Investing in Mortgage Investment Corporation (MIC)

Mortgage Investment Corporation 16

What is mortgage investment corporation (MIC)?

 

Lately, mortgage investment corporations have been getting an increasing amount of media attention. Yet if you’re interested in investing in general, there’s very little information out there on what mortgage investment corporation (MIC) is and how one can benefit from them. I’ll try to explain it to the best of my abilities and even share my personal experience with one.

MICs are investment vehicles that focus primarily on mortgages. Thousands of investors pool their money together. Then a newly formed MIC starts lending out the funds to qualified borrowers. MICs are professionally managed by a management team that is compensated with management fees and incentified with a partial cut into profits.

 

Mortgage Investment Corporation

Mortgage Investment Corporation

 

In reality, mortgage investment corporations are just like banks. Banks borrow money from depositors and lend money out to borrowers. The difference between the amounts of money they make from lending and interest they pay to depositors is their profit.

Somewhat similarly, mortgage investment corporations raise their capital from investors, lend the money out, and funnel the profits back to investors. Some of them choose to also borrow money from banks at low interest rates – but not all of them.

There are many MICs currently on the market, some private and some public. The amount of money flowing into them from investors attracted by very reasonable yield is always exceeding previous years numbers.  Largest players in this market include Firm Capital, MCAN Mortgage Corp., Timbercreek Senior MIC and Trez Capital MIC.

While the amount of capital under management and lending guidelines vary from company to company, the general business model behind generating income is very similar between them.

 

Why I’ve decided to invest my money into MIC:

 

I’ve stumbled into MICs almost by accident. At the moment, I wanted to park some of our money in a investment with good returns, but at the same time somewhat liquid – meaning we’d be able to get the money out even if it meant paying a penalty.

High interest saving accounts offered by major banks do not offer meaningful returns these days – you’ll be lucky to get anything over 2%. On the other hand, putting money into an index or mutual fund  (even with stable history of returns) didn’t seem appropriate for this money. Hey, I like mutual and index funds just like any other guy, but we all know they can go up and down rather wildly.

 

Investment

 

Through our financial advisor, we’ve found Crossroads DMD – a Calgary based mortgage investment corporation. They’ve been in business for a number of years, and pride themselves on delivering outstanding returns to their investors while operating a portfolio of many millions under management. This includes first and second mortgages, bridge financing, and construction loans.

Unlike conventional mortgages, these types of mortgages come with higher interest rates. While some people might say it’s because the risk is greater (and honestly, I tend to agree with them to some degree), one must understand this area of financing is very under-served and thus the amount of capital available is limited. Big banks that come with big capital prefer to deal with conventional mortgages, so smaller companies like Crossroads DMD are able to capitalize on small and medium-sized loans in this specialty market and command higher interest rates because of it.

When they lend out investors money, borrowers put their properties on the line. This means these mortgages are secured by real hard assets thus minimizing the risk to investors. They won’t lend out more than 85% of the asset value – which means even if the borrower goes belly up, the investment corporation will be able to recover the funds.

Over the last several years, Crossroads DMD delivered on average over 10% to their investors in form of dividends. Since inception, the average rate of return is 10.6% per annum.

This particular investment also features hurdle rate – a specific target for return on investment that must be reached before the profits are distributed to shareholders. Investors get paid first! Investors also get a 10% share of the profits above the hurdle rate thus benefiting from great performance of the management team. What a great incentive for the management to deliver good returns.

While the investment is liquid and money can be returned to you upon request, an early exit fee (sometimes called “retraction fee”) will apply if money is withdrawn before 3 year mark.

 

Here’s a snapshot of our investment:

 

Amount invested (Nov. 17, 2011): $19,200 split between two TFSA accounts.

Investment balance (Mar. 31, 2014): 24,192.15

 

Mortgage Investment Corporation

Mortgage Investment Corporation

 

Mortgage Investment Corporation

Mortgage Investment Corporation

 

Return on investment: 10.44%

Personally, I’m quite happy with this investment. While some index funds showed outstanding gains over the same period of time, I feel like this is a more stable investment for me. The returns are stable even through tough times! The management team does a great job taking care of investors’ money, and the dividends keep dripping steadily into account. Also, while I might have to pay an exit fee, I have the access to these funds at any time.

