February 22, 2014


carLooking at shiny new vehicles is fun. You’ll find lots at an autoshow or by visiting different dealerships. The problem comes when buying. Emotions and wallets get involved. Spend a little more, a little more, a little more, …

We’ve been looking for a replacement for our three year old leased Mercedes-Benz ML 350 Bluetec diesel. A comparably-equipped current model costs $7,000 more …

Key Factors

When deciding on a vehicle, look at
  • the cost of maintenance: This is “free” with BMW. Audi and Mercedes let you prepay. Lexus uses the old pay-as-you-go model.
  • the options: While 20” rims look nice on an SUV, the tires don’t last long (heavy vehicle, not much rubber). I replaced a set at 40,000 km for $2,200. That was an unpleasant surprise.
  • the lease rate: varies by term. Often lowest for 36-48 months. There may be unadvertised discounts. For instance, Mercedes offered a reduction of 1.5% (0.75% loyalty bonus + 0.75% as an autoshow special)
  • your initial outlay: how much money do you pay when you take delivery? The dollars can add up quickly. When comparing vehicles, make sure this matches.
  • the residual value: when leasing, you’re financing the difference between the purchase price and the estimated depreciated value at the end of your lease. A high residual (55% on our current Mercedes after 36 months) reduces your costs. A cheaper vehicle with high depreciation could cost you more than a pricier vehicle with lower depreciation.
Do look at all costs after tax.

Skip The Autoshow

We went to the Canadian Autoshow for the first time, thanks to free tickets from Mercedes. We chose the first Sunday and arrived shortly after opening. What a zoo! There are lots of vehicles but you can’t do much more than wait your turn to sit in them. I thought we’d see lots of autoshow specials but they aren’t advertised here.

Rather than paying for tickets, parking and food, visit dealerships for test drives. The showrooms tend to be close together, which saves you time. We tend to go on weekday evenings after dinner and past the ‘rush hour’ traffic. Avoid Saturday (though that might be a good time to negotiate).

Do Your Research

Compare vehicles (click to enlarge)You’ll find lots of information online. You might start your search here. The best site for comparisons is US News & World Report. They amalgamate reviews from other sources such as Edmunds and Kelley Blue Book. They also rank vehicles by category. That’s a nice time saver.
Because it has the best combination of positive reviews, price and long-term ownership costs in its class, we named the 2014 Lexus RX 350 the Best Luxury 2-Row Midsize SUV for the Money.
US News & World Report
The Cost of Ownership
What are the costs of maintenance, repairs and fuel? Motor Trend does a cost breakdown over the first five years and includes other categories — another time saver. Your actual results will vary. The example below shows a Mercedes diesel SUV is rated excellent compared to similar vehicles. The costs are still high, especially in years 4-5. If you’re leasing for three years, that won’t matter. If you’re buying or considering buying after your lease ends, you will.
Cost of ownership
The above information is for the US but is good for relative comparisons.
The Value of Your Current Vehicle
If you’re trading in your current vehicle, how do you know what it’s worth? Get a free estimate with Canadian Black Book. Rather than trading, you might get better results by selling the old vehicle yourself.

When negotiating, you’re at a disadvantage when you disclose too much. It’s wise to get the best price for your new vehicle before saying you want to get rid of your old one.

Buy or Lease?

Unless you must have the latest model, buying looks like an ideal choice. That might not be the case unless you have an affordable mechanic you trust. Even then, you’re still at risk. Cars are packed with technology that must endure extreme conditions such a temperatures that range from freezing to boiling. That makes the repair costs are difficult to predict. The blind spot sensor in my three year old Mercedes failed. The replacement was $1,800, excluding labour, tax and inconvenience. The warranty covered the costs but a surprise like that could happen later too (unless you don’t have this useful feature).

Our solution is to lease our primary vehicle for 36-48 months while the manufacturer’s warranty applies. That provides peace of mind. We also have a Toyota minivan we bought years ago. Selecting a vehicle with low service costs also helps.

If you drive more than 24,000 km/year, leasing may not be feasible. If you buy, do consider an extended warranty. They’re cheapest at the time of purchase. You get peace of mind and increase the resale value.

Get Discounts

You’ll save money if you’re flexible.

You get the best deals when you buy what isn’t selling well. You’ll get an idea from the lease rates. For instance, BMW leases the 535i xDrive Grand Turismo at 3.9%. Last year’s model drops to 0.9% for terms up to 48 months and benefits from generous discounts that get better as inventory drops. Hyundai is leasing last year’s Genesis sedan at 0% but paying cash saves you $11,000.

You save more when you get a low mileage demonstrator. These models tend to have more features and bigger discounts. They’ve been well maintained. Plus, you don’t pay for Freight and PDI costs get waived, which can save you $2,000.


