Tax Strategies - HELP!

Like the title of this post? I hope it summarizes how I (and apparently others) feel about taxes. I think that's why many people don't get into business for themselves. They like those automated Quickbook payroll stubs that roll out every two weeks and show them how much was robbed from them. They like not having to figure it out. I also like not having to figure it out, but, I have to be a man and face the fact that no friend, family member or otherwise seems to know enough to mentor me.

It reminds me of a quick story to prove my point. I just finished reading a book about Canadian tax strategies (link at the bottom) and realized that I am not obligated to pay my employer taxes every two weeks. Instead, I could save it till the end of the year and pay then. The reason is obvious - compound interest on the money we didn't pay every two weeks. So I approached our bookkeeper (someone who knows something about books) and she said 'You can do it but it's complicated." As soon as I heard that I was like 'Oh. It's complicated' and that little ball of stress came into the front of my head and I broke out into a rash and vomited (ok, the last two aren't true). Anyways, point is is that because of the stress of knowing that I had to figure it all out on my own, I just quit. I gave up. I said 'forget it. Too complicated." I now thoroughly doubt that it really is that hard.

I could pay a CA $395/hour but I'm not quite there yet. And it's not a good investment if you don't speak any of his lingo, unless he is able to dumb it down to street level (unlikely). Further, I think it's a matter of us needing to take responsability for our learning on this one. I therefore propose a BLIP Symposium for 2008 on the topic of:

'Taxes - We're Takin' Back Our Money from the Man, Man." (other titles open to discussion)

I propose that we dig deep and search far and wide for the easiest, more effective books on the topic. We need to learn how to get ahead.

2007 and the beginning of 2008 was a time for me to realize that I am hopelessly undereducated about taxes, bookkeeping, and accounting. The reason is simple - I've never studied the stuff. I fared well in most of my skool courses so why can't I take this one on? And, by jove, this one is worth big $ to us. It can add more dough to our seed money.

Let's start with this book, because I recall Taylor 2 and I were discussing it as an easy read and worth reading

The 10 Secrets Revenue Canada Doesn’t Want You To Know! - by David Voth

Behavioural Economics and Investing

Here is an interesting consideration - our psychology (I hate spelling that. I'm changing the spelling to 'cy-call-ogy').

Master Song (Avatar Pending) informed me that it's very important to understand how our cycallogy affects our decisions. At first I thought, "I'm not affected by this cahooey hooa fluffy cyko stuff," but it seems that I was wrong... I was wrong once before too.

He used the example of how a person, when there are many bidders bidding on an item will bid much more when there is great competition, while they will usually be much more cautious when there is only one other competitor. Their starting bid is much higher in a high-competition environment. Of course, I immediately thought about Ebay. That's pretty cool. It's true. I would do the same thing. I'm a victim of my cykee.

So, I saved you a google search on the subject and came up with, of course, a wiki link and a random PDF. Turns out the random PDF displays well and seems to sum up some of the big items well.

Here you go:

Wiki link
Random PDF on Behavioural Economics Cycallogy

A Mill a year for 25 or 17 mill up front?

So, I'm not sure if I got my numbers right, but my parents were talking about this 'dilemma' some lottery winner was having - she couldn't decide whether to take 17 million up front or 1 million per year for the next 25 years.

Being the accredited investor that I am, I immediately started thinking about compound interest... ok. I'm not an accredited investor but Master Song insists that I master compound interest...but anyways, here are my findings. Follow along as I learn:

a mill/year for 25years (investing at 3.4%)

year 1 - 1,000,000
year 2 - 2,041,364.37
year 3 - 3,083,108
year 4 - 4,139,150
year 5 - 5,209,687
year 6 - 6,294,918
year 7 - 7,395,044
year 8 - 8395044
year 9 - 9,640,803
year 10- 10,786,853
year 11 - 11,948,633
year 12 - 13,126,359
year 13 - 14,320,250
year 14 - 15,530,527
year 15 - 16,757,416
year 16 - 18,001,145
year 17 - 19,261,945
year 18 - 20,540,050
year 19 - 21,835,697
year 20 - 23,149,128
year 21 - 24,480,586
year 22 - 25,830,319
year 23 - 27,198,578
year 24 - 28,585,617
year 25 - 29,991,694

So there you go. If she really sucked, she'd make 10 million dollars just in interest. Just leaving it in the bank.

So, she lost 30 million minus 17 million for a total of 13 million.

But... the argument was that she could take the 17 million and do some rocking and rollin' style investing at much more than 10% ROI.

Thoughts?

Learning about Money from a Commie

I was looking through Youtube for videos about investing (ok...I lied. I was actually watching a chick launch a potato at a target from a homemade cannon) when I came across a very cool video about the history of money. Wow. All my questions answered about where the current monetary system came from. Granted it seems to be published by a communist, but it seems like sound information.

It is a 47 minute video but I strongly recommend it. It's low budget (like us) and is really intriguing. And when you are done, suddenly the markets and interest rates and even our bills and coins make more sense. I think it is good for investors. We need to know everything about money if we are going to make a lot of it.

Enjoy and feed me back.

Money Movie

Pools and Real-estate Value

A client of mine asked me if by installing a relatively expensive pool whether it would increase the value of his real-estate enough to compensate the purchase. I was mixed on the topic so I started asking around and then I realized it would be a good post for BLIP.

First, this pool is not a 'normal' pool. http://www.swimex.com/home/

They can be used both as a hot tub and pool, apparently, and dont take up much space.

Regardless, it brings up some good discussion points that I wanted some feedback on. I will put two categories, 'for' and 'against' the pool. Try to add some to my list or describe in detail why you agree, disagree.

FOR

-Kids like pools
-creates a visually appealing atmosphere for a summer sale of the house
-differentiates your house from your neighbours (at least in the Vancouver area)
-

AGAINST

-some buyers will look and see 'maintenance costs' and run
-some buyers will look and see 'hard work to maintain. I don't want to work'
-some buyers will say "I would rather have a garden to pee in or a lawn to cut'

Other considerations:

-If the neighbourhood is uppity, it should be a pro rather than a con because someone buying there won't be looking at the financial liabilities as much.

Thanks for your feedback!