All in all, good place to park the money for 3 to 5 years with fairly predictable outcome.

 

Mortgage Investment Corporation is not for you if:

 

– You are not comfortable with taking risk

 

Let’s be honest, the great market crash of 2007 is still not that far behind us. Lots and lots of real estate investments went belly up or taken a serious hit, so some people might not be comfortable with the idea of investing into a mortgage company. I know my first reaction was like that! But after reviewing company’s strict lending rules and their historical returns on investors’ money, it became clear to me that the management in charge of investors’ money is absolutely top notch.

Here’s a snapshot of returns investors received over 10 years:

 

Mortgage Investment Corporation

Mortgage Investment Corporation

 

Notice how returns have not changed much during our last real estate crash? Yes, the returns went down by 0.4% but never dipped below their hurdle rate of 10 percent. This means their lending practices are very conservative, and their performance doesn’t correlate with real estate market performance in general.

But I’m not going to sit here and tell you this investment is completely safe. The risk is always there, and you have to be comfortable with risk. This is not a magic investment that combines higher than average returns and low risk! Mortgage investment corporations can and do go out of business, so approach this type of investing with caution. Do you homework, read the memorandums, and do research on past performance and current management team.

Check out this awesome checklist for picking MIC to see what you should be paying attention to while considering your options.

 

– You’re looking for an “exciting” investment.

 

Putting your money into a mortgage investment corporation is not very exciting. There are no stratospheric returns to brag about. Mortgage investment corporations are not widely mentioned on the news like latest Facebook IPO. You simply put your money in, and it starts dripping dividends into your account in a form of cash distribution or reinvestments. You won’t hear from them unless you receive a statement with your earnings. And if you’re trying to impress your friends with this investment at the next cocktail party, most likely you will put them to sleep explaining what they do.

Some investment can be exciting. For example, one of our investments in solar energy is truly exciting to me because of the difference it will make in Ontario. Green! Solar! Energy! Sounds pretty cool, eh? Mortgage investment corporation on the other hand is a very predictable and boring investment that simply drips dividends into your account. Yawn.

 

 

Five Useless Financial Products

Useless Financial Products

Let’s start a list of useless financial products

 

While some financial products can truly by lifesaving, not all of them are. Some of them are truly useless in my opinion, and I can’t figure out why people even consider purchasing them.

 

– Personalized cheques ($60)

 

I can never figure out why anybody would pay extra money to have personalized checks. I understand that some people feel the need to express themselves, but I can’t imagine form of payment being a good medium for it. We already have plenty of questionable ways to express ourselves –  bumper stickers and stick figure families on your cars. But personalized cheques? Whom are you trying to impress with your dolphin-themed cheques? Your local ATM machines? Most cheques you send through mail to pay bills (if you’re one of the seventeen remaining people that do it) get deposited automatically without people even looking at them.

 

Useless Financial Products

Useless Financial Products

 

On top of everything personalized checks cost money. In my mind, you might as well burn $60 (the average cost to order customized cheques) and be done with it. Or send it to me, I’ll find a better use for them.

 

– Overdraft protection ($5/month or more)

 

Overdraft protection works like this: If you run out of money on any given day but another expense comes in, the bank still processes the payment and charges you a small fee per day until your bring up your balance (in addition to your monthly fee). In reality, you’re paying your bank a fee to cover your ass.

Here’s a simple solution – keep an eye on your bank accounts, and make sure you have enough money to cover all expenses. Granted, we all been there. I’ve bounced a few checks myself when I was broke and an unexpected utility bill would show up out of nowhere. But in every single case, it happened because I wasn’t paying attention – and paying your bank more money to cover your butt is a terrible solution. A better solution is to start paying attention.

