programs is trashy in every way, while the other is usually pretty good. You could maybe argue that PBS is a left leaning organization and will therefore produce programming accordingly, but I’m a right leaning guy and I don’t notice it very often. Besides, it beats episodes of Sesame Street interrupted by the television version of a hobo with an empty baseball cap.

Television, as a medium, is neither good or bad. When I was 18 and watching business TV after working the night shift at a grocery store, I learned a crapload of stuff on the markets and investing in general. The value ideas of guys like Benj Gallander and Kevin O’Leary have stuck with me for years afterwards. They were instrumental in making me the investor I am today.

And I also watched a lot of episodes of The Simpsons. That show is great fun, but I doubt I learned much of anything from Homer’s antics. It does give me a convenient excuse to put this in though, which I will gladly take advantage of.

no-matter-how-you-brush

Reading is the same way. I almost exclusively read non-fiction (the only fiction I’ve read as an adult is Atlas Shrugged, The Fountainhead, Fahrenheit 451, that 1963 book by Stephen King, and 1984), but even a lot of that isn’t changing my life in a meaningful way. I enjoyed just about every book I ever read, but most have faded into the background of my brain, right next to the trivia of who won the 1994 World Series. I’ve retained bits and pieces from most books I’ve read, but I can only think of 10-20 that changed my life in any material way.

I also read a lot about individual stocks. I read about the ones I’m invested in, about the ones I’m interested in owning, and even a bunch of large caps that I write about for my other job. I could probably give you the gist of the investment thesis for about 200 companies, some with more detail that others.

This isn’t to brag about how much I read, since that’s basically the intellectual equivalent of bragging about the size of your johnson. That point is this. Out of all the information I consume, most of it is a waste of my time. Clicking on the 14th Seeking Alpha or Motley Fool article of the day isn’t getting me any further along. It’s just procrastinating before actual work time starts. But some of it is good, so I keep reading.

I like to think my readers only read my blog while hating all of the other trash out there, but that’s just not the case. Chances are you’re going to hit the back button is about 30 seconds and go read 14 other personal finance blogs, because you’re at work and you’re procrastinating too. You probably want to go procrastinate over at the hot blond from accounting’s office, but you don’t because that would be the opposite of subtle.

I’m guessing most people reading this are pretty good at saving money. Most probably aren’t great at investing, but a simple ETF portfolio and a decent enough savings rate can cover a lot of sins. Most are living below their means and not buying too much house or a bigass SUV. And if they are consuming a little more than a hardcore frugalist would like, it’s because they have an above average income. If that’s you, let me ask you this.

If you have the basics down, why are you reading stuff that just repeats those basics back to you?

There are several reasons, I suppose. You have friends that are addicted to spendahol, and want a community of like-minded people to hang out with. Or you’re bored at work. Or maybe you’re like that addict that is constantly tempted to go back to the well and reading this stuff keeps you from the evil clutches of BIG CREDIT CARD.

But for most people, I think it’s just routine. They wake up, have their coffee, and check their favorite blogs. Again, there’s nothing wrong with that — provided the content is making you smarter in some way. It could also be entertaining, but let’s not kid ourselves. Most finance blogs aren’t entertaining.

The takeaway is this. If you read my blog, or any other, and it isn’t educating or entertaining you, it is a waste of your time. If you’re consistently smarter than the author and are on a whole different level, it’s a waste of your time. If you constantly disagree so vehemently about an author’s opinions that you yell at your laptop, it is a waste of your time. If it’s the same stuff you’ve already read 100 times, it’s a waste of your time.

It’s just as valuable to sit and stare out the window as it is to read the 1,583rd blog post on the debt snowball. Which is why you shouldn’t bother. Either spend your time reading stuff that entertains you, that makes you smarter, or get the hell to work. The rest of the stuff is a waste of time.

Mar 112015
 
Maybe not quite that big of stuff.

