Archive for February, 2011

Small Business Ideas

Business & entrepreneurship

small business ideas

To be honest, tightening my budget is not really my style; I would rather create small businesses on the side that will generate additional income. In my situation, managing web properties is my best small business idea so far. Since we are all looking to increase our monthly revenues, I thought of making a quick list of other small business ideas that came to mind when I didn’t have much time to develop:

Small Business Idea #1: Creating small niche websites

Creating a website has become something quite easy on the technical side. In fact, you don’t need to know much about html or php coding. All you need is a passion to write about, take some time to read on how to setup a website, go to GoDaddy to register a domain name and to WordPress to get a site theme and you are done… well for the technical part of your website ;-).

For the rest, it requires time, passion and patience. Online money definitely doesn’t come overnight. For example, I recently created Home Security System Canada as an alarm system website for Canadians. This has required some investment in terms of money and time and I hope to make a few bucks per month in the upcoming year. However, this site alone won’t pay for my mortgage right away. The idea behind it is to create a consistent flow of income (let say $100 per month) and multiply this income stream across other websites.

Small Business Idea #2: Selling Stuff to Canadians

You can use eBay or Craigslist to sell you stuff. You can also buy in the US and sell to Canadians the very same way. Why do so? Because the Canadian dollar is becoming stronger than the US dollar. Just look at this USD CAD chart. In addition to a strong dollar, Canadians are more inclined to spend money these days. Their economy is stronger and they don’t feel like they should restraint themselves.

So, the idea is to shop in the US for goods and turn around and sell them to Canadians. The only thing you must be careful is that if you do many transactions, chances are that you will need to look into export rules.

Small Business Idea #3 Repair / Sell parts for computers

I once opened a small business repairing computers. I was selling computer parts and installing them for my friends during university. More than ever, people don’t want to buy new computers as they are trying to save during the recession. If you know computers, it can be a very interesting side line.

It doesn’t require much funding (as you get the computer parts only when needed) and your work schedule is pretty flexible (you can do them after your day job). The markup is interesting as people would rather pay you $100 to repair their computer than pay $400-$500 for a new computer tower!

Small Business Idea #4 Freelance Writing

As opposed to what you may be thinking, you don’t need to be a “real” writer to become a freelance writer. In fact, if you know a lot about a specific topic, you can offer your services as a freelance writer for websites. Sites like Odesk offer the opportunity to connect website owners and freelancers in various domains.

Each time I am looking for a writer for a niche website or a specific domain, I post a job on Odesk to see if I can find someone. Then again, this kind of small business doesn’t require any funding (besides a computer and an internet connection) and can be done anywhere at any time. Don’t be modest; I’m sure you know about something better than most people. You don’t need to be the ultimate reference in your field, you just need to know more than most people in order to write valuable content.

Small Business Idea #5 House Cleaning

This is something I am very curious about. I have used the services of a house cleaning lady at one point in time and I found it very hard to find someone reliable and trustworthy. I guess that building a network of house cleaners would be a great idea especially if you can assure a certain level of professionalism.

The point of this small business idea is not to clean houses yourself (mind you, it might happen at first!). In fact, I think you can build your network and coordinate the house cleaners with the house to clean. The Markup would be smaller but it doesn’t require much work (as long as you hire the right people ;-) ).

As you can see, there are several small business ideas you can start without much cash in hand. Since the purpose is to make more money, most people don’t have much to invest. This is why it is important to pick a business model that won’t require extra cash to be invested in the first place.

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How to Buy Your First House


house buying process

Following up on my latest post on first time home buyer tips, I’ve decided to share more insight on the great financial experience that is buying a house for the first time! I thought it would be interesting to delve deeper into each of the steps for a first time home buyer just to make sure you don’t forget anything. So here we go!

– Get your budget in order

All right, we all want to be a home owner. However, it doesn’t mean that we can all afford it. The very first step prior to shopping for a house is to get your budget in line. Consider your current expenses along with additional spending that comes with a new home:

– Taxes

– Energy costs

– Condo fees

– Insurance

– Renovation / Maintenance costs

– Equipment (lawn mower, shovel, tools, etc)

– New furniture

– Curtains and accessories

– Get your documents in order

Before making an appointment with a banker, make sure you have all your documents. You can call your local bank to know what is required. Ask for a specific list according to your financial situation (documents are not the same depending if you are an employee, self-employed, property owner, etc.). Get everything in a file and then book an appointment).

