Network Marketing: What is it and is it right for you?


Do You Have What It Takes To Make Extra Money

We could all use a little extra cash at times and they are various ways of earning that money to supplement your income whether it is through online surveys or simply cutting your neighbours grass. But what if you could own your own business with a minimal investment, requiring as much or as little time as you want to devote to it, work from home and have all the training and support needed given to you for free?  Would you consider Network Marketing?

What is Network Marketing?

By definition from Wikipedia Network marketing is a strategy in which the sales force is compensated not only on sales they personally generate, but also for the sales of the other salespeople that they recruit. This recruited sales force is referred to as the participants ‘downline’ and can provide multiple levels of compensation.

So basically what this means is you sell a product or service while getting other people to join your sales team from which you receive a portion of their sales, who then go on and recruit more people to join and so on. The more products you sell and the more people selling under you, the more money you make!

Network marketing is also referred to as direct selling, multi-level marketing or pyramid selling.

I’m sure most of you are familiar with companies such as AVON, Tupperware, It Works, ViSalus (Body by Vi 90 day challenge), or Amway, all of which are operated as networking marketing businesses.  In traditional business when you work for an employer or even self-employed, you have sales quotas to meet requiring multiple employees at times to meet those goals.

In network marketing you own your own business, working as much or as little as you want while having a host company that makes all the major investments while offering all the support you need because if their company is going to succeed they need you to be successful.

These companies also have quotas to meet but say the quota is $1,000,000 instead of having 100 employees each achieve $10,000 in sales they can reach their goal by having 10 000 people (who have volunteered and invested in the company)do $100 in sales each.  Smart thinking!

Almost sounds too good to be true

Over the years I have had multiple opportunities to sit through various network marketing workshops, one just recently last weekend and let me tell you I left each one of them absolutely amazed! The enormous incomes that some of these people make from selling such things as life changing superfoods and skin care products blew me away, and they do it out of the comfort of their home! Sounds amazing doesn’t it? Though the concept is pretty simple, being successful in these companies can be a lot of work.

Is Network Marketing right for you?

The atmosphere in all the workshops I have attended has always been uplifting and inspiring as you listen to some of the top earners in the company and how they now earn over $1,000,000 a year and they’ve only been selling for 4 years. Exciting isn’t it to think that you could potentially earn that much money too, although the majority of people won’t.

Ask yourself these questions…..

How much time and money are you willing to commit?

You can spend as little or as much time promoting your business as you’d like just keep in mind your compensation will reflect that.

How many people do you know or situations will you be in where you would be able to recommend your business/products to different people on an ongoing basis?

All the workshops I’ve been to recommend that if you want to be a top earner (typically $1 cash is all you desire million + a year) than you need to recommend your business to 2 people every single day. If some extra cash is all you desire than this number won’t need to be so significant.

Is there a product out there that you believe in so much that you can convince others to join your team in selling the product.? If you can’t convince yourself that it’s a great product how can you convince others to buy  or sell it? Using the all the products yourself and having your own stories to share on how you personally have benefited from using the product will be one of your best sales tools.


The first thing I most often hear when I have a conversation about one of the workshops I’ve sat through is ‘oh it just sounds like another one of those pyramid schemes’. Yes pyramid schemes, not to be confused with pyramid selling, do exist and have a very similar business plan but are focused more on the recruiting side to build revenues rather than actually providing a product or service.  Learning in-depth about the company and the product or service they are offering is key to making sure you avoid getting caught up in these pyramid schemes.

A few times I have also heard ‘oh they just want you to sell it so they make more money’ Well yes that is true but why is that a bad thing? Keep in mind that the top earners in these companies got to be at their income levels by training and recruiting, they want to see you succeed so why not grow with them?

Do your research

There are lots of legitimate network marketing companies out there and many that have been around for several years. Knowing some of the history about the company will be beneficial in helping make an informed  decision whether or not  the company is worthwhile.  AVON for example has operated as a network marketing business for over 125 years with over 6 million sales people worldwide, they are obviously doing something right!

Things you want to know

How long has this company been around for and what are their reported sales during that time?    If it’s too new of a company it may not be worth investing your money in as it may not be or ever be a stable business. 5 years is generally a good amount of time for a company to show stability.

