Bank Fees

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Everybody hates bank fees, but there are two ways that you can feel better about them.

  1. Stop paying them.
  2. Profit from them.

I feel that a lot of the hate directed at the big banks is misdirected. Especially here in Canada where our banks weren’t involved in the same shenanigans that some of the big banks South of the border participated in. Besides, do you really feel like paying cash next time you want to buy a car or a house? Banks provide a necessary service in the loans that they provide.

Stop paying them

There are some great online banks that offer free checking and may even pay you a little interest! Since most banking is done online today, it has allowed these banks to do away with the costly branch locations and pass the savings on to you in the form of free banking.

Click on the links below to check out these three options.

Presidents Choice Financial – No Fee Bank Account

Coast Capital Savings Credit Union – Free Chequing, Free Debit and More Account 

ING DIRECT – THRIVE Chequing

Profit from them

Bank stocks have proven to be one of the best long-term investments for many Canadians. They have fared well in tough economic times and have a long history of paying out increasing dividends. When a bank profits from all those nasty fees they charge customers, they pass those profits on to shareholders in the form of quarterly dividend cheques.

I think buying shares of one of the big Canadian banks would be an excellent choice for many first time investors. By following the bank you invested in and reading articles and quarterly reports, you would learn a lot about finances and the economy in general.

Even if you are not ready to buy individual stocks and would prefer to buy mutual funds, you will find that the top holdings of most balanced mutual funds are big banks anyways.

A quick glance at the Scotia Capital Balanced Fund shows that 22.8% of it’s assets are in the financial sector. Also humorous to note that this mutual fund offered by Bank of Nova Scotia hold more shares of Toronto-Dominion Bank (3.3%) than it does its own shares (1.8%).

This fund has a 3 year rate of return of 3.1%. Shares of Bank of Nova Scotia had a 3 year rate of return of 10.97%. The fund charges a 2% management fee. Shares of the bank pay you a 4.22% annual dividend.

This is my not so subtle way of telling you that I am not wild about mutual funds and the fees that they charge. I do own shares of Bank of Nova Scotia though.

Related links:

Why David Rosenberg is keen on Canada’s big banks.

Buy RBC shares now while they’re down, urges Desjardins.

Yield.

Stocks on my radar.

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Every day I read the financial news and you hear about the same few stocks that everyone is following. FaceBook… Apple… The big banks… bla bla bla.

Today I want to know about the small caps that you’re following. Why do you think they may be a good investment? Have you bought any shares?

I’ll go first…

Whistler Blackcomb (WB.TO) is located 125 km (78 miles) North of Vancouver, Canada. It’s a world-class ski resort and favourite party spot of the rich and famous. It was the official alpine skiing venue for the 2010 Olympic Winter Games.

I bought a few shares when they went public a year and a half ago and then picked up a few more shares 6 months after that. The stock pays a massive 9% dividend yield which is next to impossible to find today and may be a red flag to some that the dividend is unsustainable. They have actually increase their dividend lately and the pay out ratio is a reasonable 54%. They have a price-to-book ratio of 1.01 and are rated a “buy” by analysts.

The stock is down from the price I bought at, but I have been paid back almost 15% of my original investment in dividends so far. I see it as a Buffet style stock in that it’s an easy to understand business. The down side is that the weather and value of the Canadian dollar can impact the amount of visitors the resort receives each year.

RYU clothing (RYUN.OB) wants to do for mixed martial arts what Lululemon did for yoga. Their motto is “Respect, Strength, Honor, and Sustainability”. So far the only clothing designed for MMA fans has been very aggressive looking in nature, made cheaply and marketed to a younger male consumer. RYU is a high performance product line using specialized fabrics and designed for real athletes.

You can buy the men’s clothing online and the women’s clothing line comes out next month. RYU is an official sponsor of the UFC and their CEO, Christopher Martens, served as General Manager and Merchandise Director at Nike Inc. Retail can be a tough business, but RYU shares are up over 400% in the past 12 months.