Ideally, you want to have enough money in your account to pay for all your monthly expenses at the beginning of the month. This way you never have to worry about dipping below the liquidity line. But if you’re not quite there yet, figure out when your bills clear your account and be proactive.

 

– Mortgage life insurance

 

I’ve already covered mortgage life insurance in one of my earlier posts. It’s designed to pay off your mortgage if the mortgage holder (you or your spouse) suddenly passes away. Sounds like a good idea?

In reality, mortgage life insurance protects your bank more than it protects you and serves as an additional revenue source for your bank.

– Mortgage life insurance is not flexible enough.

– It is generally way too expensive when compared to a simple term life insurance.

– You can run into problems with collecting money from it.

 

– Christmas dinner prepayment plans

 

Recently, I’ve seen an ad on TV for prepaid Christmas dinner. The plan is pretty simple – the company debits your account once a month twelve times straight, and once Christmas comes it delivers a beautiful dinner to your door – complete with turkey, wine, gravy, and all the other fixings. Sounds delicious, but is it a good financial product?

 

Useless Financial Products

Useless Financial Products

 

First of all, you’ll be greatly overpaying for this dinner. Not only you pay for all the products at inflated prices, but you also pay company profit (they wouldn’t do it just for nothing, am I right?), and marketing costs including the cheesy ad on TV. Second, you’re basically hiring somebody to take money from your account and put it aside for later use. Isn’t that something you can easily do yourself?

Simple solution: figure out the cost of your Christmas dinner, divide the amount by twelve, and setup an automatic bank transfer into this savings account. Takes about 10 minutes! Twelve months later you’ll have the money ready for your Christmas dinner without overpaying for it. Same result at much lower expense. In our family, we take the exact same approach with gifts and presents, and it works out beautifully!

 

– Extended warranties

 

Last time I bought an MP3 player at a local electronics store, I was surprised to be offered extended warranty for it. Seems to me they now offer extended warranties even on smallest items imaginable – from toasters to shoelaces. The salesperson explained in lengths how extended warranty protects my investment (by the way, it’s not an investment!). Being a big financial nerd, the whole premise of extended warranty is laughable to me:

 

Useless Financial Products

Useless Financial Products

 

– Most products these days are fairly reliable, especially if you go after higher quality brands and do your homework. They might not last you a lifetime and get passed on to your kids (not that they’ll want it anyway), but most likely they will last past the date the warranty expires.

– Most likely, you already have extended warranty with your credit card (provided you pay for things with credit cards). Most cards issued today automatically double the manufacturer warranty offered for the product making extended warranty somewhat useless.

– A lot of stores offer hassle-free return policy that once again makes extended warranty useless. If you have Costco membership, you can bring any item you’ve purchased back if you’re not happy with them, and they’ll refund your purchase without asking questions. No need for extended warranty.

Overall, extended warranty on smaller items became yet another highly profitable revenue source for stores and provides very little benefit to an everyday consumer. To me, extended warranty on cheaper items is one of the most useless financial products.

 

I’m sure you can think of few more. Share them in comments!

 

 

 

Three things I wish I knew before investing in mutual funds

Investing in mutual funds 2

Investing in mutual funds is a great idea

 

One of my core beliefs is that you have to put money aside and invest it to make it grow. Mutual funds were my first choice for investing back when I’ve started educating myself about investing money in general.  Simply saving the money in your bank or purchasing GIC’s is a sure way to lose money because of inflation. Inflation will slowly eat up your savings, and Guaranteed Investment Certificates (GIC) returns are extremely low and won’t protect you.

Investing in mutual funds

Investing in mutual funds

Investing in mutual funds sounds like a great idea for beginners, and in most cases mutual fund investing is a very appropriate choice. Mutual funds are extremely easy to purchase – if you can do online banking, you can purchase mutual funds. They’re diversified and in general it’s hard to lose all of your money with mutual funds. And what’s most appealing to me – you don’t need to manage them. You basically buy into a fund that is managed by a professional team; you personally don’t need to do anything but open up statements once in a while and watch your money grow (hopefully).

