for the holidays my child's school set up a food bank collection box. it was my first attempt to teach her to give. each day i put a food item in her hands and said "it's good to give to the poor. a lot of families dont have food to eat." she gladly held the can of soup, box of pasta, and put them in the donation box. i felt rich each time i gave. i hope she did too.

2011 was the second year in which I managed our money without an advisor. I kept a spreadsheet of my family's investments. The best things I did were:

Adjusted down the dividend yield to increase safety
- I risked too much in the early days when I bought stocks that had high yields. I failed to consider dividend payout ratios, free cash flows for sustainability of the dividends. So I switched out of those high yield stocks for lower yield but with potential for dividend growth.

Increased exposure to US stocks
- I wanted to take advantage of the strengthened Canadian dollar and participate in my favorite names in America: MCD, MSFT, JNJ, PG, BDX, INTC, MKC, BRK.B, NLY

Change in value in 2011 minus new contributions: +1.6%
That compared with the Toronto Stock Exchange index which fell about -10% in 2011
and the Dow Jones Industrial Average which rose +5.5%

Dividends received in 2011: 5% yield on cost

I daily update my child's RESP fund value. However, today I made a major decision. I switched the RESP mutual fund to the TD Monthly Income Fund from the TD Dividend Income Fund. This is the first time I switched since I set up the fund when my child was born.

The advantages of the TD Monthly Income Fund:

- higher yield 3.12% vs 2.03%
- lower M.E.R. Management Expense Ratio 1.48% vs 2.02%
- higher annual returns
- lower volatility risk

Looking at the underlying companies, one difference with the TD Monthly Income Fund was a high ranking of Enbridge. That alone was a great investment for 2011 as pipelines as a group did well relative to other groups. I don't for a moment expect future results to match past ones. However, I am making the sea change with a long term view that these smallish in isolation changes will result in a major difference by the time my child is ready to enter university.

I'm grateful that as of this writing, my family has saved 3 years worth of university tuition at today's prices, for my six year old.

I bought shares in Computer Modelling Group for my wife's Tax Free Savings Account (the TFSA is the Canadian equivalent to the USA's IRA) in February, 2010 at $7.98 per share. At that time, the dividend yield was around 6%.

Well, the stock reached above $16 recently and eased recently, almost a double. One of the harder things to do is let go of winners. Some investors never do and for good reasons. Warren Buffett kept Berkshire Hathaway invested in shares in Coca Cola for decades.

So what did I consider prior to selling this stock?

The dividend yield is now 3%, not because of any reduction in the dividend (it actually rose from .075 cents per share per quarter to 0.11 cents. No the yield fell because of the rise in the share price. The Price-to-Earnings PE ratio grew to 30. The 10-year average EPS growth rate is also around 30. The capital gain was far in excess of the undistributed share of earnings the company produced while we owned it. I still like the company but for now it seems EXPENSIVE.

So I had to decide: should I sell it all now? I made a compromise. I sold half the shares today, locking in most of the gain. We won't sell any more shares, unless fundamentals of the company changes. We will still participate in any growth in the company and will still receive dividends as continuing shareholders.

I studied the recent report of student scores for Reading, Writing and Math in my local school, district and province. It got me thinking: why do parents focus so much on their children's test scores, and then no longer apply the same tests on themselves?

I wondered: "How is my Reading? My Writing? My Math?"

I looked back on 2011 for evidence and graded myself.

READING: A
I read personal finance books, spiritual development books, the Bible, the Koran, investment newsletters, the Globe and Mail, the Toronto Star, the Toronto Sun, Toronto Life, GQ, Esquire, The Economist.

WRITING: B+
I wrote into a journal, wrote on various websites, emailed several friends daily.

MATH: A+
I maintained an excel spreadsheet for income, expense, assets and liabilities. I recorded returns on investment, including dividends, realized and unrealized gains and losses, returns on equity, EPS growth rates, dividend yields, dividend payout ratios, debt to free cashflow ratios, book values, share buybacks, tax-related amounts.

CONCLUSION
After 43 years I have never stopped being a student, and a high achiever.

Looking at maths, you give yourself an A+ for recording things (which for me would be a part of writing). But how are you in the actual maths. Did you create these spreadsheets years ago and just fill in numbers? Did you improve your maths (that's what schooltests check, not if you're using maths and reading books, but if you're increasing your proficiency).