Maybe not quite that big of stuff.

Let me tell you a secret about the personal finance blog industry. We write a lot of crap.

I’m hardly immune to this. I’ve previously tackled such hard hitting topics as which frozen pizza gives you the best bang for your buck, which gas program will give you the most cents back, and even made fun of Trent Hamm approximately 3,492 times. This is hardly groundbreaking stuff.

The reason we all do it is the basic stuff has been covered to death, brought back to life, and then covered to death again. There are a lot of articles out there on the best ways to pay off your credit card debt, and they all say the same thing. Did you guys know you can cut cable TV and save money? Well now you do.

When you’ve already covered the basic stuff, you expand your repertoire. Maybe the author has paid off their debt, so now they’re expanding into investing or earning more money. Or maybe the author is still swimming in debt, but just got bored of talking about it. It’s kinda like a date with Nelson.

So they branch out into different things. And then they get to more obscure and more obscure stuff, finally culminating with stuff on frozen pizza, as a pathetic cry to get people to NOTICE HIM, DAMMIT ESPECIALLY YOU DADDY WHY DON’T YOU COME TO MY G.D. SPORTS GAMES ONCE IN A WHILE EVEN THOUGH I SUCK.

Sorry. I, uh, got a little excited there.

It isn’t that these obscure financial tips are a waste of your time. Saving money on bank fees is helpful, and so is getting a couple extra cents per liter while filling up your tank. You should probably take advantage of these deals, since all the little things do have a habit of adding up. But will they ever be as lucrative as getting a raise at work? Or downsizing so your housing costs are half as much as before? Or a couple getting rid of one car? Not a chance. They won’t even get close.

There’s nothing wrong with side hustles. I love ‘em, and will continue to advocate that damn near everyone gets one. Diversifying one’s income is a good thing, and it could even lead to a new gig or full-time entrepreneurship. It could be the beginning of something really interesting, or even be a complete and utter failure. No matter what happens, you’ll learn something from having a side hustle.

Why promotions are better

But at the same time, getting promoted at work will likely be a far bigger win for your money. Why? Because you’ll work about the same amount of hours for more money. If you go from $20 to $25 per hour and do approximately the same amount of work, that’s a huge long-term win. You can probably still keep your side hustle and make bank at work.

I don’t care what problems you have, putting in the same amount of time and effort for more money will improve them.

Like with sex and driving, most of us think we’re far better employees than we really are. That, combined with a lack of patience (which is practically an epidemic with today’s 20-somethings), means that offices are filled with entry-level employees who think they deserve to be middle management.

The good news is it really isn’t very hard to surpass these people. Yeah, you have to come in early, work late, and cut down your trips to the attractive secretary’s desk, but I have faith you can handle it. They just don’t, because it’s easy to be mediocre and work at the same pace everyone else does.

Focus on big wins

We have three major expenses. We need shelter, food, and transportation. As much as you LURVE your dog, he’s really not a necessity. Especially when he chews up stuff. Bad dog.

Chances are, you can cut back on at least one of these categories. For me, it’s restaurants. My Korean living facilities aren’t exactly cooking friendly — we don’t even have an oven for God’s sake — so I spend a lot eating out. For every cheap meal I get at a kimbap, I’m going to TGIFriday’s for a hamburger that costs $20 Canadian.

I’m okay with this because I’m meeting my savings goals. Squatting illegally in my girlfriend’s apartment for free is also pretty helpful in that regard.

I could probably pretty easily save $200 per month by eating more at home. If I combined that with something like getting a house with a basement suite, I’m looking at a potential $1,000 per month in my pocket, just by making a couple of changes. If you use your imagination, I guarantee there’s a few hundred bucks per month in your budget you can cut. They’re big changes, but they’re worth it.

We’re attracted to tips like buying generic brand garbage bags because they’re literally the easiest thing in the world, and making big changes is hard. In the end though, it’s the big changes that matter.