These were the reasons why one day I’ve decided that mutual funds are the best thing since cheese you put on sliced bread, and searched for a mutual fund company representative in my area. After sitting down with him, most of my savings that were sitting in the bank were used to buy mutual funds, and for the next little while I felt like Gordon Gekko in the making – after all, I now owned tiny pieces of some very large companies and large pieces of very tiny companies.

And in all honesty, it was a good learning experience for me – but I wish some of the things I’ve learned later were known to me before I bought my first mutual funds.

 

Mutual fund salespeople have to get paid

 

When you walk into a brokerage company ready to start investing money in mutual funds and start talking to an agent, make sure you know how they get paid. While it might be an awkward question to ask, I think this is one of the most important questions that need to be answered before any transaction takes place because not all mutual funds sales reps are created equal.

Quite a lot of them are paid on commission – these are usually employees of larger brokerage firms. They won’t charge you anything to do an analysis of your financial situation, and will purchase mutual funds for you through their company. Now, since nobody is working for free, the question is how do they get paid? They might receive a salary from the brokerage company, but in most cases, the majority of their income comes from commission paid by mutual fund companies for recommending their product. In some cases, sales commissions are their sole source of income.

This is where things get interesting –  depending on the mutual fund their commission may vary. Some mutual funds choose to pay a higher commission for recommending their products, which in turns creates a conflict of interest, at least in my mind. If product A pays me $5,000 commission and product B (which may or may not be a better product) pays $2,000 commission, can you trust my opinion? My spider sense is tingling, and so should be yours.

Others are “fee only” consultants which means you pay them an up-front fee for doing an analysis of your financial situation, and making recommendations – which funds to purchase or how to re-balance your portfolio. This is more a “do-it-yourself” approach as then you can purchase recommended mutual funds through an online broker (which isn’t that hard) or your bank. Personally, I’m more comfortable with this approach because one might argue the advice you get from an independent consultant isn’t affected by commission payments.

If I was to go back in time and start investing in mutual funds all over again, I would try to deal with “fee-only” consultants simply because of trust issues. It is my personal opinion (underline “personal opinion”) that when somebody gets paid a set fee, their recommendations will be less biased, and geared towards products that are better for me, not the ones that pay higher commission.

Word of advice: when investing your money in mutual funds, make sure you know how your broker or consultant is getting paid. While it might be an awkward question, you must know this and keep it in mind when making your purchasing decisions. 

 

The fund management needs to get paid too

 

All actively managed mutual funds charge for their services. After all, people who make buying and selling decisions around the fund can’t do it for free. They also need offices, marketing budgets, and fancy coffee for visitors. In most cases, mutual funds pay a percentage of their assets to a management team and that amount is called MER (management expense ratio). You can find the percentage paid to management in the prospectus document given to you (or find it online). Here’s a typical breakdown of management fees:

Investing in mutual funds

Investing in mutual funds

You have to be aware of the MER charges when investing your money in mutual funds because they do affect your returns. After all, if your fund gained 10% last year, your actual return would only be (10% – expense %). Some funds have higher expenses, some have lower ones. For example, index mutual funds almost always have lower expense ratios which make them far more appealing than mutual funds pushed by big brokerage companies, sometimes as high as 2.7%. You might not think this is a huge amount, but over the long period of time even 1% difference in MER charges makes a huge difference on your overall portfolio. If you feel like playing around with numbers, check out this calculator to get an idea how MERs can affect your portfolio performance.

Also, keep in mind that fund’s management team gets paid either way. Whether your fund loses money or makes money, the MER amount is being taken out of the mutual fund and transferred to mutual fund management team. While some people might say that actively managed mutual funds deliver better results and thus make up for higher expenses, a number of studies find that only a minority of mutual funds beat the market.

Personally, I wasn’t aware of management expense ratios when I was taking my first steps into investing world. To me all funds sounded the same, and the only number that mattered was their performance. If I was to start investing in mutual funds all over again, I would stay away from funds that charge high MER and instead look into cheaper index funds or ETF funds.