– Go see your bank for a preapproval

As I have mentioned in my first home buyer tips, it’s easier to shop for a house with a preapproval. This is your occasion to ask your banker all the questions that come to mind regarding the transaction. It will also be a great opportunity to check with him if your budget calculations were in line with the bank’s debt ratio calculations!

– Go see a real estate agent to shop

Now the real fun begins! Sit down with a real estate agent and tell him what you are looking for in terms of:

– price

– number of rooms

– neighborhoods

– nice to have (pool, near schools or parks)

– things you don’t want (near a highway or commercial center)

He will then pull out all the properties matching your criteria and send you the listings.

– Visit at least 5 properties

In order to make up your mind and make sure you make the right decision as a first time home buyer, it’s important to look at a minimum of 5 properties. You will then be able to compare them and know exactly what you are looking for.

– Make an offer (negotiation process)

Once you find your first home, it’s time to make an offer. Ask your real estate agent to pull out recently sold houses in the same area. You will be able to assess what is the value of the property and what would be a good offer to make.

– Get back to your bank for the official letter of approval

Once the offer is accepted by both parties, it is time to turn around and ask for the official letter of approval from your banker. You then ask him for his best rate and you let him know that you will negotiate with a mortgage broker as well. Remember, the rate is one thing, but the structure of the mortgage is important too. Make sure to have a good discussion about which kind of mortgage you want.

– Negotiate rate with your banker and a mortgage broker

If you really want to pay the lowest rate possible, you can always go see a mortgage broker. This is an additional step that requires that you go through the whole process of mortgage qualification. Sometimes, you might negotiate harder with your banker and get the right mortgage and the right rate the very first time!

– At the same time, you need to get an inspection done on the house you are buying

While you are in the middle of the mortgage process, you also need to have an inspection of the house completed. This is very important as the inspector will tell you if the house is in good shape or not. If major renovations are required such as new replacement windows or a new roof, you are allowed to back off and withdraw your offer. You can also renegotiate the price according to the things that has been discovered.

– Start looking for a lawyer to close the transaction

You will need to get in touch with a lawyer in order to finalize the transaction. Prices and services are different so make sure to call a few lawyers to know what is involved.

– Shop around for insurance

You need to insure your property against fire, flood, break ins, etc. but you should also insure your loan through a life insurance policy. Take a good day to shop around, the internet is a wonderful tool to ask for quotes ;-).

– Sign your documents at the lawyer and receive your keys!

That’s an easy step! The lawyer will contact you a few days prior to your meeting telling you how much you need to bring (your cash down + fees). The bank will send the money from the mortgage.

– Move in and enjoy ;-D

That’s it! You are in your new house, Congratulations to all first time home buyers!

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First Home Buyer: 18 Things You Need To Know


first home buyer

My best friend just bought his first house last week. As I work in the banking industry, I never realized how complex the home buying process really is when it’s your first one. He gave me the idea of creating these quick 18 things you need to know if you want to buy your first home this year. They are not in any particular order; I just wrote them as they came to mind:

#1 Prepare your proof of income and assets

In all cases, you will be required to provide proof of your income and assets. Gather your latest pay stub, year end income summary and investment portfolio statements. You will be ready when it will be the time to meet with your banker / mortgage broker.

#2 It’s easier to shop for your house if you have a preapproved mortgage from your bank

This is very true especially in the case of a first time home buyer. Why? Because both the Real Estate Agent and the seller will know that you are serious, qualified and that you are not just walking around to “see what’s on the market”. Go to your bank and ask for a preapproval. This is a document certifying the amount the bank is willing to lend you in the case of a purchase.

#3 Don’t overestimate your mortgage payment capacity

After getting your preapproval, you may have the feeling that you can buy the house of your dreams. WRONG! Most of the time, the preapproved amount is ridiculously high. It’s not that you can’t afford the mortgage payment, but you will have to make some serious decisions with regards to your budget (forget about nice restaurants, cool activities and new clothes for a while ;-) ).

#4 Your real estate agent can be a great help to find a property

I don’t really like real estate agents to be honest. However, I really like them when it’s time to buy a property. You can give him all your criteria and he will find properties within your budget, neighborhood and including your desires as well. They can book appointments and visit the house with you. They are very useful to buy properties.

#5 Your real estate agent will always tell you that there is an offer coming through

The real estate business is rough and agents are only paid when they sell a property. Therefore, they could be tempted to rush first time home buyers to make an offer as soon as they realize that you like a property. My advice; take an extra 24 hours to think about it. Once you are in the process of making an offer, it’s hard to back off.

