Book Review – Strategic Dividend Investor

I saw this book at the library a few weeks ago, and decided to pick it up. The title drew me in, because really, who wouldn’t want to “Strategically” invest – maybe the alternative is an elaborate dart-board system, where you only purchase stocks on a full moon? Without reading this book, I think I would still have a strategy – it just wouldn’t perhaps be as organized as is laid out in the 163 pages.

With both personal finance and fitness/diet books, a significant amount of the book is spent selling the reader on why the author’s way of thinking is different or better than everyone elses, and why you should employ their way of thinking on your life. This book is no different – 92 of the previously mentioned 163 pages are spent going into the history of the stock market and how messed up it has become in the last couple of decades. The author builds his case on why dividend-producing stocks are the best investment vehicle available. Given the title of the book, I would think that if the reader has gotten to the point of actually picking up the book and leafing through it – they are probably already sold on dividend investing and just looking for insight.

The last third of the book is the reason why I will be purchasing an e-book for future reference in my investing “career” ($13.16 on Kindle, $19.50 on Kobo….not sure how Kobo can sell for 50% higher) . There is a possibility that I haven’t read enough books on investing, but the way the author provides insight on stock analysis both from a technical perspective as well as what should be looked for off of the financial statements made his message easy to understand.

For someone interested in investing for cash-flows as I am, the book provides a long-term, sustainable investment strategy. A useful screening process is provided, which will provide a good starting point at identifying potential investments. Also provided by the author is criteria that can be utilized when deciding on whether or not to sell the stock, outside of the price – which I also found very incitive.

So, that’s my sale on this book. The author – Daniel Peris has a second book out that I will be reading in the near future. The “Strategic Dividend Investor” isn’t huge, is written in an understandable manner and provides good information – all qualities I enjoy when looking at a technical non-fiction book.

I am a fairly voracious reader, always looking for book suggestions. Do you have a go-to investment book that you keep on your shelf?

The PF Score

So I was reading my usual blogs the other day when I came across an idea on how to an idea how you are doing financially overall along the idea of the credit score.  A single number which would give you an approximation on how you are doing.

The idea was to use your net worth divided by your annual spending to produce a one number summary of your financial state.  They called it the PF Score. To give credit where credit is due.  The original idea came from jlyblog.

Then depending on your score that should give you some idea of where you are at.

  • Anything in the negatives: You need to get out of debt now.
  • Score of 1: You have enough for one year’s worth of expenses.
  • Score of 5: You are picking up steam.
  • Score of 10: Getting better.
  • Score of 25: You are financially independent!!
  • Score of 30: Your investments are making more than you spend.
  • Anything above 30: Sit back and relax, you’re golden!

In the event you are dying to know, my PF Score would be around 18.

So on one hand I love the simplification of giving you and idea of where you are at in life financially.  Yet I do have one major beef with the idea.  The original author states when your PF score is at 25 you hit financial independence, but that isn’t correct.  Why?  Because it assumes that you can turn your dead weight assets like your home equity or car equity into an income stream.  Which is possible in some cases like a rental suite in your home, but unlikely for the majority of people.

Paying off your mortgage for example, is a good thing and it should increase your PF Score, but the real boost to your score happens when you finish your mortgage and your spending drops.

So should we do?  Well I still like the idea of the PF Score and the basic setup, I would just caution changing the scale a bit.  I would shift 25 to “You are doing great now.”  Then at a score of 30 state “You are likely close to financially independent.  Congratulations and you might want to start looking at a life with no work if you want.”

The exact spot of hitting FI will depend entirely on what multiple of house cost to your annual spending, but based on a few Google searches in Canada at least the average house cost is $389,119 (in Jan 2014) and the most recent average spending by household was $56,279 (in 2012).  So divide those two out and you get 6.9, so let’s round to 7.  So add 7 to the original scale of 25 and there we go a PF Score of 32 should mean you are financially independent in Canada at least.  Obviously this depends on your particular numbers, but if we are dealing in general statements they works just fine.

So do you like the idea of a PF Score?  Or is it too general to be useful?

Working From Home Experiment

My workplace is currently undergoing a bit of a shift since for years the entire department was centralized into one building, but that has recently changed and now there is staff across the entire province.  So being the sucker for punishment that I am, I volunteered to do a presentation on working remotely for our next full department meeting in March.

Yet to make a good presentation I obviously needed to work from home myself to find out the pit falls and other issues that could come up.  So my boss approved a half day experiment to give it a try.  I choose last Friday for a very good reason, I had already planned to be off that afternoon and I also wanted to attend an school event from about 8am to 9am.  Since I start normally at 7:30am, this obviously would normally been a bit of commuting nightmare, and hence my proposal of an half day experiment.

So overall I have to say I now fully get why people rave about working from home (or frankly anywhere but the office), you are WAY more productive when you aren’t in the office.  Why? No interruptions with people asking you questions or stopping you mid sentence to discuss a completely unrelated issue.  Despite my hour off at the school during my experiment I still managed to get the same half day amount of work done.

Yet of course there are downsides to doing this.  The first thing I realized was that despite all this great technology to do this, our company still doesn’t have everything setup to be as productive as we could be when not in the office.  The issue was certain programs were missing from our company VPN setup so there are limits on what you can work on when not in the office.  It didn’t impact me much, but it could depending on the work someone needed to do.

Another fact that could come up for some people is you trade one set of distractions for another set.  For example, my wife had kids at the daycare for that morning so I had a fair bit of giggling and the odd scream from small kids.  I personally didn’t find it that hard to ignore, but I could see that being an issue if I had spent more time on the phone.

The last issue that came up was it happened to be literally the only time I can recall my Director asking me if I was in the office.  She was off herself and needed something to be done by someone physically at the office and I couldn’t help.  It wasn’t a huge deal as I suggested a few other individuals that could help, but it was ironic.

So overall I felt the entire experiment was a bit of success as it did make me more aware of what people who work remotely have to put up with and what they gain.  I would work remotely again in a heartbeat as it is a great way to get some uninterrupted time in on a project.

What’s your experience with remote work?  Have you done it yourself?  If so, any other tips or observations?  Obviously I never got to do this for a long period of time so I’m not sure what other  impacts that come up.