  • Is the product or service something that would be in demand in today’s market?
  • How much of an investment do you need to make?
  • How is the compensation calculated and how often is it paid out?
  • Does the company offer training and support ?

If you have the drive and the ability to sell by word of mouth then network marketing may be for you. Network marketing has the potential to eventually lead to full-time employment for some but until you are comfortable with the company, their products and are earning a sustainable income don’t quit your day job.  

Many of these companies survive on people who get excited after seeing the potential earnings and without being fully prepared simply sell just enough product to get their own for free rather than building their wealth.

Would you consider a career in network marketing?

katrina cbb

Post Contribution: 

Katrina is regular contributor for Canadian Budget Binder and is as passionate about personal finance as she is gardening. Katrina is a horticulture graduate with over 10 years experience with landscaping and greenhouse production.

Her goal is to share her knowledge and experiences blogging about gardening and her continued passion for personal finance in hopes of motivating others. While being a single mom of two and an in-store marketing representative for major retail shops she also runs her own Landscaping Services in Southwestern Ontario.


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Photo Credit: Free digital photos Stuart Miles

The Saturday Weekend Review #34: Canadian mortgage rates on the rise


Mortgage Rates Going Up Again

They say nothing lasts forever but it should come as no surprise to Canadians when they read that mortgage rates are on the rise. This rise apparently may have a negative impact on the Canadian housing market but I’m going to sit back and see how far they are willing to take this and how many Canadians are still ready to buy.

Still, I believe many Canadians are on the fence about whether they should rent vs buy because of their debt load and inability to save up as much as they want or need for a down payment. I know we have friends who aren’t sure what to do because they are still saving up for their down-payment. Owning a home is great but with it comes along plenty of work and upkeep that a new homeowner must be prepared for with time and finances.

I see more Canadians reaching out for help when it comes to setting up a budget, grocery shopping and just generally want to get out of debt so they can buy a home or life a debt-free lifestyle. My hope is that with all the information available to people whether it be through TV, Print, or On-line that they grasp the “Spend less than you earn” motto and run with it, and fast.

I remember when we first bought our home in 2009 for $265,000 and our mortgage rate which was the best we could find as a fixed mortgage at the time was 3.99%. Over the months and even years we saw that interest rate get shattered which left us scratching our heads in awe of how awesome interest rates were for new home owners.

In the 80′s when mortgage interest rates went through the roof and for those that survived it seeing the rates today must make them shiver with envy but I know that deep inside they too know all good things will come to an end. When you’ve lived through the worst it’s almost inevitable that at some point in time things may get to a point where it could put a strain on the household budget once again.

I don’t think the mortgage rates will hit 18-20%+ like in the 80′s but we should brace for some hikes and with that comes more money out of the homeowners budget and pocket. You may not see the money you are paying but over time that house you bought will soon cost you potentially more than you bargained for when you ran your initial mortgage figures in the mortgage calculator when you purchased it.

When it comes time to re-finance is when you will see how you are doing in comparison to where you were when you first took out your mortgage. Don’t be surprised, it’s not like they didn’t warn us. I just hope people were smart enough to buy a home on one income or that they didn’t get more house and mortgage than they need.  I still think that the best time to buy is when you are ready. Don’t rush, take your time and do it right.

TD Bank estimates its new mortgage rate of 3.8 per cent for the special 5-year fixed term will translate into a $130 rise in monthly mortgage payments since May for the average Canadian home owner with 25-per-cent down over a 25-year amortization period.

I’m not a super investor in the markets as I pay a financial advisor to do that for me ( I know my investment friends are cringing) but the reality is I don’t know how to do that on my own yet. If I knew I could work it out so I was making more with investments than I was blowing interest on my mortgage I would certainly jump right in. I don’t know that and that is why we decided from the start of our mortgage, just to pay it off so we were debt free.

I watch the MLS and home sales in our area but I’m betting that sales will go down as predicted and those who are deciding what to do might just kick their down-payment saving for a mortgage into high gear so they can sneak into the market while the rates are still fairly low in my opinion.

