April 2021


Stay sane during Covid

It began with a shock as the virus spread, everything closed and markets crashed. Then things got eerily quiet. For a while doom scrolling kept us busy. Then the scramble to set up a home office and learning spaces for the kids. Next came guzzling down Netflix episodes for light drama followed by a US election for even more drama. Most recently we’ve been comparing shots and reactions. But we are all getting weary and it’s time to find new ways to stay sane during Covid.

Fine, I mean fun, dining

No question our eating has changed a lot. Emphasis on the lot.  Where workday dining used to be confined to mealtimes, being at home gives us continuous access to the fridge, the pantry and the cookie jar to relieve some boredom. Here are some ideas to mix things up and stay sane during Covid:

Meal Kits – here in Ohio, our Giant Eagle grocery store has a selection of Great to Go meal kits for two including Chicken Piccata and Mushroom and Green Chile Enchiladas. Meanwhile in Canada, PC Chef has their Oaxacan Pork Tacos with Mango Salsa and smashed Avocados. They make a fun date night, are easy to prepare and build real chef skills for when you are ready to take off the culinary training wheels.

Leftovers – check out Supercook, a clever way to find recipes with what you have left in your fridge. Download their app from the App Store or Google Play and just speak your fridge leftovers into your phone. Boom! It finds you recipes that use just what you have! How Cashflow Cookbook is that?

Wine Clubs – there are some great wine clubs out there including the Wall Street Journal Wine, a cool club that starts off with 14 bottles plus glasses for just $69.99. Or why not try a complete blind tasting kit from Argaux? They offer 2, 3 and 4 bottle kits to test your palette and learn your preferences. You can set up your own testing night and compare scotches, gins or rums. We did a comprehensive vodka testing night right here at Cashflow Cookbook headquarters.

Clear out the brain fog

What a great time to learn something new! We are all used to remote connections and the range and quality of courses has never been better. Wonderful way to reinvest your commute time in ideas to enrich your life and further your career while staying sane during Covid.

Stay sane during Covid take a class
a masterclass can teach you all kinds of new skills. Photo Andrew Pons

Masterclass gives you full access to the best in every field. Learn songwriting with Alicia Keys, cooking with Gordon Ramsey, skateboarding with Tony Hawk or business management with Howard Shultz (think Starbucks). An unbelievable deal at $15/month.

There are lots of other great online learning sites including Udemy, Coursera, EdX and LinkedIn Learning. Titles include business related topics like mastering XL (how fun is that?) or learning to code (How much fun can you take?), to every kind of interest or hobby. Udemy, as an example, includes courses on everything from music and photography to fitness, lifestyle and interior design. Often courses with thousands of 4-5 star reviews are only $20-$40. Coursera and EdX tend to more academic and career-oriented titles.

The great outdoors

There it is, just past your screens and out your front door! Go check it out. Prop up an effigy of yourself in your office chair so you’re not missed on the Zoom call. You got this.

Hike – grab some runners and get to a park or trail. Breathe that fresh air and commune with the woodland creatures. It’s a lot like the Headspace meditation app, but without the computer, the guy with the British accent and the annual subscription. Push the pace a bit and get your heart engaged, or bring some snacks and loaf along. Either way, the latest research says that it will help you stay sane during Covid.

get out for a bike
It’s like riding a, well, you know! Photo Carl Winterbourne

Bike – yah, the dusty metal thing in the garage, just behind the Christmas decorations and the boxes of, well, whatever is in them. Guessing here, but perhaps you haven’t had it out in ages. The good news is that it is just like riding a…well you know. Get a nifty phone holder for your handlebars to help your navigation or just go natural and enjoy the day.

Herb and Vegetable Gardens – A great alternative if all of that huffing and puffing isn’t your thing. Lots of instructions to get you started on YouTube and seeds and kits on Amazon. A wonderful way to commune with your own yard, and get the very freshest ingredients for your garden.

Bird watching – I know, I know, it sounds a bit fuddy duddy. Bust out the Tilley hat and the cardigan and all that. But a bird feeder set up just outside your morning coffee window really adds something. And since your boss isn’t watching, take your time, enjoy the interactions and the colorful species. Hauling the bird food around provides a great workout, which leads us to the next section.

Home workouts

stay sane during covid with home workouts
stay sane during covid with home workouts. Photo Johnathan Borba

Sadly, all of the excuses are gone! The gyms may be closed, but you can set up a home gym. Peloton, Bowflex and NordicTrack are all shipping again. And even if they weren’t your body weight is still there. Maybe more than ever. Get some basic equipment and then amp it up with bespoke virtual classes.

