Life, math and chapters in between

There I was, making slow but steady progress, then wham! Life happened, as it does. My last post was about the Breakfast Club Retro Dance, which I’m happy to say was a success. More than 100 people came out and we raised $3300, so in two years the event has raised $7100 for the Ottawa School Breakfast Program. That’s a whole lot of tummys we’re filling, many futures we’re helping.

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Delivering the cheque to Alison Sheepway at the Ottawa Network for Education

Back to the Canadian Securities Course. For people who are working full time while studying it does usually take an entire year to complete. Over the summer I got bogged down by Chapter 7 – Fixed-Income Securities: Pricing and Trading. Or more specifically, by the mathematical formulas in the chapter. I took the math tutorial and thought I had it figured out, then took the online quiz, which explained everything differently, and just got confused. Math panic swelled up in my gut.

Then Adult Me kicked in. (I didn’t even know my brain had an Adult Me function.) I realized that if I were to use this information in daily practice, I could always pull out the book again to refer back to the formulas. This was wonderful, especially since I still have math nightmares. (Seriously. It’s a day before the final exam, I’ve spent the entire year doing nothing but English and history, and if I don’t get my math credit I don’t graduate. Shudder.)

So I moved on, knowing that I wasn’t going to do well on one particular part and that was ok. I sped through Chapter 8 – Equity Securities: Common and Preferred Shares and Chapter 9 – Equity Securities: Equity Transactions, both in one weekend. I took a little more time with Chapter 10 – Derivatives and Chapter 11 – Financing and Listing Securities.

Now I’m on Chapter 12 – Corporations and their Financial Statements. Apparently all the terms I learned in Grade 13 Accounting have changed. (The bastards! How dare they!) Once I’m done, I’ll study Chapters 1-12 and sign up for the first exam.

Yikes.

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Shake your ass, save the world

Time after time it’s been shown grown-up boys and girls just want to have fun. Express yourself and get footloose with the Breakfast Club Retro Dance fundraiser. You’ll be dancing in the dark to raise money for the Ottawa School Breakfast Program.

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Rocking teased hair and blue eyeliner for BCRD 2015

Until Aug. 31 tickets are only $20 and that feeds a child for an entire month of school days. Sure, right now school’s out for summer but soon everyone will be hot for teacher again. Show some sweet emotion so kids can dream on and start their day with a full tummy.

Because love is a battlefield but getting through a school day shouldn’t be.

Get tickets & more info here

More Details, Fewer Earworms

The Ottawa School Breakfast Program provides over 2 million breakfasts a year. It’s in 177 schools across town, in all school boards and districts. That’s a lot of hungry kids. Surviving school is hard enough without being distracted by hunger.

The Breakfast Club Retro Dance is a high school dance for grownups to raise money for the Program and you’re invited. All of the fun, none of the mean girls!

You remember school. Maybe you had feathered hair and jeans so tight you needed a coat hanger to zip them up. Maybe you teased your hair and destroyed the ozone layer with all the hairspray you used. Maybe you didn’t use makeup because it clashed with your anti-establishment checkered shirt and torn jeans. Whatever your groove, this is the event for you.

We raised almost $4000 last year and *all* of the money goes to the Ottawa School Breakfast Program. Dressing up from your favourite era is encouraged. It’s a cash bar so the punch is already spiked and there are no chaperones.

The Program can provide a meal for $1/day, so each $20 ticket to the dance feeds a child for a month of school days. (Tickets go up to $25 on Sept. 1!)

It’s a good time for a great cause. On Sept. 24 shake your ass, save the world.

Get tickets & more info here

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Money in a sock drawer

A friend of mine sent me a link to a CBC story about CIBC selling negative-rate bonds for the first time in Canadian history. Negative-rate bonds means they are guaranteed to lose money, and people are buying a lot of them – CIBC raised almost $1.8 billion. Crazy, eh?

Here’s how a negative-rate bond works. When you buy a bond, you’re basically loaning money to the business or government, and they promise to pay you the full value at a certain time in the future. To make you more interested in giving them your money, they give you interest payments along the way. Really, it’s a big IOU and you’re the loan shark.