Some people questioned why we would do that with such low-interest rates and potential to funnel that extra money we have every month into other dividend paying investments but the reality is we weren’t confident enough. We live in an area where housing costs are high and it made more sense for us to just kill the mortgage and be done with it. I think over time as we continue to learn we will take the steps to invest on our own but for now, paying off our mortgage will be our priority. The money is ready to move now so soon enough we will be mortgage free before 40.

What do you think of the rising interest rates and mortgages? Shocked? Don’t care? …..

You can read the full Yahoo article here.

Gardening and Landscaping



Last week I promised you a photo of our mallow and as you can see it’s in full bloom and to tell you truth just staring at it makes me smile. The flowers when they are opened up are a vibrant pink and fuchsia colour that emulates a beauty that is calming to me.

Our tomato plants are still slow-growing and I don’t know if we will get anything from them at all this year. I shouldn’t say that because there are a few tomatoes on the plants but they are not near as big as last year, this time. The weather has been less than perfect this summer but the peppers seem to be doing OK. I guess when the relatives tell us they are eating tomatoes and peppers already from their garden it makes you question how behind your plants are. Next year I’m not sure if I will grow from seed I might just buy them already done up so I can move the process along quicker OR start them even earlier indoors.

How are your tomatoes and peppers?

Blog update

Not too much happening on the blog front at the moment but we are still working on the back-end developing the new site to go live very soon. If you haven’t already subscribed to Canadian Budget Binder, please do. If you follow me through WordPress please subscribe via email so you continue to get my daily update via email after I move my blog.

Other posts I wrote this week

You can now follow Canadian Budget Binder via Bloglovin and continue to get my daily posts in this reader.

If you are a regular reader you would have already received these awesome posts in your email or reader but just in case you missed reading one I’ve put them all together here just for you.

PLUS…. check out the NEW FEATURE I’ve added which is my New Free Recipe IndexYou get all the recipes that I have posted here at Canadian Budget Binder in one spot so you don’t have to go looking for them.

Garage sailing with Jen


Jen and her husband have made many improvements to their shopping habits and their budget. You can read all about it in her guest post, Budgeting With Mr. CBB Got Us Back On Track. Jen shares her weekly garage sale finds with us for the summer to show just how much she can save for her family.

Today’s haul:
Salad spinner (Ken just broke mine and I couldn’t get one on freecycle) – $1 (they were asking $2)
Boy’s shoes and ladies blouse – $3 (they were asking $5)
Little white car – free
Hockey stick and puck – free
Black truck for hauling cars – $.25
Total $4.25
We took Adam again so Ken could stain our deck, once again he was given free items :-)
As I side note last week I had purchased 9 x Lego bases all for $1.  I sold them on a Facebook auction group I belong to and made a $12 profit.

Making a difference


Each week I like to showcase a blog that I follow on a regular basis and today I give to you my good friend Shannon who runs the popular blog The Heavy Purse.

Hello Canadian Budget Binder Readers! I’m Shannon Ryan and you can find me at The Heavy Purse where I provide tips and tools on how to raise Money Smart Kids. I’m a Certified Financial Planner and proud mother to two beautiful girls, Lauren and Taylor.

My father started teaching me about money when I was thirteen, which helped me develop a healthy relationship with money. After becoming a CFP, I realized how much influence parents had on their children’s beliefs and habits around money. Unfortunately, too many kids were observing poor habits that eventually became their own. This was not the future I wanted for my girls, so I began talking to them about money when they were very young.

The lack of financial literacy in our children troubles me as I have seen how it cripples their financial lives as adults. This is why I wrote The Heavy Purse and started blogging: to help busy parents teach their children simple, value-based principles to guide their money decisions and support their long-term financial well-being. I believe teaching our kids how to handle money properly and make mindful money decisions is one of the most loving gifts we can give them.

Blog share

I really appreciate when other blog owners recognize my hard work at Canadian Budget Binder and share my posts with their fans or even mention my blog on their blog or website. Here are the blogs that did just that this past week, so please head over and check them out. If I’m missing you it’s because I didn’t get a ping back so please send me an email and I’ll add you next Saturday.

What is a blog carnival?

Some fans have asked me just what a blog carnival is so a little explanation is due here for anyone reading for the first time or for my long-time fans. A blog carnival is where a blog or website hosts what we call a carnival of blog posts from around the web.

