As I write this, Canadian 30-year bonds yield 1.674% per year. If we assume that Canada will be able to maintain its 2% inflation target, these bonds will lose purchasing power for the next 30 years. Investors today are willing to tie up money for 30 years and get back less at the end of it all. This seems remarkable to me. Of course, investors can choose to sell these bonds before they mature, but if we follow the life of an individual bond, its owners will share the loss of purchasing power for 30 years. Some investors may hope yields will drop further creating a capital gain. Some may think inflation will drop or that we might even have deflation. Others may think that alternative investments, such as stocks or real estate, will fare worse. I don’t know if bond investors are being rational, but I find it hard to look past the apparent near certain loss of value. Over 30 years I’m hoping my stocks will roughly triple in real value and that my house will hold its value. I ...

I managed only one post in the past two weeks looking at the Air Miles fiasco: Thousand-Foot View of Air Miles Here are some short takes and some weekend reading: The New Yorker cracked me up with a piece on “fact-resistant humans.” There’s not much of a connection to money, but it’s a good read nonetheless. Mr. Money Mustache does an interesting case study of a young man’s finances and spending. A great quote: “it is impossible to out-earn the habit of spending all your money.” Potato discusses the problem of companies such as Valeant and Nortel growing to dominate Canadian stock indexes. It’s true that when such companies topple, they bring the index down. But the flip side is that when they soar, they bring the index up. It’s only market timers who are harmed over the long run by stocks that inflate and deflate. Million Dollar Journey looks into tax-efficient non-registered investments for children. Canadian Couch Potato continues his series on “smart beta” w...

Many collectors are upset that their Air Miles are set to expire and choices for cashing them in are slim. Boomer and Echo’s open letter sums up the current situation well. Ellen Roseman has even started a petition calling on LoyaltyOne to help collectors save their Air Miles. Sadly, this conflict was quite predictable. Air Miles resemble a currency. In many ways it’s as though LoyalyOne minted their own money, and they control the exchange rate of cashing in Miles for flights and other goods. Collectors of Air Miles got used to one exchange rate, but it was inevitable that as the Air Miles “money” supply grew, LoyaltyOne would have a growing incentive to tinker with expiration rules and change the exchange rate. In some ways, this reminds me of when my son was young and held onto cheques, thinking they were as good as money. I had to explain that cheques sometimes bounce and that they expire after about 6 months. It’s best to deposit them as soon as possible. Similarly, ...

Here are my posts for the past two weeks: Thinking Differently about Investing Adventures in Credit Reports Here are some short takes and some weekend reading: CBC News reports that Advertising Standards Canada will be cracking down on sponsored posts on blogs. This sounds great to me. I’m tired of getting part way through a blog post and realizing that I’m reading paid-for dreck. Boomer and Echo explain why Echo made the switch from dividend investing to index investing. The comments are civil, and in a few cases they illustrate some dividend investors’ beliefs that can only be true if dividend stocks earn higher total returns than other stocks. One example is “In an upcoming age of slower growth, I believe it’s important to own birds in hand (dividends) vs. two in the bush (capital gains). If I’m correct, dividend investing will be more beneficial.” Another example is “it’s simply not true to generalize that a dividend stock’s price will be held back by its dividend....

Equifax and TransUnion are required to provide Canadians with free copies of their credit reports once per year, but you only get these reports if you ask for them. Fortunately, asking for these reports by automated telephone system or online is fairly easy as long as you can get past the authentication questions. Here I describe my experience getting these reports. It’s not too difficult to search for “Equifax free credit report” or “TransUnion free credit report” and find ordering instructions, but don’t be distracted by their attempts to divert you to reports that aren’t free. Find the word “free” on the web pages. TransUnion Request TransUnion offers a way to order free credit reports online that seemed easy enough, but didn’t quite work for me. The problem was that one of the questions they used to authenticate me was based on errors in my file. They crossed up my home address with that of one of my family members. I know what TransUnion thinks my address was 13 years ...