Book Review and Giveaway: Rob Carrick’s Guide to What’s Good Bad and Downright Awful in Canadian Investments Today
It’s been quite a while since our last book review and giveaway, but lets get it going again with a great personal finance book written by the popular Globe and Mail columnist, Rob Carrick. The title is a bit long, but descriptive to the overall theme of the book. The book is titled “Rob Carrick’s Guide to What’s Good Bad and Downright Awful in Canadian Investments Today.”
About the Author:
According to the book:
Rob Carrick is one of Canada’s most widely read and best-respected financial experts, with two decades of experience as a business and economics reporter and commentator. Carrick worked on both Bay Street and Parliament Hill before becoming the personal finance columnist for The Globe and Mail ten years ago.
About the Book
As you can probably conclude from the book title, this book focuses on the Canadian investment industry and does a great job explaining how the industry works in a brutally honest fashion. Although this book is meant for the beginner to intermediate investor, there is something for everyone in this book.
Did you know that when you buy mutual funds from a discount broker that they keep the trailer fee even though they didn’t offer any advice (except Questrade)? Or the traits of an advisor that you should look out for? Or even mutual funds that actually provide value? Those are just a few tid bits of information that I gathered from the book.
The topic areas covered in the book include:
- Getting off to a good start – how to get started as an investor, some common mistakes.
- Mutual Funds – how fund fees work, and lists of good and bad mutual funds.
- Navigating the Stock Market – how to build a simple portfolio without mutual funds, dividend investing, discount brokers, ETFs.
- Bonds, GICs and other conservative stuff – fixed income rip offs, ETF alternatives, principal protected notes, high yield bonds.
- Do-it-yourself investing – reasons to use a discount broker along with a listing of the top 3, investments that go great with a discount broker account and online resources for investors.
- Investment advisors – traits of good and bad adivsors, interview questions, and steps to take if an advisor has wronged you.
- Information, please – recommended websites/newsletters/calculators for investing.
Final Thoughts
Overall, I enjoyed this book and would consider it a must read for personal finance enthusiasts, especially those just starting out on their journey.
Want a Free Copy?
The book publisher was generous in offering Million Dollar Journey readers the chance to win a free copy of the book. The details are below:
- Follow our new Facebook page by clicking “Like” on the top of this page. (+1 entry)
- Leave a comment in this post. (+1 entry)
- Only one comment entry per person (valid email addresses only please – privacy policy).
- Only those with a North American mailing address may enter (publisher rules, sorry).
- Contest will end Fri 5pm EST Sept 10, 2010 and the winner, drawn randomly from all entries, contacted shortly after!
A Primer on Corporate Bonds – I (Credit Ratings)
This is a column by regular contributor Clark.
The earlier parts of the bond series dealt with the basic types of bonds and their risks and suitability. This part will begin a sub-series on corporate bonds.
As mentioned in the first part of the series, corporate bonds are issued by companies to gather funds for their business. With thousands of companies issuing bonds, where does one start to make the list smaller?
Credit Rating Agencies
Similar to credit reporting bureaus that keep track of a consumer’s credit history, there are Nationally (US) Recognized Statistical Rating Organizations such as DBRS (short for Dominion Bond Rating Service), Moody’s, Standard and Poor’s(the S&P Indices fame) and Fitch Ratings that issue credit ratings for companies. These agencies offer a rating system to aid investors in determining the risks associated with investing in any company. Debt could be secured or unsecured and there are specific ratings for short-term debt, long-term debt, preferred stock, etc. A glance at the long-term credit ratings of a company (that also considers assets or collateral needed in case of default) would show the company’s ability to fulfill its debt obligations and credit worthiness. It must be noted that credit ratings are not meant as alerts to buy, hold or sell; they are just a tool to assess a company’s capacity to pay back debt.
Foreign Currency Debt
Companies may borrow from lenders inside and/or outside the country (for example, Canadian companies may make use of US banks and vice versa). As would be obvious, borrowing from foreign lenders comes with currency rate fluctuations. Repaying a local (as in country) lender is straightforward – if the company has the money and willing to repay, then the debt is paid. But, in the case of foreign currency debt, companies would have to consider currency rates and decide if it is lucrative to repay debt at that existing currency rate or watch market forecasts and calculate if they would be in better health by holding off until when they think the exchange rate will be stronger (they may also invest overseas at such a time). Foreign currency debt throws another variable into the mix but thankfully, agencies evaluate an organization’s ability to repay debts in local and foreign currencies. If the organization has foreign currency debt but does not have sufficient foreign currency reserves, then their rating may be lower.
Corporate Credit Rating
Corporate credit ratings range from the highest quality (best) to junk level (worst). Agencies use different designations but in general, long-term ratings are denoted by the letters AAA (triple A), which is the best credit rating (meaning low credit risk) and C or D (based on the agency) is the worst (default level as in failing to meet obligations). There are subsets to the basic category, which might involve a “+” or “-” sign to indicate subclasses (again, varies based on the agency). For example, the Fitch Ratings use AAA, AA, AA, BBB for investment grade and BB, B, CCC, CC, C, D and NR (not rated) for non-investment grade bonds. A good credit rating helps a corporation attract new partners or retail investors, apply for an increase to their line of credit, or sell their business.
Sovereign Credit Rating
A sovereign credit rating provides information about a country’s ability to provide a stable and secure investment market. This rating is contingent on a country’s economic status, market transparency, foreign investments, currency (local and foreign) reserves, and political stability to name a few. Potential investors can analyze the country-level risk associated with the company they are looking at and arrive at their decision. A sovereign rating is critical, since it will boost the country’s prospects in terms of pulling in foreign investments and assisting in the growth of the economy.
In the next part, we’ll look at some metrics worth knowing about when purchasing corporate bonds.
About the Author: Clark is a twenty-something Saskatchewan resident employed in the manufacturing sector. He repaid around $20,000 in student loans and has been working to build his investment portfolio as a DIY investor (not trader) while nurturing plans to retire early. He loves reading (and using the lessons learned) about personal finance, technology and minimalism.
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