Most blog carnivals have a theme and certain rules for submitting which must be followed. If you are a blogger and would like to learn what blog carnival directories I submit to each week you can find the information in a previous Saturday Weekend Review post that I wrote.

A big thanks to these pages for accepting my blog posts and sharing them in the following carnivals

Carnival glory

Google search terms

web search terms

Every week I get thousands of people visit Canadian Budget Binder because they did a search online and found my blog. Here are a few of my favourite searches that may have even brought you here and you’re reading this, right now.

Top Pick of the Week:

  • A man cooking is sexy: Ya… I know now we need to encourage more men to get in the kitchen and explore
  • Dog spa: Just because every dog should go to the spa
  • Nice house: I love when I get simple visits for simple searches like this
  • Mr. Food Crockpot lasagna: Well, I have a crockpot lasagna recipe but my name is not Mr. Food!
  • Fat dog haircut: I have no idea on this one
  • Yellow Pepper: I have to say my yellow pepper gets lots of action on here. I don’t know if they are rare but I’m not complaining.


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Summer Jobs For Students: Tips For Finding The Perfect Job

Hire Me Student Summer Job

By: Katrina

Now that school is over, at least for College and University students, it’s time once again to find those perfect summer job opportunities.  For the majority of students, the summer means 4 solid months of money-making time that should not be wasted. So, what can you do to make the most of those months to save up tuition money and expenses for the following school year or to start paying down OSAP loans or other school debts?

If you are University or College bound prepare your finances now rather than later because money can mount up fast when you don’t have a plan. It’s also a great way to plan ahead for your student budget before heading back to University or College if you know how much money you have earned over the summer months.

Below are some tips that I’ve learned over the years which worked for me or others that I know to find summer season jobs to make money. Don’t be afraid to put yourself out there, after all most employers are looking for employees that are creative, go-getters and want to work hard for their organization.

Seasonal Jobs

Many landscaping, painting, and window washing companies as well as city works just to name a few, hire seasonal employees every summer. One popular company in Ontario being Student Works Painting which have employed students year after year since 1981. Being a student and only available for the summer months in most cases,  hiring students can be a costly move for a company.

Thankfully, the government has the ‘Canada Summer Jobs’ program and will provide some funding to these companies to help with the cost of paying summer students. These companies WANT to hire you as the government pays a significant portion of your wage….why wouldn’t they want to take advantage of this?

Stand Out In The Crowd

Summer time means lots of competition for these job opportunities. When applying for a job really take the time to create a résumé specific to that job position. If you have skills that qualify you for the job, make sure to highlight and concentrate on those more so than other irrelevant skills.

For example….I have many years of landscaping experience as well many years of retail and customer service experience. If I was applying to a landscape company I would focus a lot more on my landscaping experience and touch only slightly on my retail experience. Dealing with customers on a landscape job happens often so I would still mention that I do have customer service experience.

Job Research

Besides making sure your resume is in top-notch shape know the people you are applying to as well as the position applied for. Show some interest and they might just see how much you want the job and how you may be a perfect fit for the organization.

Do plenty of  research about the company and the name of the person you are applying too. Avoid writing a cover letter to ‘Whom ever it may concern’, take the time to find out their name. If possible find out their first and last name to avoid incorrectly using Mr or Mrs/Ms.  Showing that you took the time to look into the position shows how serious you are about wanting the job.  Give the company a call a few days or maybe a week after to see what the status of the position is. Don’t call everyday as you want to avoid annoying them, but calling to inquire will again show your interest and determination to get the job.

Job Network

Talk, talk, talk don’t be afraid to speak about what you are passionate about.

Something I have mentioned before in regards to making your own work is talking about what you do, talk about it a lot!! Just the other day I was approached by a couple who is leaving for the summer. They had heard that offer I landscape services and asked if I would be interested in maintaining their property for the summer. You bet I said YES!! Every job I do get, I always mention that they are more than welcome to pass my information onto others. I even managed to find a job simply by guest blogging here at Canadian Budget Binder from a fan who was interested in my skills and abilities.

If you can’t find job opportunities….make them!