When the bond has a negative rate, you’re giving say $100 to the business/government and they promise to pay you $95 back. Why would you do it? Because you think the world is going to hell in a hurry and this may be your best bet. At least you’ll have $95.

Like the loan shark you are, if you’re not paid back in time you can take the assets they put up as collateral, they can raise cash by charging their customers more or they can call in their own debts to help them pay you back (after you break their knees, of course). What assets do Canadian banks have? Mortgages. Ah, the plot thickens!

Canadian banks are strong and strongly regulated. The government wouldn’t let them get into the pissing contest between the US and the UK when those countries were deregulating themselves into a tizzy trying to create new ways of making money that eventually led to the 2008 economic collapse. So we trust our banks. When you’re scared, you turn to people and institutions you trust.

That’s why people are handing money over knowing they’ll get less back in the future. They’re scared.

Emotions are running high right now. Here in Canada business investment is slow and the Fort McMurray wildfires took a chunk out of our economic growth when oil production stopped, according to the Conference Board of Canada. Horrible things are happening all over (another attack in France; failed coup in Turkey; race relations in the US; the UK second-guessing its Brexit vote). C’mon, Donald Trump is a presidential candidate fer cryin’ out loud.

Fear, greed and hope. That’s what runs the economy.

My friend wants to keep his money tucked away in his sock drawer. Can’t say I blame him. (Of course there’s inflation, but that’s a post for another day.)

Faces behind the figures

There’s been a lot going on lately, both in the world at large and my own personal life (Bluesfest is on, when I participate in my favourite sport – concerting). As a result I’ve been neglecting this blog, and to be honest, my studying. With a full-time contract & contracts on the side, plus an active social life and a fitness routine (yes, I actually have one), it’s hard to find the time for something I’m doing just for me.

I’m up to Chapter 6 now, on bonds. Bonds, just bonds. The entire chapter is full of terminology and I finally realized why it’s so boring.

The people are missing.

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(At Bluesfest 2014)

Sure, there are things that I can make interesting, like strip bonds and convertible bonds. Now don’t they sound sexy? Strip bonds are bonds that have been stripped of their regular interest payments and resold for just the face-value amount. So if you have a bond worth $100 that pays you 5% interest annually until it matures in five years, and you sell it to me, I can sell the bond but keep the interest payments. Convertible bonds are bonds that can be converted into shares. It’s a way companies can raise money, by first borrowing (via bonds) then selling (via shares).

But I have to work at it. I have to imaging someone on a pole stripping (not me) and someone in a convertible (hopefully me). Maybe that’s just how my mind works, but what makes life interesting is the people.

That’s why the events in the US (Orlando, Florida; Baton Rouge, Louisiana; St. Paul, Minnesota; Dallas, Texas) and the UK (Brexit) are so riveting – we’re relating to the people involved and how they’re affected.

So I’ll keep going, slowly but surely, and try to find a connection. Money and the economy affects every single person and they’re just too important to be this boring. (I have to find the characters in the text. Get it? Tee hee!)

I’ll start by imagining James Bond stripping after picking me up in a convertible.

Speaking in tongues, riddles and codes

Any group that has specialized knowledge or works in a specific industry tends to have its own language. That language makes it easier for group insiders to communicate, and by making it harder for outsiders to understand, it also helps secure the group’s status as experts.

What does that mean? It means that as I’m working my way through the Canadian Securities Course materials, half the time I don’t know what the hell they’re talking about. The financial industry is in dreadful need of a plain language makeover.

Here’s an example. The book says the national debt is “the sum of past deficits minus the sum of past surpluses.” Seriously, was that necessary? No wonder financial literacy is so low, with language like that! (My version: the national debt is how much Canada owes.)

Chapter 4: Economic Principles was not as much fun as I’d hoped. (Shocking, I know.) Finally, after three chapters on rules and regulations, we were getting to the good stuff. Interest rates, inflation rates, business cycles, oh my! I could see how it all affected actual people.