Liquid Nutrition (LQD.V) started in Montreal Canada selling protein shakes, vitamins and supplements and is now opening franchises in L.A., Toronto, Vancouver and Oakville. With business partners Steve Nash (Phoenix Suns) and Arlene Dickenson (from the TV show Dragon’s Den) I feel they have a real shot at success.

Starbucks spending $30 million to buy Evolution Fresh, a California-based premium juice maker was a signal to me that Howard Schultz thinks there is money to be made in the health and wellness business. It’s a penny stock right now and I have been picking up shares.

Other stocks I’m watching

GNC (GNC.N) up 103% in 12 months and rated a “strong buy”.

Whole Foods (WFM.Q) up 44% in the past 12 months and rated a “buy:.

Lion’s Gate Films (LGF.N) up 117% in the past 12 months and rated a “buy”.

Related posts:

How to pick a winner

How to pick a winner part II

How to pick a winner part III

Money News

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  • Canadians who shop in the States will get a break soon. June 1st the new, higher, duty-free limits announced in the federal budget kick in. The duty-free limit for stays of more than 24 hours will be boosted to $200 from $50. Limits for visits longer than 48 hours will be increased to $800. The previous limits were $400 for a week and $750 for more than a week. According to a BMO Capital Markets report released Thursday.“Our latest random sampling of a basket of goods finds that Canadian retail prices are roughly 14% above U.S. levels, before taxes and adjusted for the exchange rate.”
  • Bank of Nova Scotia’s landmark red tower in downtown Toronto has been sold for $1.27-billion, the highest price yet paid for a Canadian office building. Although it was common in decades past for banks to own their headquarters, a series of real estate sales over the years left Scotiabank as the only of Canada’s Big Six lenders to own its headquarters.
  • On Thursday shares of Research In Motion fell to $10.89, its lowest level since the end of 2003, after a top sales executive in charge of the company’s global sales strategy quit the company.
  • Stocks were higher this week with the S&P 500 index rising 1.8% in the States and in Canada, the S&P/TSX composite index ended the week 2.6% higher.
  • There was some upbeat economic news in the United States: The University of Michigan’s consumer confidence index broke free of expectations and rose to 79.3 – its highest reading since October 2007 and its ninth straight increase.
  • Investors were more focused on Europe though, where Spanish regulators suspended trading in Bankia SA, Spain’s fourth-largest lender, ahead of what is expected to be a €19-billion bailout by the government as it attempts to steady the country’s financial turmoil.
  • Facebook shares fell another 3.4% on Friday. The shares have fallen a total of 16% from their initial public offering price of $38 (U.S.) last Friday amid a flood of complaints about the IPO process.

Hawaii on a budget.

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When I was a little kid I would hear about people going on vacation to Hawaii. They would return with a tan wearing a cool Hawaii 78 t-shirt and a puka shell necklace.

Later, when I was a teenager, my favourite TV show was “Magnum P.I.”. It took place in Hawaii and every week I would watch Tom Selleck race around Waikiki beach in his red Ferrari.

Somehow, someway, I knew I had to get to Hawaii one day…

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Money News

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Markets were down this week as the European economy showed increasing signs of deterioration and a U.S. payroll report points to another sluggish period for the economic recovery.

Canadian market this week

On Tuesday Research In Motion unveiled its crucial BlackBerry 10 software and the stock has dropped roughly 15% since to hit an 8 year low of $11.77. In 2008, RIM was worth more than the Royal Bank of Canada’s with a share price peaking around $148.

Research In Motion 1 year chart

On Wednesday Whole Foods (or Whole Paycheck as some people call it) reported second quarter results and sales for the quarter increased 14% to $2.7 billion. The stock is up 50% this year and is rated a “strong buy” by most analysts.

Whole Foods 1 year chart

The Super Bowl of investing is happening this weekend. The Berkshire Hathaway annual meeting – hosted by 81-year-old Warren Buffett – is a private event open exclusively to shareholders and select media. Buffett’s disclosure that he has prostate cancer has again raised the question of who will eventually succeed the world’s most successful investor at Berkshire Hathaway.

Full coverage of the event: The Motley Fool – Berkshire Hathaway 2012 Annual Meeting