If you have read some of my past posts you will know all about how I make extra money on the side from my full-time career. I offer to help people create, install and maintain their landscapes and gardens. Although I am no longer a student, a lot of what I’ve done could be applied to a student trying to find a summer job and having no luck. The idea of starting your own business can be terrifying! Believe me, I was scared even at the thought of it. But it doesn’t have to be, I’ve learned that running a business can be pretty simple.

Keep an eye out in your neighbourhood, many retirement aged people and seniors spend a lot of time away from their homes in the summer. In the spring you could pass out flyers offering to help maintain their gardens, cut their grass, water their plants etc. while they are gone. If you offer a reasonable price you would be surprised how many people will take you up on it! You could also put up signs on posts or billboards in offices or shopping centres that allow it advertising your service, what you do with a phone number tear-off at the bottom.

Business Ventures

Things to keep in mind while creating your own job opportunities…..

Don’t be afraid to jump into a new business venture if you feel you have an idea coupled with the skills needed to earn some extra money this summer.

In Ontario, as long as you operate your business as your own name, nothing fancy added, you are not required to register yourself as a business. Also if you operate as your name you do not require a business banking account, you can avoid the fees for registration and business bank fees. It’s a great way to save a little while starting up. You can always register and change your business name later if desired.

You are not required to pay GST/HST in Canada until after a revenue of $30,000 (before expenses) in one year, calendar year or any 12 consecutive months. This allows you to advertise your services as tax-free, if you are not paying it to the government you cannot charge for it.  Remember you still have to pay your income tax.

Training and Leadership 

Training and leadership based job opportunities are a great way to build confidence and skills in anyone wanting to take charge in their future. As a student, thinking about your post-education career can be terrifying. Are you going to be able to find a job in your field? Are you going to have enough experience? Do you have the skills and confidence to really win over an employer?

There are companies out there whose main goal is to teach you the necessary skills that you need to succeed. An example of this is a company called Student Works Painting as I mentioned above. They help College and University students run their own summer painting business.

Painting may not be what you plan to do with the rest of your life but this is a great way to learn how to run a successful business that you can apply to whatever field you choose. They will teach you leadership, management and business skills while supporting you every step of way to ensure you have a successful business. Not only are you left with some great knowledge and training, but also some excellent experience to add to your résumé.

Focus Groups

A focus group refers to an organization or institution looking for people to contribute their knowledge and or experiences to a research study. Most often I see focus group studies offered by Colleges and Universities or even organizations that help businesses with new product lines or potential product lines and want input from potential consumers in certain demographics. This is a great way for a business to see what improvements they need to make for a product or to find out if the product might even do well before they spend any more money moving forward.

Last summer I stumbled across an ad on Kijiji I (search jobs or under community category) looking for young females who endure physical labour on a regular basis. The study was regarding females and what was a suitable weight for lifting repetitively throughout a work shift.The study offered a rate of $15/hr, it took 4 hours and I made $60! I’m not going to lie and say that it was easy because I worked up a pretty good sweat doing this one, but it was an easy opportunity to make some money.

It was pretty cool too, I was hooked up to a bionic machine and being able to see on a computer every move I made was neat.  Schools will quite often have posting boards where they will regularly list paid current studies in which they are looking for participants.

Although participating in a focus group or online study that pays you money is not on-going income for the summer don’t pass up easy ways to make money when they fall in your lap. Money is money after all whether it’s  $5 or $5000 especially if you are not yet working, so make time to make money when you can.

Smile and Be Confident

Don’t get yourself down if you don’t get that phone call for that perfect summer job you were waiting for, think about what you can you do….and what job opportunities you can make for yourself! There is a lot of  summer work out there for students, just keep looking. It’s a great way to understand what you may face once you are finished your education so you can plan moving forward.

What other tips can you offer to students looking to find the perfect job this summer?

katrina cbb

Post Contribution By: 

Katrina is regular contributor for Canadian Budget Binder and is as passionate about personal finance as she is gardening. Katrina is a horticulture graduate with over 10 years experience with landscaping and greenhouse production.

Her goal is to share her knowledge and experiences blogging about gardening and her continued passion for personal finance in hopes of motivating others. While being a single mom of two and an in-store marketing representative  for major retail shops she also runs her own Landscaping Services in Southwestern Ontario.