High interest rates are good for savers but make it more expensive to borrow money for a couple buying a home or a company expanding its manufacturing plant. High inflation is bad for people on fixed income like pensions, like the little old lady I’m going to be one day, because rising prices means your money doesn’t go as far and you can’t buy as much. Business cycles ebb and flow, affecting labour relations and unemployment – and who hasn’t had to hit the pavement to look for a job at some point.

Then I took the quizzes – and spent most of my time trying to figure out what the questions were asking, never mind what the answers could be!

This is going to take some work. I’m onto you, financial industry, and I will learn your secrets. I refuse to be an outsider with my own money. I’m coming for you – and this time it’s personal.

Tracking mah money

There I was, studying away, plowing through Chapter 3 when suddenly wham! Life happened. You know those situations, when you get some news and you put your regular life on hold for a bit to deal with something big. We’ll return to regularly scheduled programming (studying) soon, but meanwhile, writer & editor Kaarina Stiff asked me how I track my money.

Are you ready to hear my magic secret? I use – drumroll please – a notebook!

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Every month I sit down with my online banking accounts on my computer and do a check-in. It takes less than 30 minutes. When I hit a milestone I draw huge exclamation marks and stars; yes, just like a teenaged girl’s diary. I use funky colours and whatever else it takes to make it more fun and less of a chore.

Knowing what’s coming in and going out is important, afterall. How can you make any other financial decisions if you don’t know what you’re dealing with?

On my Financials page, I list my amounts in three categories: short-term (cash), medium-term (stocks, bonds, TFSA) and long-term holdings (RRSPs). Then I add them all up for my assets. I also add up my mortgage and any debt I have that month on my line of credit or credit card – that’s my liabilities. I minus my liabilities from my assets and voila! That’s my net worth. (Plus my condo – real estate rah rah rah!)

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On my Spending page, I split it out into fixed expenses (mortgage, condo fees, utilities, insurance, etc.) and variable expenses (groceries, restaurants/entertainment, gas and other). I add them up to see how much money is going out every month.

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When I first started I forgot to include gas. I also accidentally included my monthly savings under expenses, then couldn’t figure out how I was overspending every month while my net worth kept increasing. Oops.

If you’re more technically inclined than I am (which ain’t hard), there’s software programs like Quicken. The starter edition is $40 (and if you work for yourself remember to expense it!). It connects to your online accounts and puts your spending into categories.

However you do it, what matters is that you know what’s happening with your money. If that calls for a fuzzy cow pink pen, so be it.

Hitting the regulations wall

I hit the wall in Chapter 3: the Canadian Regulatory Environment. Twenty-eight pages of tedium, plus online exercises. I’m telling myself, you gotta get through this to get to the fun stuff in Chapter 4: Economic Principles. (Yes, by comparison, it is the fun stuff. At least we’ll get back to talking about money.)

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Chapter 1: The Capital Market managed to make money seem like a force for good. Of course it can be, but it’s really just a thing. The people behind it are what matter.

Chapter 2: The Canadian Securities Industry was a little easier, despite multiple definitions of underwriting. (Anyone else think of underwire bras? No? Just me then.)

Ok, one more push to finish. I’m trying to convince myself this is sexy stuff. Arbitration sounds fancy. Examples of unethical practices should be juicy. Trying really hard not to think of Paul Giamatti in his Billions bondage gear. I may need to watch Richard Gere in Pretty Woman instead.

Highlights of what I’ve learned so far:

  • Capital is just money that’s available so you can do stuff with it, like invest.
    Having more capital (money) means people can invest, businesses can increase productivity and governments can get more stuff done. So capital is good.
  • Lots of foreign countries invest in Canada because we’re seen as safe and secure. (Peace, order and good government baby!)
  • There are seven different stock exchanges in Canada, not just the TSX.
  • The big six banks run >90% of the country’s banking assets but there are oodles more banks (yes, oodles. Hey you’re not the one being quizzed. Believe me, I’m saving you.).
  • There are entirely too many definitions of underwriting.