Word of advice: when investing your money in mutual funds, be aware of management expense ratios (MER), look for them in prospectus documents, ask your broker about them, and keep them in mind when choosing between funds.

 

 Some funds have deferred sales charges (DSC)

 

Most mutual funds have sales charges associated with them. Sometimes they’re charged right away and taken out of your investment thus reducing your buying power (these funds are known as front-loaded). Others charge you a sales charge when you decide to sell (back-loaded) and the amount  is prorated to the length of time you’ve been holding your investments in this particular mutual fund. Believe it or not, there are also no-load mutual funds that don’t charge sales charges when you sell them.

Here’s a typical deferred sales charge (DSC) schedule for an actively-managed mutual fund (keep in mind that numbers might differ from fund to fund):

Investing in Mutual Funds

Investing in Mutual Funds

What does it mean to you? This means that if buy $10,000 worth of back-loaded mutual fund and decided to sell it the next day, you will get charged 6% of your investment. Most of this sales charge pays for the commission the mutual fund paid out to your broker when you put the transaction through.

Now, is this a big deal? If your investment horizon is several decades and you’re in for a long haul, the deferred sales charge might not be a big deal to you. But if you’re just starting investing in mutual funds and you’re not sure how long you want to hold this particular fund, you might want to go with no-load funds. In my case, I had to pay deferred sales charges when I’ve decided to change my investment strategy and ended up selling my mutual funds.

Word of advice: before you complete the transaction, make sure you’re aware of any DSC charges attached to funds you’re purchasing. Ask your broker – are these funds back-load, front-load, or no load at all? If your investment horizon is short, you might want to look into purchasing no-load mutual funds.

 

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Canadian Banknotes are fascinating! – $10

Canadian Banknotes 4

Previous story: Canadian Banknotes – $50

Canadian banknotes can be truly fascinating!

 

While going through my wallet, I found a new $10 banknote that is currently in circulation. The ten dollar bill (polymer series) once again features some of Canadian pride and one of the most prominent politicians in Canadian history.

 

Front Side – Sir John Alexander Macdonald:

 

Canadian Banknotes

Canadian Banknotes

Sir John Alexander Macdonald was the very first Canadian Prime Minister and served for a number of terms (1867–1873, 1878–1891). After his family immigrated to Canada from Scotland, he became a lawyer and shortly after got involved in politics slowly rising to the top of the political scene. His actions helped shape Canada as we know today.

 

Notable achievements and interesting facts:

 

 

  • Dominion of Canada came to existence on July 1st, 1867. Same day, Sir John Alexander Macdonald was knighted (hence “Sir”) and appointed the Prime Minister of newly formed government.
  • Shortly after, the very first general elections were held in Canada. Interestingly enough, back then no secret ballots were used and votes were made public.
  • Under his rule, Trans Canadian Railway slowly came into existence and was completed after years of planning and design. The entire project was extremely expensive for such small nation, and required heavy borrowing, negotiations, and compromising. Few times the project almost went bankrupt – but it was finally completed on  November 7th, 1885.
  • Mount Macdonald at Rogers Pass, Ottawa Macdonald-Cartier International Airport, and Ontario Highway 401 (the Macdonald-Cartier Freeway) are all named after him.
  • John Alexander Macdonald was known to be quite a drinker – to the point his drinking would sometimes get in the way of politics.
  • John’s first wife Isabella Macdonald was John’s first cousin. Apparently cousin marriage was no big deal back in the day.

 

Famous quote of Sir John A. Macdonald (one of many):

 

“Let us be English or let us be French… but above all let us be Canadians.”

 

Back Side – The Canadian:

 

 

Canadian Banknotes

Canadian Banknotes

 

Back side of the bill features The Canadian train winding through Rockies as a tribute to Sir John Macdonald as the main driving force behind Trans Canadian Railway.

 

Interesting facts and information:

 

– British Columbia joined Canada in 1871 with the promise that it will be included in Trans Canadian railway project. People of BC were also given large sums of money as part of the deal to repay their debts.

– Overall cost of the project was estimated around $100,000,000 which was a monstrous amount of money in that time.