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Photo Credit: Stuart Miles/freedigitalphotos. net

I Can Buy It, But Can I Afford It

Can I Afford it

Author: Katrina

I can buy it, but can I afford it. Sounds pretty simple right?  It is!

This last year has been a very educational year for me in terms of finances and managing my money. Every day I am improving and I am further along than I ever thought I could be. I’m actually really enjoying learning everything there is to know about personal finance especially when it comes to my bad habits.

Since starting my landscaping business which is a passion of mine, earning extra money has been an eye opener for me. I have also been able to engage in a few money conversations and actually feel comfortable having an idea of what I am talking about. One of those conversations happened just this past weekend.

What Can You Afford?

I have always enjoyed talking with my one Uncle and this time we talked about money! I loved it! Even more I loved what he shared with me. He mentioned that when he talks finances with people he always brings up the phrase…. ‘I can buy it, but can I afford it’?  These were just the words I needed to hear. Simple and easy to say to myself, which I will…over and over again.

 I’ve got money in my pocket, sure I can afford it.

Let’s look at a scenario together shall we? So, I walk into a grocery store to buy a bag of milk and I have a $5.00 bill in my pocket and the cost of the milk is $3.99. On my way into the store I see a display of my favourite chocolate bars, I love Mars bars! They are on sale for $1.00. Wow, what a great price I think to myself. I have $5.00 in my pocket, I can buy one! We all know chocolate is a taxable purchase which will bring the total to $1.13.

So after I buy the chocolate bar I am left with $3.87. What did I actually come in here for I ask myself? Oh yes a bag of milk….oops the bag of milk costs $3.99 and now I only have $3.87. So moral of the story here is yes because I had $5.00 in my pocket I could buy the chocolate bar but could I afford it? No!

Now I am leaving the store without what I originally went in for, the milk. I cannot afford the milk now because of an impulse purchase that I really didn’t need. This is just an example to explain the idea behind what my Uncle had to say.

Adjusting The Budget

An extreme example of this might be, say you have $30,000 in your bank account, does that mean you can afford to go down to the dealership and pay cash for a new car? What in your budget have you sacrificed to buy that car? How much are you going to have to adjust your budget for buying something that you really couldn’t afford?

Going in and out of multiple stores for my job challenges my ability to say no to impulse purchases. I usually take advantage of this opportunity to do my grocery shopping kid-free. Those with kids will agree that grocery shopping can easily get more expensive when bringing the kids in the store.

But….being I am in the stores so often it can be easy to walk past a really great sale and convince myself that I need that product when really I could have done without. If you pick up an item and you look at it and tell yourself, ‘I can’t buy it’, likely you shouldn’t be. Listen to yourself more often and you might just save a bundle.

Having the money in my wallet or my bank account allowed me to be able to buy it but it wasn’t in my grocery budget. I do now. Now it has to come out of somewhere else in my budget, so really I couldn’t afford to buy it. This phrase will continually pop into my head every time I am in stores now.

I am preparing to join the Grocery Game Challenge on June 1st , I promise I’m in! Saying this over and over to myself is going to help me stick to my weekly/monthly grocery budget. It is now. I am also starting to enforce ‘no-shopping days’ when I go to work to help me from spending money I don’t need to spend.

Multi-Buy Purchase

After working outside all day yesterday in the garden I had a handful of stuff going into the house. I set my sunglasses on the step in the garage so I could open the door.

I forgot about them until this morning when I stepped into the garage to throw out some garbage and stepped on them, breaking them to pieces instantly. Smart that was, now it’s going to cost me money to replace them.

I do not leave my house without sunglasses, even on a dull day. I find myself wearing them as I seem to get more headaches if I don’t have them on. After I finished work today I stopped in at Ardene’s to buy a new pair of sunglasses.

I usually buy my sunglasses there because they always have a deal, usually either 2 or 3 pairs for $15. Today’s deal was 2/$15. I picked out one pair then continued to look for another.

Ask Yourself This…….