What’s a fair price to pay?

Get a free price quote from Unhaggle. In exchange, you provide your name, email and phone number. This goes to a dealership. I tried their service for three vehicles. Two dealerships called within 30 minutes. That’s okay since you now have someone to answer your questions on the phone. Unhaggle will also negotiate for you for $99 without identifying you. If you get a better deal, they'll refund their charge. Maybe they’re worth a try?


PS Good luck with your hunt!

February 15, 2014


imageTick tock. Time passes.

This blog started on February 18, 2007 — seven years ago this month. What’s more, the writing has continued. There’s personal satisfaction in not quitting.

You’ll find over 700 posts (357 here at Riscario Insider, 338 at Marketing Actuary and 10 at Money 50/50). That’s over 350,000 words, based on a conservative estimate of 500 words per post. You’ll also find the Riscario wiki which launched in 2006 (word count not known).

The beginning

Click to read the first ever postBlogging felt fresh and full of possibilities in 2007, the year the iPhone launched. I thought I had things to say that needed saying. That seemed more important than knowing how to write.

I had many unanswerable questions but didn’t use them as excuses to delay.
  1. Would anyone read? Yes!
  2. Would the ideas run out? No. More keep arriving
  3. Would there be time to write? Yes — a question of priorities
  4. Would I quit? Not yet (but stopped podcasting two months ago after 250 episodes)
Most personal financial bloggers peer in from the outside, a perspective which is valuable. There weren’t many insiders who blogged. There still aren’t (where is your advisor’s blog?).


Blogging is easier today thanks to the platforms available (I still use and recommend Google Blogger). That means more blogs. That means more difficulty in finding a niche and standing out. There are advantages to being an earlier adopter and consistent in posting.

Blogging is also harder today thanks to conflicting demands on our time. Also, readers have higher expectations for quality content and ease of reading.

The Future

If I were starting afresh, I’d focus on creating video instead. The transcript could be turned into a blog post and the audio into a podcast. Thanks to Toastmasters (why I finally joined) and podcasting, I feel more comfortable in front of a video camera.

I’ll continue blogging and plan to create more video. Thanks for reading year after year!


PS Now’s a great time to take a few minutes to explore more of this blog.

February 8, 2014


Dental floss v2 - Flickr 500x390 509495525_e7fff069f7_oAt Insider Advice for Today’s Topsy-Turvy Times (which went well, thanks for asking), participants asked how to change the way they behave. That’s an essential but overlooked aspect of mastering our money — and our lives.

We often know what to do (e.g., payoff credit card debt, stay employable, get insurance). We may even know how (or can ask Google). That doesn’t mean we will do anything.

There’s a big gap between knowing and doing. Three steps make the difference: wanting, starting small and getting help.

Want IT

Those who have a ‘why’ to live, can bear with almost any ‘how’.
— Viktor Frankl, Holocaust survivor

Without a compelling goal, will you invest the effort needed after your initial enthusiasm wanes? You must want — really want — the outcome. That’s the second of the seven habits of highly effective people: begin with the end in mind. A strong why defeats an inconvenient how.

What do you want enough to take action now? Put other items on your bucket list or balk-it list for the future.

Example: I want to improve my general health now to prevent problems later on. I’m not a morning person but selected a 16 week yoga class which meets on Saturday from 7 AM to 9 AM. Today was week six and I’m keeping up.

Start Small

If we take on too much, we’re likely to fail. If we take small actions, they soon become automatic and faster. We can then add more.

Do you remember the transition from a trike to a bike? We already knew how to pedal, brake, turn and ring the bell. Now we learned to balance, first with training wheels and soon without. We had scrapes along the way but our desire to ride a bike helped overcome them. Help from our family and friends did too.

Example: In each yoga class, we repeat what we’ve already learned and are taught new items (theory, demonstration, practice). This understand-watch-do process and gradual pace makes progress easier.

Benjamin Franklin and the 13 Virtues

Benjamin Franklin wanted to cultivate 13 virtues, such as Frugality, Humility and Cleanliness. That’s a lot to remember and manage. It’s easy to deplete our willpower and falter. Ben had a solution. He worked on only one virtue per week, which works out to four times in a year. Doesn’t that look more manageable?

Suppose this is the week for Silence (“Speak not but what may benefit others or yourself; avoid trifling conversation”). That’s not an excuse to abstain from Cleanliness (“Tolerate no uncleanliness in body, cloaths, or habitation”). Instead, you maintain the other virtues at their current levels, which improve with each cycle.

Get Help

It’s very easy to break a habit and much tougher to restore it. Think of exercising. Do you remember Newton’s first law of motion? Objects in motion tend to stay in motion. Objects at rest tend to stay at rest. Changing from motion to rest is easy. Changing from rest to motion is tough. Restarting may be toughest of all because we know we failed (even if we have reasons).

