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Middle Class Millionaire

Middle Class Millionaire
I rant about the market, stocks, retirement, saving money and anything and everything related to money, investing and retiring early. I will also share my financial progress and document my journey from middle class to an early retirement.

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How I Added $20,000 to My Home in 3 Days - Part 2
2008-06-16 22:06:00
Here are the Details:Time Spent:In total there were 3 of us working on the house from 8AM until Midnight Friday, Saturday and Sunday.Improvements Made:Hallway* Removed dated wallpaper and chair rail - Free* Re-Mudded sections of the wall after the paper was removed - $5* Primed and painted walls- See Paint costs* Primed and painted 3 doors in the hallHalf Bathroom* Replaced cabinet - $50(we bought this used new it would be around $300)* Replaced Sink and Faucet - $300 * Replaced toilet paper and towel holders - $50* Bought new towels - $20 (and we take them with us)Dining Room* Removed dated crown mouldings - Free* Primed and painted - See Paint costsKitchen* Removed dated wallpaper - Free* Re-Mudded sections of the wall after the paper was removed - $2* Removed dated oak cabinet doors and primed and painted them with cabinet paint - $80* Replace old hardware on the cabinets - $50* Replaced counter tops - $250 (bought precut sections from Home Depot)* Replaced sink - $150* Replaced ...
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How I Added $20,000 to My Home in 3 Days - Part 1
2008-06-13 00:26:00
As many of you know I have recently relocated to my country property and switched to a slower paced lifestyle. As a result there was no need to keep our house in the city so about a month ago we listed the house and I'm happy to say that this week it sold for 98% of the asking price. In order to make the house more appealing we decided that if we wanted to get top dollar for our home some improvements were needed. Being a frugal kind of guy we of course did all the improvements ourselves and on the cheap. I wanted at least a rough idea of how much value we'd be adding to the house so prior to beginning the work I had 2 real estate agents in to view the property and provide me with a suggested listing price. After the renovations were complete I had them in again to re-evaluate the listing price and both were about $20,000 higher. In my next post I'll explain exactly what improvements were made and the approximate time and cost involved.
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GE
2008-06-11 02:43:00
I recently initiated a position in GE for the following reasons."General Electric is one of the largest and most diversified industrial corporations in the world. GE is engaged in developing, manufacturing and marketing a wide variety of products for the generation, transmission, distribution, control and utilization of electricity. Some of GE's products include major appliances; lighting products; industrial automation products; medical diagnostic imaging equipment; motors; electrical distribution and control equipment; locomotives; power generation and delivery products. Their operations are divided into six different segments; Infrastructure, Industrials, Healthcare, Commercial Finance, GE Money and NBC Universal."-2008 Estimated PE ? 13.8X-2009 Estimated PE ? 12.5X-2010 Estimated PE ? 11.25X-Current Yield ? 4.05% -5 Year Average Yield ? 2.6%-Current Payout Ratio ? 53%-5 Year Historical Payout Ratio ? 52%-3 year dividend growth rate ? 10.56%-5 year dividend growth rate ? 9.16% -...