Then I stopped and thought to myself….I was not planning on having to buy one pair of sunglasses, let alone two. If bought individually each pair cost $8.50. In the past I wouldn’t have even thought twice and grabbed two pairs, but in this case being an unexpected purchase saving myself $2.00 by buying two pairs wasn’t worth spending another $6.50.

I reminded myself that yes I could buy two pairs but really I couldn’t afford two. Buying one pair was already something I would have to take money from somewhere else in my budget. I could justify one pair as I need them, but not a second pair.

Every time that I see a multi-buy discount now I will stop and think it out again. Do I really need to buy the second one and is the deal really something that I can afford? If you have to ask, you can’t afford it.

What I can afford is patience….

I do occasionally shop for clothes and fun things for myself and the kids, although the majority of my impulse spending is on groceries. I am not the person who has to have every new gadget on the market.

I’m also not someone who will spend $100 on a pair of jeans. I also can’t afford to. When I do buy something for myself I don’t like to feel uneasy about how much I’ve spent. I’ve learned to have a good amount of patience for the things I need to purchase but haven’t saved the money up for yet.

I Love My Job

Working in a retail environment for a few years, I have learned lots about how companies strive to achieve top sales. I work on behalf of multiple companies as an in-store marketing representative. Part of my job includes working with the store to maximize sales and secure optimal placement of their products and advertising materials and displays in-store.

My job is to market products to maximize sales and I understand the reasoning behind why manufacturers want their product seen. I also know that as a consumer I have the right to make informed decisions whether the product is in my face or hiding on a shelf. Alternatively I might decide to buy something the day the product is released, or wait a few weeks/months until the price drops significantly.

It’s a pretty simple concept even though many find difficulty with it like I have in the past. Having it said to me and being a catchy, simple phrase really stuck in my head, and it just makes sense to me. I’m working so hard sticking to my budget so why do I want to throw my budget out the window just to buy something I really can’t afford?

How do you avoid buying things you can’t afford?

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Katrina is regular contributor for Canadian Budget Binder and is as passionate about personal finance as she is gardening. Katrina is a horticulture graduate with over 10 years experience with landscaping and greenhouse production.

Her goal is to share her knowledge and experiences blogging about gardening and her continued passion for personal finance in hopes of motivating others. While being a single mom of two and an in-store marketing representative  for major retail shops she also runs her own Landscaping Services in Southwestern Ontario.


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What are Realistic Investment Returns

Investment Returns

This is a contribution by Troy, blogger behind The Financial Economist.

What are Realistic Investment Returns?

In these days when Bernake rules supreme, the average citizens of the world are left with two choices. Either we can invest in bonds that yield an unbelievably awesome 2% a year, or we can invest our own money and make a meager 12% in this bull market. Tough choice, eh?

Such an obvious choice is what draws so many new investors to the market – the chance to make some real money in this next-to-nothing interest rates environment. Unfortunately, too many investors approach this game with the mindset of a gambler – I’ll be real angry if I don’t AT LEAST double my money this year! Of course, you ask these guys how they know how they can make such pathetic returns, and they’ll say “I can just feel it in my bones!”

Now you may be laughing at this, but this is a far too plausible scenario. Too many investors jump right on-board the Investment Train without knowing that this train often runs parallel to the edge of the Rocky Mountains. So what kind of returns can an individual investor realistically expect?

Like everything in the world of investing, there is no clear-cut answer.

It depends on a couple of factors:

  1. The markets you invest in.
  2. How long you have been investing.
  3. Your investment style.
  4. Your time frame.
  5. Your financial products.

But of course, for every market whose realistic investment returns are higher, the potential losses are also higher (higher risk, higher reward) – just keep that in mind.

Return Factor #1

What market you invest in – stocks, bonds, currencies, commodities, etc – will play a big role in deciding how much you can realistically make. The big mistake a lot of investors make is that they expect to make 40% a year with stocks – this just ain’t going to happen. Compared to a lot of other markets, stocks are a rather “flat” market, meaning that the volatility isn’t exactly insane.

A big year for stocks might be a 25% move, whereas bonds and commodities can make the same jump in a month. Realistically speaking, good stock market investors can make an average of 25% a year, nothing close to the amazing returns you hear from hedge funds.