YouTube has every kind of workout and tons of instruction in Yoga, pilates, bodyweight, and Martial Arts. If the Apple elves brought you a watch for Christmas, put it to work with the Apple Fitness+ app. Love this, new classes all the time to bring your treadmill, spin bike, yoga mat and abs to life.

Honeydew list

Since you are at home staring ceaselessly anyway, why not fix a few things up? Tradesmen are booked solid, but what a great time to learn some new skills. Recruit a handy relative or try working under the wing of a pro. There are YouTube channels for every kind of fixit project. Bob Vila and Vancouver Carpenter are awesome for general repairs, while Appliance Repair is great for fixing, well, you know.

If your boredom sinks to previously unexplored levels, it might be time to do the sorting and organizing that you have put off for the last decade or two. Do some robust purging, move those old treasures out to charity and then get some shelves going to give you primo access to the things you really need. Cleaning, sorting, purging and organizing rivals meditation and Xanax for mood improvement.

Looking to ease your boredom, stay sane during Covid and save money? Tackle some energy saving projects, like weatherstripping some leaky doors and windows, sealing around pipes entering your home and adding attic insulation. We did a few Covid-era projects to save on electricity and it made a big difference. See below:

stay sane during covid home energy projects
Looks like those January energy savings projects paid off

Build a kit

stay sane during Covid - build a kit
stay sane during Covid – build a kit

You name it, you can get a kit for it. Deb got me a Les Paul guitar kit that will have me sanding, staining and soldering for weeks. Once done, I will plug it into one of the amp kits I built earlier for a real all-built-at-home experience. To ensure that I can enjoy really great guitar tone, we just got tickets for a Santana concert later this summer.

If you trend to more arts and crafts, here is a cool hands casting kit to immortalize your paws. Or you can find books and kits to make everything from candles to clocks.

Entertainment in a box

A bunch of companies will ship you a monthly box, of well, cool stuff. Hot sauces, mystery games, puzzles, at-home escape rooms, luxury essentials and tons more. Check out Cratejoy as an example. Prices run from $20-$40 a month or so.


Turns out that there are lots of ways to stay sane during Covid. As scary and as sad as this chapter has been, its also been a time to regroup, reconnect and recharge. Maybe a change to remake your life in a new way. For many it has opened possibilities – more working from home, less commuting, more free time for family. Some of these changes can help free up cash (one less car? reduced commuting costs?), while others can offer a better lifestyle (more time with kids, spouse and pets). Use the time as a chance to improve every aspect of your life. Soon the fog will lift, the world will open up and we will appreciate relative visits, dinners out and concerts like never before.

How are you staying sane during Covid? Let me know in the comments below.

Main Photo by Priscilla Du Preez on Unsplash

Build wealth like the pros!

If you’re on a slower path to wealth than you would like, this is the post for you. No wealth whatsoever? Even better. Let’s get you started. There are the special hacks that will help a lot: marrying into money, inheriting a bundle, lottery winnings or working somewhere with a juicy stock option plan. If none of those are in the cards, not to worry. Turns out, there are just 4 factors to tweak to build wealth like the pros. Which one is the biggest issue for you? Read on and let’s find out!

Factor 1 – Rate of return

As you save money and invest those funds will grow. How much? That depends on the rate of return. If you want to build wealth like the pros, that is the first place to look. For a quick perspective, the Rule of 72 is a handy way to understand the impact. If you divide your percentage return into 72, the result is the number of years it will take to double your money. As an example, at 7% return, it would take about 10 years to double your money. At 2%, it would take 36 years. Ouch! That’s a big difference. No Lamborghini for you. And if inflation was running at 2%, you would be getting exactly…nowhere. Now you know why having all of your money invested in savings accounts, treasury bills and GICs won’t work.

Compare to the Indexes

How are you doing on your rate of return? Go back and take a look. For business, the rate of return should be quite clear from the business statements. For savings with an investment firm, your rate of return should be available on your statements or online. In the case of equity investments (stocks) the question is whether, after all fees, they exceeded the overall stock index. For the US market the index is usually viewed as the S&P 500. It has averaged about 8% over time. If your investments are trailing that, it’s time for a review with your investment advisor. Investing on your own, maybe it’s time to invest in the overall index. By definition, if you are investing in the index, you can’t be underperforming it. Also, maybe act on fewer “hot” stock tips from your Uber driver.