Back From Vacation
2008-06-10 04:35:00
I'm officially back from vacation now and will start posting regularly again. Here is a little preview of the topics I'll be posting about this week.1. Provide an analysis of a new addition to my portfolio.2. Post my regular monthly portfolio update3. Talk about how I added $20,000 to the value of my home in 3 days.
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Vacation
2008-05-29 13:10:00
Sorry for the late notice but I've been on vacation recently and will return to a more regular posting schedule in the 2nd week of June.Cheers,MCM
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Some Recent Dividend Increases
2008-05-21 23:03:00
For those dividend hungry investors here are some of the companies that have raised their dividend/distribution over the last month:-AGF Management (AGF.B) - Annual dividend increased by 25.0% from $0.80 to $1.00 -Barrick Gold Corp (ABX) - Annual dividend increased by 33.3% from $0.30 to $0.40 -Baytex Energy Trust (BTE.UN) - Annual distribution increased by 11.1% from $2.16 to $2.40 -Boyd Group Income Fund (BYD.UN) - Annual distribution increased by 11.1% from $0.18 to $0.20 -Calian Technologies (CTY) - Annual dividend increased by 25% from $0.48 to $0.60 -Cineplex Galaxy Income Fund (CGX.UN) - Annual distribution increased by 5% from $1.20 to $1.26 -Clorox Company (CLX) - Annual dividend increased by 15% from $1.60 to $1.84/share-Easyhome Ltd (EH) - Annual dividend increased by 21.4% from $0.28 to $0.34-Finning Int'l Inc (FTT) - Annual dividend increased by 10% from $0.40 to $0.44 -Freehold Royalty Income Fund.(FRU.UN) - Annual distribution increased by 20% from $1.80 to $2.16-Jo...
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High Fuel Prices
2008-05-16 22:26:00
With the long weekend upon us you?re bound to hear a plethora of opinions and complaints about how the government and oil companies are gauging the poor working man. At some point during these many rants someone always suggests (in a very confident manner) that the government should be doing something about these prices. Although I agree that it would be nice if someone magically made fuel prices cheaper I don?t think it?s practical, realistic or appropriate to expect governments to do this. Since oil is a global commodity what exactly should the government be doing to protect us poor Canadians from high fuel prices? Maybe they could eliminate the gas tax altogether? Sounds like a great idea but then where are they going to make up that revenue? Maybe spend less on hospitals, schools etc? Or perhaps they could initiate a communist style business policy and claim the private owned oil companies as government property? This obviously isn?t a reasonable option either.In my opinion if ...
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Macquarie Power & Infrastructure Income Fund - (MPT.UN)
2008-05-14 04:46:00
Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets, with an emphasis on power infrastructure.MPT's POWER PORTFOLIO INCLUDES:-Gas Cogeneration ? Cardinal, a 156 MW gas cogeneration plant, is located in Cardinal, Ontario. -Wind ? MPT owns the 99 MW Erie Shores Wind Farm in Port Burwell, Ontario, which currently represents about 6% of Canada's installed wind capacity. -Hydro ? MPT owns four hydroelectric facilities, located in Dryden and Marathon, Ontario, and Sechelt and Dease Lake, British Columbia, totalling 36 MW. -Biomass ? MPT owns a 28 MW biomass facility in Whitecourt, Alberta, and holds investments in a 31 MW facility located in Chapais, Quebec. MPT's SOCIAL INFRASTRUCTURE INCLUDES:An indirect 45% investment in Leisureworld, which is currently the fourth largest provider of long-term care (LTC) homes in Ontario.FINANCIAL HIGHLIGHTS:-I have listened to the last conference call and management seemed to be very conservative and selective in...

Best of the Blogs Winners
2008-05-13 02:48:00
Well the results of the ?Best of the Blogs ? contest are in and Middle Class Millionaire was voted the ?Best Blog on the Internet??well not quite? Middle Class Millionaire came in tied for 14th place. The real winners deserve their crowns and are listed below:1. iBankCoin (formerly known as Fly on Wall Street)2. Wall Street Fighter3. Dealbreaker4. Paul Kedrosky5. Canadian CapitalistThanks to everyone who voted.
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How Many Securities Should You Have?
2008-05-09 03:30:00
I?ve been asked this question before and my general rule of thumb is 20. I touched on this in a January, 2007 post about diversification however I?ll just rehash it a little bit. I think that if you own over 20 stocks you run the risk of becoming too diversified. If you?re too diversified you basically become the market and if that?s the case why waste the time and commission fees buying individual stocks? Simply buy some low MER index funds and get it over with, because if you diversify too much you?re going to mimic the index anyways.There are of course exceptions, for example if you?re pursuing a high risk strategy such as penny gold stocks it would probably be wise to create a basket of these high risk stocks and hope for a few big winners. Additionally, if your portfolio is under $70,000 I don?t think that you should be aiming to hold 20 stocks. I believe that if you can?t commit a minimum of 2.5% to 3% of your portfolio to a stock you probably shouldn?t buy it. I will often bu...
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Best of The Blogs
2008-05-07 03:36:00
I thought that I?d use this post for some shameless self promotion as Middle Class Millionaire has recently been nominated as one of the "Best of the Blogs " by The Globe and Mail. I am definitely in good company as fellow bloggers Canadian Capitalist, Four Pillars, Dividend Guy, and Million Dollar Journey were also on the list.