If you’re going to invest in bonds, then the returns are pretty obvious – 2% a year. However, if you’re trading bonds, then that’s a whole different story. Bond trading, not to be confused with bond investing, can be highly profitable. A 1% move coupled with a bit of leverage yields magical returns, to the tune of 50% a year that some bond traders are making. Of course, inexperienced bond traders should not even hope to make such returns – the bond markets are such dangerous markets (trading-wise) that most traders would be lucky just to break even.

Currencies, as I mentioned in my post about volatile markets, are an extremely volatile market because all traders (there are no investors) who trade currencies do so with leverage. However, even with leverage (realistically speaking) you are not likely to make more than 40% a year, even if you’re a good currency trader.

This is because currencies usually have really small price movements, something along the lines of 4 – 5% a month.  In addition, a lot of currencies such as the CAD/USD pair trade in ranges, making the formation of large trends unlikely. Although the currency markets aren’t big on returns, but their extremely big on size.

Contrary to popular belief, currency trading isn’t attractive because of it’s supposedly “massive” returns but because it is the one market where the big market players can easily move in and out of the markets without their own buying/selling pushing the markets (hence the massive liquidity).

Commodities are a frequently overlooked market. Although commodities such as crude and gold have historically underperformed stocks, that “history” only goes back to the 1970s Nixon took us off the gold standard. Gold and oil have experienced massive bull markets, and are poised to continue to do so in a world where emerging countries are eating up what’s left of the earth’s resources.

I personally know a couple of commodity investors are doing extremely well – one can expect to make more than 60% in good years (as in 2010), but of course that includes heavy downswings. But all in all, commodities have drastically outperformed stocks in the last 10 years because historically raw material prices have been suppressed by increases in agricultural efficiency..

Return Factor #2

The second factor is pretty obvious – the longer you’ve been around the markets, the more experience you probably have had which hopefully translates into making fewer mistakes. New investors shouldn’t expect to shoot the lights out the first year – my first year of investing wasn’t exactly a honeymoon either. The first year should be a time of learning, which means that you will make plenty of mistakes that should be corrected in the future.

Investing is difficult, especially if you’re new to the game. First you have to learn all the jargon, and then you can start learning how to invest. Age in the markets doesn’t necessarily guarantee wisdom nor investment success, but inexperience CERTAINLY won’t. That’s why they say that investing is an old man’s game.

Return Factor #3

Are you an aggressive investor who’s ok with participating in massively volatile markets? Or are one of those investors who will buy more as the market falls?

Investors who are more laid back and less concerned with the short-term market situation obviously cannot expect such great returns – they cannot beat the market’s average of 8% per annum by a significant amount. On the other hand, the best and most profitable investors are always the more aggressive ones who, like the Big Swinging Dicks & Dickettes (see Michael Lewis’ famous book Liar’s Poker), have the guts to bet big and be nimble.

Return Factor #4

A major component that decides your investment style is your time frame – are you a short-term trader, a medium term investor, or a long-term investor?

As I’ve already mentioned, long-term investors should not expect the kind of returns that great traders can generate. Good long-term investors can probably make 15% a year, provided that they catch the right side of long-term bull/bear markets and keep buying on the dips, whereas a lot of traders can realistically say that their goal is to make 70% a year.

One caveat I’d like to add: even though the best investors are the more active and aggressive ones, as a whole the long-term investors outperform the aggressive investors, whose average investment returns are dragged down by some major losers (high returns, high risk!).

Return Factor #5

Last but not least, the financial products that you choose to invest in also determine realistically how much returns you can make. You’ve probably got not clue what a financial product is.

A financial product is simply how you choose to express an investment idea. For example, let’s assume that you’re bullish on U.S. companies. One way of expressing this opinion is to outright buy stocks, maybe even a U.S. large-cap index fund. More arcane ways of expressing this idea can be by buying a call option, which is the right (but not the obligation) to buy a certain stock in the future at today’s price.

Inherent in different types of financial products are their expected returns. By outright buying or selling stocks, you can maybe expect 15% per year. However, other financial products like options or futures are more of an all-or-nothing investment (or gamble, whichever way you want to see it) – you can either double your money, or lose 60% in two weeks.

Contribution By: If you want to learn more about the basics of investing? Check out Troy’s finance blog.
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