#6 Your real estate agent may seem disappointed by your first offer

Then again, the higher the first offer is, the better are the chances to close a quick deal. Real Estate Agents are known to put their own property for sale for a longer time and selling them for a higher price. This is a great stat showing you that they will try to facilitate the negotiation toward the fastest closing time.

#7 Don’t be shy to start low and negotiate your price

Even though the Real Estate Agent will be disappointed, starting with a lower offer will give you more negotiation room in the process. If you negotiate properly, this could save you an extra $5,000 or more. This is more than enough to cover other purchase fees (transaction fees, moving, new furniture, etc.)

#8 Don’t be shy to make a 3rd offer

You make an offer, the seller comes back with another one and you close the deal. Really? Why don’t you try to grab an extra 3 to 5K? It often works since the seller certainly doesn’t want to go through this process again (visits, offers, counter offers, etc) for a few thousand. The negotiation game is an interesting one. Be patient and rational. Even though it’s your first home, it is also your first occasion to make a good deal!

#9 If you are buying with an agent, you can’t contact the vendors directly

The real estate agent represents the vendor. Therefore, all communications must go through him. It is sometimes a pain but this is the way it works. Sometimes, having a middle man is a good thing, especially during negotiation time ;-). If you wish to discuss a specific detail, you can always ask the agent for permission to contact the vendor.

#10 An appraisal doesn’t count as an inspection

There is a clear difference to make here: an appraisal will be done by an appraiser which is specialized in determining the value of houses compared to the market. The inspection is made by an inspector which is specialized in house structure and buildings. Therefore, he will not give you a value of your house but will rather tell you what is in good shape and what requires minor (or major) renovations to keep it up-to-date.

#11 You will need an official letter of approval once your offer to purchase is accepted by the vendors

Your preapproval from the bank is not enough. Once your offer is accepted, you need to go back to your banker with the offer and the house listing. Then, you can negotiate your lending conditions (term and rates). Once your mortgage is officially approved, the bank will send a confirmation letter to the real estate agent.

#12 Shop your rate with a mortgage broker first

If you want to make sure that you have a good rate, go see a mortgage broker first and he will give you the best rate around. Warning; some mortgage brokers are aware of this shopping method and will charge a file opening fee before starting working with you. Sometimes, it’s a $250-$500 well invested. And it doesn’t mean that you won’t do business with him ;-).

#13 You can ask your bank to pay for the appraisal fee

Once you are done negotiating with the vendor, you can start negotiating with your bank ;-). Ask for a special rebate or to have the appraisal fees paid since you are a first time home buyer. It usually works like this with bankers ;-). On top of that, they probably gave you an “okay rate” since it’s your first house and you are not used to negotiate. They certainly have more room to pay other fees.

#14 You can ask your bank to pay for lawyer fees

You don’t have enough with the appraisal fees paid? You can always push your luck to have your lawyer fees paid too. Worst case scenario, the banker will say no. But he will never cancel the deal based on your request ;-).

#15 You don’t have to get your mortgage where you had your preapproval

I know, this is not really fair with the original banker that dealt with you. However, if you are feeling ripped off by the high rate (remember, first time home buyers tend to get so excited about getting their first house that they completely forget about the rest), you can still shop around for a mortgage once your original mortgage is approved. Just make sure you are in line with your timing according to the offer to purchase (avoid last minute mortgage shopping!).

#16 Life insurance is recommended but not mandatory

Some advisors will tell you that the life insurance is mandatory to any mortgage. This is because they sometimes make even more with the insurance than with the mortgage itself ;-). Don’t get me wrong, insuring the biggest debt you will have (especially in the case of a first time home buyer) is very important. However, you should have the right to shop for the best product available.

#17 Creditor insurance vs Life insurance

An important point, as I mentioned before, for first time home buyer is insurance. You don’t have to take creditor insurance as you can also look for a term life insurance that matches your mortgage amount and term. This is usually cheaper. A good insurance shopping session with an insurance broker is suggested.

#18 Normal Steps in the buying process for the first time home buyer

– Get your budget in order

– Get your paper in order

– Go see your bank for a preapproval

– Go see a real estate agent to shop

– Visit at least 5 properties

– Make an offer (negotiation process)

– Get back to your bank for the official letter of approval

– Negotiate rate with your banker and a mortgage broker

– At the same time, you need to get an inspection done on the house you are buying

– Start looking for a lawyer to close the transaction

– Shop around for insurance

– Sign your documents at the lawyer and receive your keys!