It’s important to compare like for like investments to the indexes. That is to say, compare your US stock portfolio to the US stock index. Likewise with bonds, European stocks etc. Here are the common indexes to use as benchmarks:

  • US Stocks – S&P index
  • European Stocks – STOXX Europe 600
  • Canadian Stocks – S&P TSX index
  • Global Bonds – Merrill Lynch Global Bond Index

These are just examples of some indexes for comparison. Find one that works and compare your investment returns.

Factor 2 – time

Assuming you are getting a great rate of return, the next big factor is time. Compound interest is the 8th wonder of the world, but time is the magic that really sets it ablaze. To illustrate, let’s go back to the Rule of 72. As we said earlier, at 7%, money doubles every 10 years or so. Cool. But it doesn’t stop there. It keeps doubling every 10 years. Let’s say that you had $100,000 invested at 7%. After 10 years it would double to $200,000. So 10 years later it would be $400,000, then $600,000 and $800,000 after a total of 40 years. Wow! that is a pile of money. OK, now let’s see who was napping during that math! It actually doubles every 10 years. So the real math is $200,000, then $400,000, then $800,000. After 40 years, it hits an astonishing $1,600.000!

Enjoy now or save for later?

Well that is a big pile of money, but who wants to wait 40 years to get rich? Great question. There are three parts to this. First, if you are 20 right now, 40 years from now you will be 60. Which isn’t all that old. Trust me, I’m almost there. I can still run, ski, play the guitar, and bike. And the mortality tables tell me that I still have another 30 years or so to go. So I’m glad that I followed my own advice and earned a good return and let that money grow over time. Second, you aren’t waiting for all of your money to grow like that, just the part that you are saving. The rest you can spend and enjoy through all of those years. Third, let’s go back to that $1,600,000. That means that every dollar you set aside and invest at 7% becomes $16 in 40 years. That is a big difference vs spending that $1 now.

But how much should you save and how much should you spend? That leads us to our next factor in how to build wealth like the pros.

Factor 3 – Savings Rate

Savings rate is just the percentage of your gross income (before deductions for taxes and other things) that you set aside to build wealth. So if you earned, say $100,000 and saved $10,000, your savings rate is 10%. If you saved $15,000 on that same income, your savings rate would be 15%. But how much difference does the savings rate really make? Is it really worth it to increase your savings rate from 10% to, say, 15% or 20%? Let’s take a look:

Build wealth like the pros
Build wealth like the pros

In the graph above, we see the difference that savings rate makes. To provide context, the graph is based on a household income of $150,000 with the savings earning 7% annually. Saving 5% of that would be $7,500 a year, or $625 a month. At a 5% savings rate, after 30 years, we would accumulate $762,000. Not bad! But saving 10%, we would accumulate $1,526,000. Quite the difference. After 40 years, the 5% saver would have $1,640,000 while the 10% saver would have $3,281,000. Of course, someone who enjoyed all of their income and saved nothing would have, well, nothing. Not a great retirement. Or maybe working longer than you had hoped. So savings rate is a key to build wealth like the pros.

And there are other ways to look at this chart. As an example, let’s say you wanted to retire early. At a 5% savings rate, you would accumulate $1,126,000 after 35 years. But with a 10% savings rate, you could gather the same amount after just 27 years. That’s 8 years to whack white balls across the countryside, build a school in Kenya, or just bask in a hammock sampling Pina Coladas.

What counts in savings rate?

Another good question. It’s anything that builds wealth. For instance, contributing to a registered education plan is a great thing to do, since the government helps you save more effectively. But it doesn’t contribute to your long term wealth. Joining the company pension plan does count. If you want a 10% savings rate and your pension plan contribution is 6% of your gross, then you would need to save another 4% elsewhere. If you had a high interest mortgage or other debt, applying accelerated payments would count since the “return” is guaranteed and eliminating that debt would help build your long term wealth. Just make sure that you aren’t living beyond your means, continuously racking up debt, then paying it off. That doesn’t count! Nice try though!

What if you can’t scrape together a decent savings rate?

There are tons of ways to save on just about every category of spend. I spent 2 years finding the best ideas, in fact, $13,000 of monthly savings ideas. Check it out here. And be sure to subscribe to this blog so you don’t miss anything. No spam, no passing your information to foreign hackers. Just you and me building your wealth!

One more trick to build wealth like the pros

Saving any amount might seem daunting. But 4% is better than 2% and 2% is better than nothing. Build the savings habit, establish some sort of automatic savings plan that snatches the money before you can. A company stock purchase plan, an automatic monthly  transfer to an investment account or a government registered plan. Start with a small percentage and step it up a bit at a time. If you do it just as you get a raise, you literally won’t notice the difference. Maybe enjoy half the raise and use the rest to crank your savings rate up an extra 2 or 3%. Then do it again next raise. It’s worth it.