Does 1% Really Matter?
2008-05-06 03:17:00
When it comes to investing and your portfolio does 1% really matter? If you are paying an MER of 2.5% instead of 1.5% is it a big deal? What about if your portfolio returns 7% instead of 9%?If your investment horizon is between 1 and 2 years than a couple percent really doesn?t matter. Your portfolio won?t be affected in any meaningfully way. However, if you are a long term investor 1 or 2% certainly does matter and will have a huge impact on your total portfolio return. I created the below chart to illustrates just how much difference 1 or 2 percent can make. The chart makes the following assumptions:1. Initial investment of $10,000 in year 1.2. No additional contributions.3. Interest compounded annually.4. All interest is reinvested.So although it may seem petty to be wasting time and squabbling over a one or two percent difference it could mean a difference of hundreds of thousands of dollars in retirement.
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Portfolio Update as of May 1, 2008
2008-05-02 06:26:00
-up 3.1% from last month-up 3.5% in 2008 -CDN 66%-U.S. 30.5%-International 3.5%TRP - 3.99%CSH.UN - 4.03%GWO - 4.25%PFE - 4.39%POW - 3.80%WAG - 3.22%L - 2.64%UNS - 1.95%GZ - 2.82%TD - 12.61%EIT.UN - 2.68%JNJ - 5.82%MMM - 3.38%C - 3.57%ATD.B - 2.59%BCE - 5.26%IIC - 2.65%O'Shaughnessy?s Global Fund - 3.43%American Growth Fund - 0.89%CDN Value Fund - 3.00%Small Cap Growth Fund - 3.71%Chou Associates Fund - 9.14%Money Market Fund - 10.20%There were no changes to the composition of my portfolio last month and I don?t anticipate any major changes this month either. However, I am taking a close look at BPT.UN and CU and may initiate a position in one of those names this month.
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Moving to the Country?The Finances
2008-04-29 02:18:00
As promised here is a little update on the finances of our move to the country. As you?ll see below this move is being done solely for lifestyle reasons and is certainly not financial motivated in any way.My wife is on maternity leave for the next 2 months so the move will have no impact on what she brings in (in the short term). However, she works in a field that is in demand everywhere and she doesn?t anticipate having any trouble finding work once her maternity leave is up. However, it?s a different story for me as I currently work in a specific area of technology that doesn?t exist up north. Luckily for me I do have some other skills to bring to the table and was able to get a part-job in Information Systems for a government organization. My new hourly wage will be considerably below what I currently make and accounting for the lower wage and reduced hours I will probably be taking around a 65 to 70% pay cut. However, for what it?s worth my actual take home pay will probably be ...
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Thinking about Investing? Start Now
2008-04-25 16:47:00
The below chart illustrates the importance of investing early and the power of compounding interest. When it comes to investing time really is on your side.Case 1:? $2,000 invested annually in years 1 to 5? No contributions after year 5? Assumed rate of return of 10%? Interest compounded annually.? All interest is reinvested.? Total invested $10,000Case 2:? No money invested in years 1 to 10? $2,000 invested annually in years 11 to 40? Assumed rate of return of 10%? Interest compounded annually.? All interest is reinvested.? Total invested $60,000You have probably seen similar charts on the front of mutual advertisements and although I?m not a huge proponent of mutual funds I think the underlying message is valid---The earlier you start investing the better.
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Boralex Power ? BPT.UN
2008-04-23 13:28:00
ABOUT BORALEXCreated in February 2002, Boralex Power Income Fund (the ?Fund?) is an unincorporated open-ended trust that indirectly owns ten power generating stations with a total installed capacity of 190.0 MW. Eight of these power stations are located in Quebec (Canada) and two are in the State of New York (United States).?The Fund owns seven hydroelectric power stations ? five in Quebec and two in the United States ? with a total installed capacity of 96.4 MW.?In Quebec, the Fund owns two wood residue-fired facilities ? a thermal power station and a cogeneration plant ? with a total installed capacity of 62.6 MW. The cogeneration plant also produces 1,780,000 thousand pounds of steam annually.?The Fund also owns the only natural gas-fired cogeneration plant in Quebec, which has an installed capacity of 31.0 MW and approximately 862,000 thousand pounds of steam annually.FINANCIAL HIGHLIGHTS-14% Yield-expected 2008 payout ratio of 95%-trading at approximately 30% below it?s book va...