– Move and enjoy ;-D

So that’s it for me, do you have any other great tricks people should know about being a first time home buyer?

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Quit Your Job To Freelance


I’m leaving the world of ETF trading and asset allocation models to come down to something very important; your job! Have you ever considered quitting your job to become self-employed? Have you ever considered doing freelance stuff? I had quit my job a while ago to switch for another one. However, I have never had the guts to leave a salaried job to work on my own.

The beauty of freelancing

Month after month, this thought has teased me; quit my day job to work full time on my online venture. It’s not that I am not making money or that I am not happy at work. In fact, it’s quite the opposite; I have a well paid job and I am pretty happy doing what I do. However, there are several advantages of being your own boss:

–          no more schedule

–          you can create sources of passive income

–          you can work from home

–          you can establish your own work plan, your own strategy

–          your earnings are proportional to your efforts

–          you can make way more money if you are ready to work hard

Things to consider before quitting your job

There are a few things that are holding me back. I wish I hadn’t such a good job. I wish my job didn’t have benefits, pension plan and a good bonus at the end of the year ;-). These are part of the things you need to consider before quitting your job:

–          benefits such as healthcare insurance and dental care

–          pension plan

–          income growth potential

And a few questions to ask yourself:

–          Are you self driven?

–          Can you work without having a boss telling you what to do?

–          Will you cut corners and take breaks or will you work both day and night? (both are not recommended by the way ;-) ).

–          Do you have a team of professionals to support you? (accountant, lawyer, banker, etc.)

–          Do you need a partner? (I know I do)

How to create a sideline that will eventually replace your job

Instead of quitting my job right away and being left with no income tomorrow, I have decided to consider another path: creating a sideline income that will eventually allow me to quit my day job. Based on my passion and worked on during my spare time, my online company has grown significantly over the past 4 years. I am not yet at a level where I can plan the day when I will quit my job. If my business keeps growing I should be able to quit within the next 5 years. This will be quite an achievement… but still… I’m very nervous about it.

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ETF Asset Allocation Model How To Pick The Right One


On Valentine’s Day, I’ll tell you how to choose the right one. The one that you stay with throughout the years. The one that will be there for you no matter what. The one that you are glad you chose a while ago. I’m talking about the right ETF asset allocation model of course ;-)

Obviously, I can’t give you specific financial advice nor can I tell you how to trade your ETFs. However, I can help you out with a few guidelines. The rest will need to be done with further research or with the help of a financial advisor.

A few Rules for the Perfect ETF Asset Allocation Model

Since we already discussed how to build a ETF portfolio, I will go straight to the point:

#1 Make Sure You Consider Your Risk Tolerance

If you are not much into wild fluctuations, I would avoid trading ETFs linked to emerging markets, for example. I would also avoid investing too much in stocks and commodities ETFs. But most importantly, I would avoid investing in a Bond ETF thinking it is secure.

In fact, bond ETFs follow bond prices and don’t give you any security. Therefore, if you are looking for safer investments, I would leave part of my money in regular bonds and GICs. Bond ETFs have smaller fluctuations than the stock markets but they will surely go down upon interest rate increases.

#2 Make sure you are well diversified

Put your beliefs aside and invest in American, International and Canadian equities. I outline the latter since the Canadian market represents one of the best places to invest in the financial and commodities sectors. If you think that Europe has problems and you don’t want to invest in international ETFs; you are on the wrong track. Since we can’t predict when the stock market will surge, I think that it is safer to have a good diversification of both sectors and countries.

#3 Rebalance your portfolio once a year

If you rebalance your portfolio quarterly, you will generate trading fees. For a solid asset allocation model, rebalancing once a year is more than enough. With this technique, you won’t be exposed to concentration risk while minimizing your trading fees.

#4 If You Follow the ETF Asset Allocation Model of the Ivy Portfolio, you must stick to it

As previously mentioned in my Ivy portfolio article, one must follow the moving average and trade accordingly. No second guessing, no second thoughts; only your ticker graph along with the moving average. This is the only way this ETF trading model will workout.

#5 Choose a Well Known ETF for Each Asset Class

Instead of trying to find the best performing ETF, I would select a well established company manufacturing several ETFs. You want a solid company that will be able to trade efficiently. Forget about the flavor of the day and focus on long term investments. This is how you will build a solid ETF asset allocation model.

In the upcoming weeks, I’ll build an ETF asset allocation following the Ivy portfolio trading technique. Just for the fun of showing you how it works ;-).