And there is one more way to build wealth like the pros:

Factor 4 – Income

On the one hand, this is a bit obvious. Doesn’t everyone who earns a lot end up rich? Well, actually not. Ask Mike Tyson, MC Hammer, Nicolas Cage, Toni Braxton, 50 Cent, Kim Basinger, Michael Jackson or Burt Reynolds. If you spend as much as you earn, or more, you will go broke no matter how much you earn.

But what happens if we keep everything else the same, but increase our household income from, say, $150,000 to $200,000? Let’s take a look at the chart with the new numbers:

build wealth like the pros
More income helps too!

No surprise. All of the numbers get bigger. As an example, a 20% saver earning $150,000 would accumulate $3,049,000 over 30 years, while the 20% saver earning $200,000 would pile up $4,066,000. Whoa! An extra millski. And it shows that increasing your earnings is another key to build wealth like the pros.

What did I miss? What aha’s did you have? Let me know in the comments. If you enjoyed this, please share it with the social buttons.



Why your investments aren’t growing

What an awesome year for investors! The Dow Jones Index is up 58% in the last year. Rank amateurs are striking it rich. Your Uber driver, plumber and urologist are all making zillions! Investing has become a way better fad than the Macarena, the Ice Bucket Challenge and even fidget spinners. And everyone is crushing it except, maybe, you. Let’s look at the 5 reasons why your investments aren’t growing and everyone else’s are:

1. Everyone else’s aren’t growing

It’s a bit like Facebook. Remember Ronnie’s post about getting demoted at work? No? How about the one about Tom getting dumped by his girlfriend? Or maybe the one showing Tammy watching Netflix all alone since she wasn’t invited to the virtual wine and cheese Zoom party? Investing is a lot like that. People do plenty of bragging about their winners. Everyone stays silent about their losers. In other words, don’t listen to the hype, its likely not showing you a clear picture. Maybe you are doing ok and everyone else is just exagerating.  On the other hand, maybe your results really do suck. Let’s fix that. Read on.

2. You are watching your stocks like, well, a watched pot

No wonder they aren’t boiling. Warren Buffett often paints the picture of someone building or buying a business. Do they call in a business valuator every day to get an update on the value of the business? How about 4 times a day? Unlikely. Give your stocks some time. As a stockholder you own a piece of a business, give it time to grow.

For example, look at this stinker of a stock:

why your investments aren't growing
Stock Number 1 – time to sell!

Whoa! A drop of almost 37% and this chart was taken over just 2 1/2 months. Should I sell?

Why can’t it be more like stock Number 2 below?

why your investments are't growing
Stock Number 2 – let’s buy more!

This one went up almost 10X in just 2 years. Love that. And the great news is that the first stock IS a lot like the second stock. In fact they are the same stock. They are both Apple stock (AAPL). Here is a longer term chart:

why your investments aren't growing
Actually they are the same stock! Keep holding!

If you play around with stock charts, you will find that any stock can look like a winner or a loser by just changing the time frame. In conclusion: Buy quality stocks and hold them for the long haul. Don’t buy or sell based on the ups and downs of their charts. Stop watching them at every commercial break, they will do just fine without you. Too much trading could be why your investments aren’t growing.

3. Don’t buy and sell based on news headlines, boredom or tips

The news is there to sell more news. It’s not intended as investment advice. Let’s look at a few headlines that might have made you sell your stocks:

  • North Korea is going to flatten us with their missiles.
    Didn’t happen. The stock market continues to grow. If it does happen, our investment returns won’t be our biggest worry.
  • We are running out of oil, the world is doomed!
    Lots still available! In fact oil prices were negative just a few months back. Couldn’t give the stuff away.
  • The 2008 Financial Crisis will decimate stocks.
    It did for a while. Since then they have grown 292%. Thankfully you didn’t sell and miss all of that. Did you?
  • The volcano in Eyjafjallajökull Iceland will wipe out airline stocks!
    Hard to spell and it did suspend flights, but planes are back and flying.
  • Financial expert says get out of the markets now!
    This is a permanent-headline. Like the sign at a bar that says free beer tomorrow. Ignore it.
  • If Trump gets in, the stock market will implode.
    Actually markets rose 9.6% in his first 4 months.
  • If Biden gets in, the stock market will implode.
    Actually markets rose 13.6% in his first 4 months.

In other words, headlines don’t have a great track record of predicting stock markets. Even if you get out at the right time, how will you know to get back in at the right time? Build a quality portfolio and then let it grow.

