I’m Joining the Yakezie Challenge

The Yakezie network, started by Financial Samurai, is a community of bloggers consisting on personal finance, investing and lifestyle blogs. The Yakezie challenge is a 6-month long process, open to all bloggers, to improve and promote each other’s blogs and reach a better overall Alexa rank.
Roadmap2Retire’s current Alexa as of today, Feb-11-2014, is 565,407.
Proud Member of Yakezie
The challenge for the next 6 months is to:
  • Reach a ranking of 200,000 or better
  • Publish 2-4 articles weekly (already doing that!)
  • Selflessly promote other blogs and become an active member of the Yakezie community
  • Install the Yakezie badge on the site (done!)

I intend to include my Alexa ranking update in my monthly updates over the coming months.

 

Is Inflation Just Around the Corner?

Inflation is a tricky beast to control. The central bankers around the world do not want it rampaging and destroying the masses in its path. They want to rein it in and control it without killing it. Ever since the financial crisis of 2008-2009, the US Fed has slashed the interest rates and has been on a bond buying spree. The central bankers of the developed economies have followed suit with slashing their interest rates, whilst keeping an eye on the inflation rate. Cutting the interest rate was supposed to be a temporary measure to spur the economies and inflation for now, remains dormant. On the contrary, the International Monetary Fund (IMF) recently warned of deflationary risks. Deflation would be the biggest nightmare for the economies – something that occurred during the Great Depression of 1930s, a repeat of which Ben Bernanke wanted to avoid by any measure while he was the Fed chair.

The Fed decided to cut the interest rates for an extended period of time (at the risk of rising inflation, even though it hasn’t happened so far) and the bond buying route, which has resulted in additional trillions of dollars of deficit to the US national debt. The insurmountable debt may seem daunting, but there are some tweaks that are at their disposal. Recently, the the government has changed the way inflation is calculated – which leaves out essential parts such as food and energy costs; and the government has also changed the way the GDP is calculated to make the economy look better than it really is.

How does the central bank and the government dig itself out of these problems? Normally, governments have three tools to fix their books: (a) Taxation – which is an unpopular option and raising taxes could result in political suicide, (b) Borrowing – by issuing bonds and (c) Devaluation of currency – which results in inflation.

The debt can be more manageable by devaluing currency, the US$, since all the debt is issued in local currency. This is great for the debt issuer, i.e. the US, and hurts the debt holders. But how can they spur it on and inflate their way out of this problem? One way to spice up the economy and the spending is to raise the wages, more importantly the floor – the minimum wage. As wages rise, more money in the economic system should results in inflation. If wages are rising, fixed amount of debt can be paid off more easily using cheaper dollars. Normally, its the other way round – where wages rise due to inflation. But we could be witnessing the government trying to approach the problem the other way round. The media is abuzz (see the Google Trends chart below) with wage increase talk over the last few months across N. America.

In the US, a number of states including Kentucky, Connecticut, NY, NJ, California have started debating about increasing the minimum wage, if not already started passing the bills. Some of the states have proposed raising the minimum to $10.10 per hour. In Canada, Ontario recently announced raising its minimum wage to $11.00 per hour. Quebec has followed that with increasing its minimum wage to $10.35 per hour. More money in everyone’s pocket should result in more spending to spur the economy and we could finally start seeing some of the inflation that the central bankers want to see.
As an investor, you want to strategically position yourself to, not only protect yourself but take advantage of these shifts. There are many ways to protect your portfolio against inflation such as – inflation-indexed bonds, owning commodities, real estate etc. A more detailed account of this can be found on my earlier post – How to Fight Inflation.
Are your investments positioned to protect you from inflation? My full list of holdings can be found here
Acknowledgement: A special thanks to Bryan from Fast Weekly for reviewing and providing feedback for this article before publishing.

Chatter Around the World – 32

Chatter Around the World is a weekly link update of economics, investing, dividends and personal finance articles that have caught my eye. In these weekly updates, I also capture my blog updates and news related to my holdings.

History may not repeat, but it rhymes

New Blog Posts

It has been a very productive week. Five articles this week!

Let dive into the links that caught my attention this week.

Updates from My Portfolio Holdings

General Reads

Dividend Reads

January Updates

 

Have a wonderful weekend.

Unilever (UL) Faces Some Headwinds in the Short Term

Unilever (UL) (UN) is a supplier of fast moving consumer goods with sales of its products in 190 countries. Unilever, along with Procter & Gamble (PG), is one of the most popular companies around the world in the consumer goods sector.Company Profile (from FinViz):The company operates through four segments: Personal Care, Foods, Refreshment, and Home Care. The Personal Care segment offers skincare and haircare products, deodorants, and oral care products. The Foods segment provides soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines, and spreads. The Refreshment segment offers ice cream, tea-based beverages, weight-management products, and nutritionally enhanced staples. The Home Care segment provides home care products, such as laundry tablets, powders and liquids, soap bars, and various cleaning products. Unilever PLC offers its products under various brand names, such as Axe, Becel, Flora, Ben & Jerry’s, Bertolli, Blue Band, Rama, Brylcreem, Cif, Clear, Comfort, Domestos, Dove, Fissan, Heartbrand, Hellmann’s, Amora, Knorr, Lifebuoy, Lipton, Lux, Omo, Pond’s, Radox, Rexona, Signal, Closeup, Simple, St Ives, Sunlight, Sunsilk, Surf, TRESemm, Timotei, VO5, and Vaseline. The company was founded in 1885 and is headquartered in London, the United Kingdom. Unilever PLC is a subsidiary of The Unilever Group.

To read the full article, click here.

 

BCE Inc (BCE) Dividend Increase

Another pay raise! BCE Inc (TSE: BCE) announced that it will be raising its dividends by 6.0% from an annual dividend of $2.33 to $2.47 effective BCE’s Q1 2014 dividend, payable on April 15, 2014. The record date is close of business day Mar 14, 2014. This is BCE’s 10th increase in the past 5 years. This dividend increase comes as a bit of surprise as BCE was originally expected to announce the dividend hike in March.
BCE’s dividend increase for 2014 comes supported by a higher expected free cash flow generation and a positive business outlook for 2014. The dividend increase maintains a dividend payout at the mid-point of a target policy of 65% to 75% of free cash flow.
As I pointed out in my analysis, BCE has been growing its media and entertainment sector by leaps and bounds with lots of acquisitions. My portfolio consists of 40 shares of BCE, which translates to a dividend raise from $93.20 to $98.80 annually. My yield-on-cost is now 5.62%.