Adjusted Cost Base
2008-04-21 17:57:00
With the end of the tax season approaching I?ve been asked a few times about how to account for capital gains as a result of the sale of income trusts. Well, the process is basically the same as with common shares except with income trusts the cumulative ?return of capital? (ROC) received from distributions must be accounted for in the adjusted cost base (ACB).What is Return of Capital?Basically return of capital is the tax deferred portion of income trust distributions. Return of capital can also be described as money the trust gives back to you from your original investment. The exact amount of ROC is provided to you annually by the trust.What Do You Do With The ROC?Once you?ve calculated the cumulative ROC you use it to re-calculate your ACB, which will be used to calculate your taxable capital gain when you sell. For example, suppose you paid $10 a unit and received a $1 per unit return of capital. Your adjusted cost base would be $9 ($10 - $1 = $9). Now if you sold that income...
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The Secret to Financial Success
2008-04-17 15:14:00
Many people have the view that finances and investing is some kind of mystical puzzle that once solved will instantly eliminate all their financial troubles. The code will be broken and the chest of gold will fly open (just watch any late night infomercial). In my opinion the notion of a financial quick fix is the most dangerous and damaging perspective that anyone can have. Having this view effectively removes individuals from their current financial problems. It rationalizes the belief that you don?t have to diligently and effectively manage your money because once you figure the secret out everything will be OK. In my opinion the real secret to financial success is the realization that there is no secret, and that for 99.99% of the population (myself included) there is no formula or secret that is instantly going to solve all your financial problems. The real secret to financial success can be found by following these 3 easy steps: 1. Spend less money than you make.2. Invest you...
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Johnson & Johnson ? JNJ
2008-04-16 13:34:00
In typical fashion Johnson & Johnson announced that they have once again beat analyst consensus earnings estimates. Their quarterly earnings came in at $1.26/share, 6 cents above analyst estimates of $1.20/share. However, their two major businesses, pharmaceuticals and medical devices, would have experienced declines had it not been for the weak American dollar. The recent increase in earnings due to currency is viewed as a negative by many analysts however, as an investor it helps to reaffirm one aspect of my investing strategy. One of the criteria that I used to select the U.S names in my portfolio is their international exposure. Over a year ago when I first initiated a position in JNJ I stated that one of the reason that I bought was that 44% of their sales were from outside of North America which would act as a built-in currency hedge. It works like this: JNJ reports their earnings in U.S dollars so the 44% of their revenue that was generated outside of the U.S. has to be conve...

Moving to the Country...Permanently
2008-04-14 14:42:00
For the last five years Mrs. Middle Class Millionaire and myself have been talking about selling our house in the city and moving back to our very very rural home town. Well...the talking is over and over the course of this month we?ll be packing up all our stuff and making the 350km trip straight north. Long time readers of this blog will remember that last year I purchased a recreation property up north well we?ve decided that we?re going to be moving there permanently. Here are some of the details below:WHY THE MOVE-lifestyle-lifestyle-lifesyleABOUT THE HOUSE-located at the end of a dirt road.-no cell phone or high speed internet service (looking into satellite internet)-30 minute drive to ?town? which is where we would have to work.-our backyard is now 60acres which is surrounded by 1000?s of acres of crown land.-land has 2 stream fed trout ponds.-house is smaller than our current home (we plan to put an addition on sometime in the future).-house is only 20 years old and very st...
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