Warren Buffett’s quote tells the story

“The stock market is a device to transfer money from the impatient to the patient”. Print this off, cut it down to size and Scotch tape it to the screen of wherever it is that you buy and sell stocks. It’s like taping a picture of either your fat self, or the movie star you want to become, to your fridge door.

A Dalbar Inc study showed that for the twenty years ending in 2015, the S&P 500 averaged growth of 9.85% a year, while the average equity investor earned a market return of just 5.19%. The reason is human emotion. Greed. Fear. The fun of hitting the buy and sell button. The craving to lock in wins. The panic to avoid tragic losses. Resist! Keep a qualified financial advisor in between you and your investments. Or develop the discipline to buy and hold. It works.

If you have dividend stocks with a dividend reinvestment program in place, you may learn to love the dips in stock prices. Sound weird? I wrote about that here.

The conclusion – buy and hold for the long term. Think of that old adage that your investments are like a bar of soap. The more you handle them the smaller they get. It could be a big reason why your investments aren’t growing.

4. Stay properly diversified

Some companies do better when interest rates rise. Others are happier when they fall. Sometimes bonds do better than stocks, other times the reverse is true. The US markets might outperform Europe. or it may be the other way around for a period of time. The same is true of small company stocks vs large company stocks. Returns vary by industry as well.

All of this makes it very hard to consistently pick winners. And even if you pick a great stock in a growing industry in a booming economy with rising productivity and a powerful product advantage and great Super Bowl ads, it may all come crashing down when the CEO gets caught licking quarts of ice cream at the supermarket.

How to prosper? Invest with proper diversification by:

  • Asset classes – stocks, bonds and cash. Maybe some real estate.
  • Geography – exposure to the major economies
  • Duration in the case of bonds. Short, medium and long term
  • Company size – so called large caps and small cap companies
  • Industry type – tech, resources, consumer goods, financials etc

As an example of the first point, many people are terrified of the stock market and instead hold only cash, treasury bills, short term bonds and their wallet. As a result, they see terrible returns of under 1%. After tax they earn well less than inflation. That means that their money buys less every year. They lose by not investing. Here is a post about how to solve that one.

If this sounds complicated, get some help from a qualified financial advisor, or use Exchange Traded Funds to simplify diversification. As an example, part of my holdings are in Vanguard’s VTI Exchange Traded Fund. It holds over 3,600 companies in every industry. Well diversified. It has averaged over 8% annual growth since its inception and even pays a dividend. Combine that with a bond fund and you can build a solid portfolio. This is just an example, readers should do their own research prior to investing.

In short, if you are wondering why your investments aren’t growing, it could be that you aren’t properly diversified.

5. Don’t overpay for investment advice.

Many studies have been done about the ability of investment pros and fund managers ability to consistently outperform the market. The answer is that about 90% don’t. And you might be paying 1.5%, 2% or even more in fees for the privilege of trailing the market. The fees could be a combination of advisor fees, fund fees, commissions and other expenses. It can be a big reason why your investments aren’t growing.

How much does this matter? A lot. Those fees come right out of your returns and the effect compounds over time. Let’s take an example of an investor who invests $100,000, pays 1.75% in total fees and the investments earn 5% per year. Over 25 years, the investment would grow $238,635, but investment fees would add up to $116,176 and the investor would keep $122,460 or about half of the total return. Try some different scenarios on the excellent simulator at Larry Bates’ site here.

While that tool might whip you into a frenzy about investment fees, remember that for many people, an investment advisor can save them from blunders 1 through 4 above. The key is to ensure that you are getting more in value than you are paying in fees. Maybe that financial advisor stops you from selling during the start of the Covid crisis, thus keeping you in the market as it rebounded more than 50% in a year.

In summary, know how much you are paying in investment fees of all kinds and know your investment returns for each year. Compare your after fee returns to the benchmarks for each of your investment types – stocks, bonds etc.

Why your investments aren’t growing – the summary

Saving 10% or more of your income is a powerful step to wealth building. But the magic really happens when you have those savings invested and the results compound over time. If you are saving less than 10% look for ways to save more. There are lots of ideas in my blog on how to do that with minimal effort and sacrifice.

But it is just as important to make those savings grow. Select quality stocks and bonds (or funds) and then give them time to grow. Diversify your portfolio and align it with your risk tolerance. Then track your investment returns and fees for the last several years. If you aren’t growing as fast as the market, take the time to understand why not.

Which of these issues are hampering your investment growth? What are you looking to change? Please let me know in the comments.

Photo credit Pixabay.