We often need a little push or guidance to keep us in motion.

People are good motivators but people are busy. If you can’t find anyone, consider using apps. You likely have your smartphone near you. Your device can remind you, instruct you and track your progress.

Example: Yoga students sign an agreement to attend classes and practice. We get group instruction and personalized tips. Attendance is marked each time. There’s support and monitoring. In between classes, I use the general purpose Trello app to keep track of the instructions.


PS Small victories build our confidence for bigger challenges.

February 1, 2014


Get Bruce Sellery's book on RRSPsDoes the world really need a book about RRSPs? The topic is quite narrow and there's lots of information online with more added during the January-February RRSP season. Here are the five latest from Google News at the time of writing:
  1. So what is the point of RRSPs anyway?
  2. The best strategies for your RRSP and TFSA when money’s tight
  3. Will Malcolm (66) and Catherine (64) run out of RRSP gas?
  4. Borrowing for your RRSP: Here’s how to calculate how much you’ll need
  5. Slap your hand if it dips into the RRSP jar
These three are from Melissa Leong alone:
  1. How RRSPs are like social media (Jan 29, 2014)
  2. For young people, debt might come before RRSPs (Jan 28, 2014)
  3. Should you raid your RRSP to pay debt? (Jan 13, 2014)
Tip: Be sure to see Melissa speak live at Insider Advice for Today’s Topsy-Turvy Times on Feb 6th.

What’s Missing?

The sheer volume of RRSP information quickly overwhelms. The contradictions don’t help. For instance, The Globe and Mail tells you how to borrow for your RRSP and the Toronto Star says don’t borrow. How do you decide?

Consider a unified voice, especially if you want to learn well. A book helps. Bruce Sellery’s Moolala Guide to Rockin' Your RRSP: Start Rockin' in Five Easy Steps (Amazon link) makes an excellent choice.

I first met Bruce at the 2013 Canadian Personal Finance Conference organized by Preet Banerjee and Krystal Yee and then at the 2014 Art of Sales. We’ve exchanged numerous emails in between. Bruce has an engaging personality, high energy and breezy way of communicating the complex. You’ll see that in his book.

Why write a book?

Writing a book takes time and too few read regularly. Since RRSPs are most discussed during January and February, the market seems small. Why not write a book with broader appeal which includes RRSPs as a component?

That seems like a wiser strategy. Bruce already wrote a general book called Moolala: Why Smart People Do Dumb Things with Their Money - and What You Can Do About It. Maybe that's why he decided to specialize this time. This video lets him explain.

Why read it?

A book that’s only about RRSPs would be shorter and (probably) boring. Bruce’s book is about much more.

Bruce asks a simple but powerful question: why are you saving for retirement.

He’s saving for adventure, which includes travel. Unless you know your why, how motivated are you to save? A distant goal must be compelling to move us. Saying you want financial security during retirement may not be enough. That’s vague.  A vacation or new car or home renovation is often much more tempting.

You Participate

Bruce includes many quotes from real people. That's unusual and effective. The book feels interactive and engaging — a workshop, rather than a lecture. Bruce encourages you to write in the book, which makes it more like a workbook (see write a workbook instead of a book). You’re then more likely to act and less likely to lend your copy — more sales!

Myths About Retirement Income

Bruce starts by tackling beliefs about retirement income, which you might share:
  • “The government will cover the basics”
  • “I can’t afford to save for retirement right now”
  • “I’ll just work longer”
  • “My family will provide for me”
  • “My retirement plan is simple: I won’t need much”
  • “My house is my retirement plan”
For more details, read this book excerpt in MoneySense.

Likelihood of disabilityHe only leaves out lotteries, which 34% hope to win. How likely is that? There’s a much greater chance of getting disabled before age 65. The likelihood for a 30 year old nonsmoker is 36% for males and 41% for females. Too few worry about this (use the risk calculator from Manulife yourself).

It’s easy to be optimistic ways that cause financial harm.

Five Steps

Bruce gives five solid steps for retirement financial planning.
  1. Lay the foundation
  2. Determine how much you need
  3. Develop the plan
  4. Take action
  5. Stay engaged
The book guides you through the process. Yes, you can go through the steps yourself. No, you don’t need to know much about RRSPs to start.


Unless you’re one of the few with a secure defined benefit pension plan, you need to take steps to prepare for retirement on your own.

A secure tomorrow requires sacrifices today. We know that but don't always take the steps. Bruce helps you build good habits that can help you for the rest of your lives — even if you win the lottery (and don’t get disabled).


PS Bruce has generously donated autographed copies of the Moolala Guide to Rockin’ Your RRSP for giveaway at the Money 50/50 live event on Feb 6, 2014 — another great reason to attend.

click for event details