Since my last post I’ve been studying like mad. Last Saturday I wrote the final exam for the Canadian Securities Course and yesterday I found out I passed. That’s it, it’s over – the brilliant idea I had in Spring 2016, started working on that May, wrote the first exam last December – tout fini.
(I really need better hobbies . Say, crystal meth. )
Just kidding. Actually, I learned stuff. I worked my brain in different ways. Studying during my lunch breaks and on weekends kept me off the streets and out of trouble, which is important for a punk like me.
(Obviously I’m giddy from the Christmas sugar cookies. Bear with me.)
I’ve already started putting the knowledge to good use. I do a lot of volunteering, and this year for the first time I joined a finance committee for one of the organizations. Not only do I understand everything at the meetings, but I was able to productively participate in a discussion that led to a better asset allocation for its contingency funds – the money the organization depends on in emergencies.
That’s right – by learning about money, I was able to help people who really need it. I know it’s just a start, but it got real.
(Aside 1: Speaking of good causes, Interval House of Ottawa is building an animal housing area so that women and children can bring their pets when they flee. We know that many abusers also hurt the animals. We know that many women stay behind because they don’t want to leave their pets. We know there’s a strong connection between pets and mental health. Click here to find out more.)
(Aside 2: Also this year, my Breakfast Club Retro Dance raised $3500, bringing the three-year total to $10,700 to help kids start their school day with a nutritious meal through the school breakfast program. And the Food Bank drive I organized at the office brought in $425, which the organization can turn into $2125 worth of food through its partnerships with food industry donors. This raising money is pretty addictive – maybe I don’t need crystal meth after all!)
After the holidays (anyone else find it the season of obligation, stress and debt?) I’ll start thinking of other ways to use my new money powers for good.
It’s been a while, I know. I took a break for the holidays, then I went on holiday. Now I’m here with no excuses to put off the second part of the Canadian Securities Course. It occurs to me though that an outline of the topics covered might be of interest, if only so you have an idea of what I’m learning about.
Volume 1 and the first exam covered:
The Capital Market
The Canadian Securities Industry
The Canadian Regulatory Environment
Fixed-Income Securities: Features and Types
Fixed-Income Securities: Pricing and Trading
Equity Securities: Common and Preferred Shares
Equity Securities: Equity Transactions
Financing and Listing Securities
Corporations and Their Financial Statements
Not a whole lot of everyday practical tips here, or anything I’d really consider personal finance. Volume 2 covers:
Fundamental and Technical Analysis
Introduction to the Portfolio Approach
The Portfolio Management Process
Fundamentals of Managed and Structured Products
Mutual Funds: Structure and Regulations
Mutual Funds: Types and Features
Segregated Funds and Other Insurance Products
Exchange-Listed Managed Products
Working with the Retail Client
Working with the Institutional Client
Hedge funds – that sounds sexy. There are exchange-traded funds (ETFs) in my future too. I’m up to Chapter 15 and I’ve actually found some practical tips! But that’s a story for another post – I’m off for a study break to watch another episode of the TV show Bitten (based on a really good book series by Canadian author Kelley Armstrong).
I can’t do math (specifically algebra). Have I told you that lately? As sure as I am that I have blue eyes, I know I can’t do math. So I was understandably stressed while preparing to take the first exam for the Canadian Securities Course. Even one of the easier formulas like this:
Made my brain look like that:
But I can do words and study and memory. I decided to tackle the formulas a different way. Instead of the mathematical shorthand seen above, I broke it down into words I could study and memorize:
Yield to maturity equals interest income plus or minus price change, divided by, face value plus price divided by two.
Once I wrote it out enough times I could add a little shorthand of my own:
YTM = interest income +/- price change, divided by, FV + price divided by 2.
I was getting somewhere.
But still – if there were too many math questions I was in for a hard time. Seven months and it came down to this. I needed at least 60% to pass and while many people were cheering me on, I never take anything for granted and my concern was real (there is nothing false about my modesty). I was just going to have to suck it up and ride the fall. I went into the exam prepared to be brave enough to fail.
The time came, the proctor handed me the exam booklet and I took a look. There, of the 100 questions, only 10 even had numbers in them. I only used one formula I had memorized and there was one calculation I could do IN MY HEAD.
Results were swift – three days later I emitted an “Eep!” when I checked online and found I had passed. I didn’t ace it but I didn’t squeak by either. I did something that scared me, did it successfully and lived to tell the tale. If there’s hope for me, there’s hope for just about anyone.
Here’s a quick roundup of a few interesting things.
US Banks Finally Getting Sued for the Great Recession Crash
Remember back in 2008/2009 when the US banks lent people money to buy homes they couldn’t afford, then raised interest rates and foreclosed? Miami nearly went bankrupt — if people lose their homes they’re not paying property taxes. But no one went to jail because for years before the crisis the banks and other financial institutions changed the rules in their favour (deregulation). Now Miami is trying to sue the banks. This will be interesting. Read all about it in the Washington Post
Canadian Banks Overcharging Customers
Meanwhile here in Canada the big banks are turning themselves in, admitting they overcharge customers and paying them back. Here’s the key point in this article – it is just too hard for average people to figure out what’s going on with their money. Most of our financial information comes from people trying to sell us something, which makes unbiased decisions much more difficult. Read all about it on CBC
Hillary & Donald: It’s Almost Over
Finally, is anyone else out there waiting to see if election anxiety affects the markets? When people get nervous they start pulling their money out by selling off their stocks, which sends prices lower. That’s what I love about the whole financial and economic scene – it’s not about numbers, it’s about people, and whether they have hope or fear for the future. I won’t direct you to any article about the American election though; I think we’ve all had enough over the past 18 months.
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.
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.
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.
(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.
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.
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.)
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.
When the global economy collapsed in 2009 (and the world’s biggest capitalist society needed government bailouts – wow!) we all discovered we really didn’t know much about how or why. We recognized that our financial literacy is lacking. As a current Facebook meme says, I’m sure glad I learned about parallelograms in school instead of taxes…
Money is a funny thing. I like learning about it and talking about it. It comes from growing up without it. Over the years I’ve collected a little library of books on the topic, I subscribe to a magazine about it (MoneySense), I even have a monthly meeting with a group of women to discuss it. But even with all this, I know there’s still so much I don’t know.
Sure I know how to budget and save and invest – to a certain extent. I know there’s a whole other world out there and, despite having some math fears (seriously, I have recurring nightmares about high school math class), I took a big step.
I signed up for the Canadian Securities Course (CSC), the foundation you need to work in the financial industry here. The plan is to take the course over its suggested 135 to 200 hours of study, and to write about what I’m learning along the way. I’m hoping it’ll help me find new clients to write and edit for in the financial industry. At the very least I’ll learn more about how to make the most of my money so that one day, I won’t have to work so hard for it.
Will I be spending my summer Sunday afternoons on my balcony in studying bliss? Or will I have to replace my new financial calculator multiple times from throwing it in frustration?
Let’s find out. Let’s improve our financial literacy and do some book learnin’ about this money stuff. Most importantly, let’s find out how to avoid eating cat food in our old age.
Thirty years ago today my mom and I left my dad for the last time. I had some clothes stuffed into my school bag, she had some stuffed into two plastic bags. We had bus fare and an extra quarter to call the women’s shelter for directions. That means we started a whole new life for $2.
My mom had no education, no money, no options. Sometimes seeing what not to do gives you the best lessons. Thanks Mom.
The TTC transfer that got us to the women’s shelter that day has been in a photo album for 30 years.