– The project caused First Nations rebellion in Manitoba against Canadian government which lasted 6 months but ended after Canadian troops were brought in.

– The railway was completed in on Nov. 7th, 1885 in Craigellachie, BC (area between Sicamous and Revelstoke). First train arrived at Port Moody from Montreal on July 4th, 1886.

– Port Moody was originally the final destination for the railway on the west coast. But by 1886, the Canadian Pacific Railway Company had decided to extend the line further to the West to Vancouver after local businessmen promised to fund the extension for their own benefit.

– Ride between Montreal and Port Moody was five days and nineteen hours long.

 

Canadian Banknotes

Canadian Banknotes

 

Canadian Banknotes are fascinating! – $50

Canadian banknotes can be truly fascinating!

 

Personally, I think Canadian banknotes are truly unique. Especially the latest series – so-called “polymer series”. Being basically plastic, they’re designed to be extra durable – and thus saving money on printing and replacing (God knows they’re printing enough money already). They also have a myriad of security features paper money didn’t have – holographic elements, transparent windows, raised characters, hidden numbers.

I especially like certain elements of Canadian pride shown on our money. Have you ever wondered who are the people pictured on our money? Even pictures on back sides are connected to Canadian history. Why are they shown there?

I had nothing to do this Sunday, so I’ve looked up some information on Canadian banknotes and imagery on them. So, next time you’re trying to make small talk with a good-looking cashier when grocery shopping, feel free to pass on this information.

 

Front Side – William Lyon Mackenzie King:

 

Canadian Banknotes

Canadian Banknotes

William Lyon Mackenzie King was a political figure in Canada from 1920’s and well into 1940’s. He served as a Prime Minster of Canada on multiple occasions, and some of his achievements can still be enjoyed today by everyday Canadians.

 

Notable achievements and interesting facts:

 

  • William Lyon Mackenzie King was the longest serving Prime Minister of Canada – he ruled Canada for over 22 years .
  • He wasn’t very popular with voters (despite being elected a number of times) and would probably never get elected if he was alive today, but he was a true diplomat and had a talent for striking alliances.
  • Mackenzie King had five university degrees (his student loans must have been huge!)
  • His government created Canadian Broadcasting Corporation (CBC) in 1936
  •  Trans-Canadian Airlines (now knows as Air Canada) was also created under his rule in 1937
  • He transformed Bank of Canada into a crown corporation in 1938 (before that it used to be a private entity)
  • William Lyon Mackenzie King is rated #1 (or the Greatest Prime Minister) by a survey of Canadian historians

 

Famous quote of William Lyon Mackenzie King (one of many):

 

“A true man does not only stand up for himself, he stands up for those that do not have the ability to”.

 

Back Side – CCGS Amundsen:

 

Canadian Banknotes

Canadian Banknotes

 

CCGS Amundsen is an Arctic icebreaker and research vessel operated by Canadian Coast Guard. Originally known as CCGS Sir John Franklin, this icebreaker was built in 1979 in North Vancouver. After serving for a number of years, it was decommissioned after it was deemed surplus (fancy term for “useless”  or “not needed”).

In 2003, CCGS Sir John Franklin got a new lease on life after universities around Canada decided to pool the money together, and retrofit the icebreaker to use it as a research vessel. It was to be operated by Canadian Coast Guard half the time – so in reality the icebreaker is shared by scientists and Canadian Coast Guard – kind of like how roommates buy a flat screen TV together so everyone can enjoy it at scheduled times. This was the moment when the name was changed to CCGS Amundsen (in honor of Arctic explorer Roald Amundsen).

 

Interesting facts and information:

 

– CCGS stands for “Canadian Coast Guard Ship”.

– Roald Engelbregt Gravning Amundsen (after whom the icebreaker is named) discovered South Pole in 1911 and was the first one to reach North Pole in 1926. He disappeared during a rescue mission in 1928 and his body has never been found.

– CCGS Amundsen is powered by 6 diesel engines – 18,000 horse power combined! That is roughly equal to 130 Honda Civics.

