Lumbergh agrees! The first 40 rules.

Hey, here's the first 40 of Ryan's Money Rules.

Rule #1: The Power of Compounding - Earlier is Waaaay Better!
Rule #2: "Lotteries are taxes on the stupid"
Rule #3: Defining Assets and Liabilities
Rule #4: Never Carry a Credit Card Balance... Ever!
Rule #5: Know your Monthly Expenses!
Rule #6: Forget the Latte, Its the Car/Vacation/Renovation Factor
Rule #7: Maximize income in AFTER TAX money

Rule #8: Your Home is not an Asset
Rule #9: Spousal Financial Compatibility is VERY important
Rule #10: Thumb your nose at the Joneses

Rule #11: Dividends - Buy Stocks for the Cash Flow
Rule #12: Use Leverage for MORE positive cash-flow!
Rule #13 Take Accountability. Stop Whining! Go Read a Book already
Rule #14 Live on one salary
Rule #15 Don't try to "Beat the Market"
Rule #16 Plan on Financial Independence without CPP
Rule #17 Save/Invest ALL windfalls or bonuses
Rule #18 Don't Diversity... too much
Rule #19 No Fixed Income
Rule #20 Set Financial Goals

Rule #21 Chart your Progress!
Rule #22 Pay your bills on time.. Every Time!
Rule #23 Automate all Monthly Payments
Rule #24 Borrow money for things that appreciate, pay cash on things that depreciate
Rule #25 Live like a student as long as you can
Rule #26 Create/Develop Multiple Income Streams
Rule #27 No Financial Advisor
Rule #28 Pay No Bank Fees
Rule #29 Talk about money. Ask about money.
Rule #30 Live where you Work, Shop and Play

Rule #31 Out of Chaos comes Big Opportunities. Be Ready!
Rule #32 Take Full Advantage of Employer Matches
Rule #33 Don't spend all of that salary increase
Rule #34 Find Yourself a Money Mentor
Rule #35 The Main Goal is Financial Independence, Not Retirement
Rule #36 Owning a good company is are better than working for one
Rule #37 "Hedge" against price inflation by investing in staples you use
Rule #38 Use good debt wisely, get rid of bad debt completely.
Rule #39 Adopt an Entrepreneur/Investor mindset
Rule #40 One week wait time for impulsive purchases over $100

Plus there's these two gems:
Dividend income growth... 16 months in review
Buy vs Rent. Why we're okay with renting today

Dividend income growth... 16 months in review.

If you follow any of my previous posts, you know I am a believer in dividend growth investing.  We've consistently been able to achieve an increase of our portfolio's annual dividend income since we started using this strategy with the lowest annual portfolio dividend income increase of approximately 5%.  We grow our dividend income through dividend reinvestment, new monies added to the pot, and from dividend increases.  This year and a half has been a bit of a special case from past years because we have added NO NEW MONIES to our investment pot.  Therefor the increases over the past 16 months are solely from the pooling of dividends and then reinvesting them, and from dividend increases which have been plentiful this year.   I've also incorporated some covered call writing in our RRSPs to add a little extra cash-flow but those are really small potatoes compared to effect of the reinvestment and increases of the existing dividends.  From July1 2013 to October 30 of 2014 we have increased our dividend income by a compounded rate of 17.5% over those 16 months.. or just over 1% per month.  Our portfolio currently yields about 4.5%, so over the 16 months about 6% of the growth came from reinvestment and the remaining 11.5% is from dividend increases.  This represents an annual dividend growth rate of about 8.6%. Not too shabby.

The following chart shows the increase to our annual dividend income for each month, which includes both reinvestment and dividend increases.

Note that every month there was an increase in our total dividend income.  Every month had some form of increase and there were no decreases.  In order to give this chart a bit more meaning, lets assume that July 1st 2013, we made $10000 a year in dividend income.  The monthly increases to that amount would look like this:

... to the point where $10000 in dividend income turns into $11749, 16 months later.

If you've been watching the stock market over any period of time, you know that we always see increases and decreases in stock prices, usually by the second during market hours sometimes with big swings to the upside and the downside.  This watching of the market go up an down can rattle some people as they watch their portfolio value increase or decrease by up to double digit swings within short periods of time.  The above chart is the kind of chart I like.  Our dividend income continues to rise month after month.  Some months we had dividend increases and other months we deployed some of the dividend monies that had built up and bought some more stock.. usually ones that we thought were depressed. on sale, or were due for a sustainable dividend hike in the future.

#37 "Hedge" against price inflation by investing in staples you use.

From Investopedia: Definition of 'Hedge'

"Making an investment to reduce the risk of adverse price movements in an asset..."

People like to complain about gasoline prices. They also like to complain about bank fees.  And how about cell phone fees?  Yep, people keep complaining about phone fees.  Energy costs such as electricity generation and delivery, natural gas costs etcetera are generally going up over time... and yep, people sure do complain about them.  Every year all of these products and services increase their cost to consumers like clockwork, sometimes around the rate of inflation and sometimes higher such as in the case of finite resources such as oil and gas.  If the cost of these items is expected to go up over time, and its reasonable to expect that businesses will pass on the cost of these items to customers so that companies can preserve profits, is there a way to either hedge against their price increase or to participate in the increasing value of these consumables?  There sure is!  Buying good companies that produce products or services that people use everyday is a good way to participate in the market.  It is also a way to hedge against rising prices of the products and services they sell.  A good example of this is participating in increasing gasoline prices by investing in Oil and Gas stocks.  We like to focus on companies that pay and increase their dividends over time.  This way when the price of gasoline goes up, we are able to participate in the increase through the accompanying dividend increases.  As the price of gasoline goes up, it costs me more money to fill up the tank of my car... but I also profit from the rising price of the oil and gas stocks that I own.  This is my hedge against price inflation.

The everyday costs/staples that we consume are gasoline, mortgage payments, insurance, phone plan, internet plan, electricity, heating fuel etc... so to hedge these costs we own shares in Oil and Gas companies, Banks, Insurance companies, A Phone and Internet company, Electricity Generation and Delivery companies.  All of the companies pay me a dividend and they all have raised them at or above the rate that they increase prices on their products or services that I buy.

So while some people have a tendency to do nothing but complain about higher prices year after year, we've taken a different approach.  We participate in the higher prices and higher profits through stock ownership.  Since we've been doing this for nearly 15 years now - and the dividend increases have outpaced inflation - many of our bills are now paid for by the cash-flow of the stocks we hold in their specific sectors.... such as our oil stocks now actually pay for our gasoline purchases, our phone company stock pays for our monthly cell phone costs and so on.