When and How to Give Advice

Rule 1: Give advice only when it's asked for. I have made the mistake of offering advice ... very good advice ... to people who weren't ready or willing to listen to it. As I was giving the advice, I looked into their eyes and realized there was zero chance they were going to pay attention to what I was saying. I thought to myself, "This person has no idea how valuable this could be to him."

Rule 2: Give the same good advice only once. I have friends and colleagues who are perennially in money trouble, and to whom I continually explain how to get out of debt and develop wealth. This is a foolish habit of mine. If you give someone good advice and he doesn't listen to it the first time, it is better to say nothing from then on. Just nod sympathetically when he tells you, every time he sees you, how life has screwed him.

Rule 3: Make everyone but close friends and relatives pay for your advice. Countless psychological studies have proven that people don't value things they get for free. If you want people to listen to your advice, charge for it. If you want it to be taken as seriously as it should be, charge a lot for it.

When and How to Give Money

Rule 1: Don't give anyone but close friends or relatives money for free. You will almost always regret it. I give away hundreds of thousands of dollars every year, and it is almost all wasted. It is wasted because the receiver almost never invests it wisely. Easy come, easy go. That's the way it is. I continue to give away money because I can't help myself. It seems worth it to me, because every once in a while - maybe 10 percent of the time - it is invested wisely.

Rule 2: If you do give away money, don't expect it to be used wisely and don't expect gratitude. More often than not, you will create resentment in the heart of the receiver.

Rule 3: If a friend or colleague has a good business and needs a loan, extend him one - but only if (a) you think it's a good investment on an arm's length basis and (b) you are willing to charge him an arm's length interest rate on the loan.

Rule 4: An arm's length loan has a written contract, terms, and collateral. Be satisfied with all three before you lend the money.

Rule 5: Realize that even though you have the power to seize the collateral if your friend or colleague reneges on the loan, you may not want to do that, because it might end the relationship. Figure out beforehand which is more important - the return of your loan or the continuation of your relationship. If the latter, be prepared to lose everything without resentment.

By Michael Masterson

RRSP Calculator

An RRSP Calculator can be found here.

Saving Rates in Canada

The two Canadian financial institutions that offer high interest rates on savings are
ING Direct and PC Financial.

The current rate from ING Direct on saving accounts is 3.5% which is not the top rate that can be found.

PC Financial offers one of the highest rates on saving accounts - 4.0 %. However, a minimum $1000 daily balance is required.

Global investing dos and don'ts from a top investment manager

Global investing expert Gavin Graham, chief investment officer of theToronto-based Guardian Group of Funds (GGOF), says Canadians are on theright track in diversifying their investments on an international basisas long as they do it the right way.

One way to cope with the volatility of overseas markets is dollar-cost averaging, he says, "where you buy more when it is cheap and less when it is expensive.

"You shouldn't be frightened off because we've had a sharp sell-off.There have been numerous sharp sell-offs in the past few years but generally they have been pretty good times to buy."

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The Coming Economic Collapse

This is the title of a new book by Stephen Leeb in which he predicts that the price of oil is going to reach $200 soon. He also gives some stock recommendations. He believes the coming decade will be very similar to the 70-s when stocks did very poorly. So his first stock recommendation is to avoid index investing. "Stay away from index funds, large-cap funds and any other vehicle that mirros the broad market." I guess that includes ETFs that track a broad market index. His other recommendations:
- even worse will be the so-called defensive stocks
- avoid small-cap stocks as well

Investment Jackpots according to Leeb:
- Gold and gold shares
- Oil and oil shares, including oil service companies, in particular.(among them, Shlumberger)
- Real estate
- Companies well positioned to capitalize on growth in China and India such as 3M, Coca-Cola, Procter & Gamble, and Texas Instruments
- Zero-coupon bonds as a hedge against deflation

World Glut 2006*

Somebody told me that markets, on average, drop seven times (7x) faster than it takes to rise.  This year we're close : from Dec 31 to now, markets have risen and given back near everything  in 3 weeks, since 18 May.

The entire western world along with Japan have been the leading "producers" of easy money the  last 4-5 years after the dot.com blowout. In the simplest of terms, monetary investment  will expand to fill the amount of liquidity alloted to it. That is to say, the recent run up  in many sectors and markets have been feeding on the "easy" money which has been injected  into world economies over the last years...

Our estimation of this from January this year was that by Q4/2006 the FFR (baseline Fed interest  rate) would be 5.25 or 5.5% (2 more 25bp hikes). We are sticking by this figure.

Randolph Buss

http://www.safehaven.com/article-5375.htm

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The real stock market panic is yet to begin

While a general stock market crash may pressure all stocks (including precious metal stocks) to  go lower, precious metals and precious metal stocks are being offered now at significant  discounts (much of the excess that caused sharp drops in price has been washed out).  

In the years ahead, the high prices we have all seen in gold and silver will be surpassed many  times over. In addition, leaving your money in short-term cash with no price risk while receiving  5%, looks a lot better than losing money in stocks or real estate! Suddenly, risk is a four letter  word and cash is not trash.

http://www.moneyweek.com/file/13994/the-real-stock-market-panic-is-yet-to-begin.html

New US Depression

As I have said before, possibly the best definition of a depression is a period when most people's standard of living drops significantly.

Youcan also define it as a period when distortions in the economy and misallocations of capital are liquidated. The distortions are almost always the result of government intervention in the economy, through things like taxes, regulation and currency inflation.

Those are the factors that caused the unpleasantness that began in 1929. Since the US government is exponentially more powerful and invasive today than it was in either the 1920s or the 1970s, I expect the consequences will be much worse this time around. Things could have come unglued,and almost did, back in the 1970s. I don't see how the US will dodge the bullet this time.

Although that's not really a good analogy, in that, for reasons we don't have time to explore in depth, a depression in the US is probably inevitable this time.

By Doug Casey for for The Daily Reckoning.

http://www.moneyweek.com/file/13928/how-to-prepare-for-a-new-us-depression.html

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