– The ship has enough room for 80 people (40 being the crew) and a small helicopter

– She can crash 1 meter thick ice and travel  up to 15,000 nautical miles

 

Canadian Banknotes

Canadian Banknotes

 

Best Personal Finance Podcasts

What are podcasts?

 

Well, before I talk about best personal finance podcasts, let me explain to you what podcasts are. Podcasts are digital radio and video shows that are available on your mobile devices completely free of charge. Unlike radio stations, they’re recorded offline, and uploaded for everyone’s enjoyment. Most mobile devices (iPhone/iPad, Blackberry, Android phones, etc.) have an app that allows you to search, subscribe, and listen to a podcast of your choosing. Think about them like your favorite TV show – once a new episode of Top Gear comes out (which happens to be one of my favorite shows), your iPhone downloads that new episode automatically and signals you it’s ready for your enjoyment. You can even listen to them on your laptop or PC, but I prefer a mobile device.

 

best personal finance podcasts

best personal finance podcasts

 

There is a mind boggling number of podcasts out there on different topics. Comedy, philosophy, business, education, etc. Basically, pick a topic, and there’s probably a podcast about it – even if it’s raising bunnies for food in captivity:)  Most of them are audio-only, but there are some video podcasts as well. Just hit “Podcasts” app on your mobile device, and you’ll see thousands of them ready to be downloaded. My data plan on my phone is pretty pricey, so I always download all of my podcasts over WiFi. There are settings to manage that aspect on both Blackberry and iPhone.

Personally, I love podcasts. For some reason, it’s easier for me to listen to things as opposed to reading – that includes podcasts, talking to people on the phone, or listening to audio books. For that reason, podcasts are ideal for me. Listening to some of them became almost a ritual to me and a very good habit. Just one of the things I do to keep myself educated.

 

Why are podcasts so awesome?

 

First of them, they’re free. Second, they’re educational in nature. Third, they let you transform the time you’re wasting into time well-wasted. For example, one of my habits is washing the dishes and tidying up our living room at the end of the day. It’s almost like a ritual for me before winding down for the day. Instead of simply washing dishes, I listen to a podcast AND wash dishes. Keeps me from getting bored – and also keeps my wife happy as she hasn’t touched the dishes in years.

I also spend considerable time driving sometimes – nothing like having 3-4 hours of entertainment and education saved up for a long trip.

 

Best Personal Finance Podcasts

 

Following are some of my favorite podcasts on the subject of personal finance. Hosts of these podcasts are very educated individuals, podcasts are very educational in nature, and bring a lot of value to listeners. Best of all, they’re all free. Some of them have commercial spots, but they’re easy to ignore.

 

Motley Fool Money

 

Motley Fool Money is a great resource on investing. They cover major events in investing world, economy, and business news. Their weekly podcast comes out on Friday, and covers major events that took place that week. They also have an interview or two on different subjects, and some rather entertaining banter. After listening for a while, you start to understand how some of the publicly traded companies perform, learn to make educated guess about investments, and simply stay “in” on business news. Highly recommend!

They also publish Market Foolery podcast – this is a daily podcast about stock market events. If something major is happening on the stock market, they’re probably discussing it in these very short (10-15 minutes) daily podcasts.

 

Brian Preston’s “Money Guy”

 

Brian Preston runs a wealth management company somewhere in the south of US. Every other Friday, they put together a podcast about personal finance and investing. Unlike Motley Fool described above, they mostly cover topics of personal finance and investing from the point of view of average people. They put together podcasts full of useful information. Though their personal finance philosophy is a bit different from mine, I listen to these guys religiously. My only grumble about them – being from US, a lot of their information on taxes and investing is very US specific. But general advice and tips and tricks are absolutely fantastic. I consider it to be one of the best personal finance podcasts out there.

 

The Dave Ramsey Show

 

Dave Ramsey is an award-winning author of several books and a host of Dave Ramsey radio show with an enormous and cult-like following. Though not very known in Canada, his books are absolutely fantastic for somebody who is stuck when it comes to personal finance. Motivational value of his books alone is out of this world. His philosophy on money and personal finance is very old-fashioned, and very simple – yet very effective. His daily podcasts are about 40 minute long recordings of his daily radio show and features callers with specific questions and Dave’s advice on how to solve their money problems. Sometimes some of his rantings too!

He can be a bit controversial for some people, but overall it’s a great podcast to listen to keep yourself motivated while fighting through money problems. Nothing like listening to people scream “I’m debt free!!!” to keep yourself going!

 

Stacking Benjamins (added January 31, 2015)

 

Here’s what I love about Stacking Benjamins podcast. Two fellas by the name of Joe and OG mastered the perfect balance between a serious show that talks about personal finance and entertainment. A lot of personal finance podcasts tend to be overly dry. Stacking Benjamins on the other hand makes the process of learning about money fun and entertaining.

I love the fact they go outside of the normal financial advice and talk about alternative investing and matters related to personal finance such as career development and education. They don’t try to sell you on services or products, and offer genuinely great personal finance advice.

If you want to pick just one personal finance podcast to listen to, I would absolutely pick Stacking Benjamins. You won’t be disappointed.

 

Money Plan SOS!

 

Money Plan SOS is a podcast of  Steve Steward, who is a personal finance coach. His weekly podcasts are more about an average person fighting for his money. He doesn’t touch much on business in general, more on things about how you personally can improve your personal finance well-being. While he closely follows Dave Ramsey’s teachings (being one of his approved coaches), Steve injects a lot of his personal thoughts into his teachings that make this podcast very valuable. Unlike other financial coaches, he shares his mistakes and struggling as well as successes – and it tends to be very personal.

 

Derek and Carrie’s Better Conversations on Money and Marriage (added July 15, 2014)

 

Why haven’t I discovered this podcast before? I’ve recently discovered this podcast and just had to add it to my list of best personal finance podcasts. It would make my life so much easier! In all honesty, it took way too much energy and time for me and my wife to work out the best way to deal with money as a family. Heck, I didn’t even know how to talk about money at the beginning. Many days were lost to heated discussions on how to spend money and how we can improve our financial situation. Thankfully, we were able to work out all the kinks without cutlery flying across our house, but there were a few close calls.

Derek and Carrie run a podcast with focus on how people relate to money in their marriages. They discuss topics of talking about money with your spouse, creating budgets, pros and cons of combining finances, and many other topics. If only I knew about this podcast sooner! If you want to improve your marriage and communicate better with your spouse on money topics, this podcast will be invaluable to you.

 

Listen, Money Matters! (added July 15, 2014)

 

Sometimes one can find the process of learning a bit tough if they can’t relate with the person presenting the information. For example, I’m a younger person (ok, younger’ish), and I can’t listen to a boring university lecture about compounding interest or mutual funds. In most cases, I’d like to learn from people just like me, who have same challenges, fears, and inspirations.

Well, Listen Money Matters podcast is right up my alley. Matt and Andrew speak about personal finance without holding anything back. They’re not university professors teaching economics, they’re your average everyday dudes who just happen to discuss personal finance and investing world. They speak my language and I can relate to them on many levels. Heck, they even discuss drinks they’re consuming at the moment!

If you’re looking for people you can relate with and learn some valuable lessons about money and investing, give Matt and Andrew’s podcast a try!

 

 

How do I start listening to podcasts?

 

best personal finance podcasts

best personal finance podcasts

Just hit Podcasts app on your iPhone or Blackberry. At this point, the app will let you browse the entire library of podcasts, or search for specific ones. I highly recommend you to check out these specific shows as I consider them the best personal finance podcasts. Hey, you have nothing to lose – all of them are free. Think of your car as a university on wheels – instead of just driving to work, might as well drive to work and educate yourself. Or wash dishes – whatever is it you’re doing can be used as a chance to educate yourself on personal finance.

I love the fact they go outside of the normal financial advice and talk about alternative investing and matters related to personal finance such as career development and education. They don’t try to sell you on services or products, and offer genuinely great personal finance advice.