From what I see in your posts you're just continuing the use of skills you've learned a long time ago, but not as a student, expanding on these skills

I for one would give myself a A++ for my time spend on reading (I'm an addict, I read always). But regarding the improvement of skill? I've not specifically done anything to get better at reading. Haven't read complexer texts than in the previous years. I'm just cruising along on the same plateau.

What if you have to judged yourself on the actual learning of new things, rather than the use of existing skills? Do you still come out as well?

Hi, SONIA:

Thanks for reading my post. You're right, doing the same thing year upon year is not growth. It is stability, which is also worth celebrating, but I get your point and feel okay with my original self-evaluation. I just have to look back 12 months or so at the new math areas I learned in 2011, of which I'll list just four:

1. EPS growth compared with P/E ratios. (Growth at a reasonable price)
2. Real Estate Investment Trust Funds from Operations (New industry study)
3. Internal Rates of Return (Computed for cashflows)
4. Dividend growth rates (rather than just dividend yield).

At age 5 my daughter was ready to learn about money. So last week I introduced to her a weekly allowance. But first, I wanted her to understand savings. I began by asking her what was in her piggy bank. "Money", she said.

"What can you do with that money?" I asked.
"Buy Toys" she said.

I told her she could buy toys for herself, or give it to somebody who needs it as a gift, or save it for something later if she does not want to spend it all.

I then told her that I would give her five dollars every Saturday for an allowance.

"What's an allowance?" She asked.
"It's money that I will give you every Saturday. I'll give you five dollars.

I put five loonies on her table. Then I put beside her piggy bank 2 jars.

1 loonie goes to the piggy bank as SAVINGS
1 loonie goes to the GIVING JAR to be given away to help others
3 loonies goes to the SPENDING JAR to buy whatever she wants

She looked at the 1 loonie in the Giving Jar and said "only one moneys?" I said yes, but next week she can get another five dollars and put one of those dollars in the giving jar.

She's started to learn saving, spending, and giving.

1. Returned to monthly goal setting. Achieved great progress in several goal categories.
2. Re-read The Millionaire Next Door
3. Read The Thank-You Economy
4. Read a James Montier article about mean reversion for profit margins
5. Helped 2 new people complete and file their tax returns, no charge
6. Beat the stock market TSX index returns over the past year-to-date, 12 months, and since I took over the family investments 2.5 years ago.
7. Updated my resume for a new goal of returning to work

..that's all for now.

1. The goal is not status. It is STASIS.

The present and continuing sense that I have inner tranquility, sufficient resources, that while I am connected with others, I am not dependent upon others for my happiness. The diminution and dulling of formerly sharp inner aches of disappointments, worries, inconveniences, becoming all part of the landscape of my life. A strengthened inner self, a consistency between my inner desires and outward manifestations. A reduction in desire itself, replaced with a satisfaction with what is.

2. The ability to SUFFER WELL.

Being disappointed, unloved, unremembered, and accepting this as part of the cycle of living. Not anxiously striving for my well-being and satisfying myself, but serving others, whether I emotionally love them or do not love them, to make myself their servant. To do so with a smile that starts weakly but ends brightly as I work for others. Discovering an inner strength in the doing of this.

To be continued...

..after an emotional discussion with my wife, we agreed to pay off all the lines of credit, which were in my name. I had amassed about a hundred thousand in line of credit debt. This was due to:
1. stock option ideas that failed
2. business prospects that succeeded
3. stock investment ideas that succeeded

Due to the success of #3, I never bothered to reduce the balance of debt, because the cashflows from the investments were greater than the interest costs. For the foreseeable 2 years of low interest I was not motivated to cut the leverage, due to the positive expectation of cash flows. Incidentally, we also gained over $30,000 in capital gains from our stock portfolio, but this was a reflection of the market's recognition of the undervalued prices that I bought these stocks in the past.

The emotional decision was that my wife was growing uneasy about the level of debt because she grew up always paying off all debts. Because she married me, she married my comfort with debt, but was never herself comfortable about it. She was patient with me, but after more than ten years, her patience had run out. I laid out the numbers for her on a piece of paper, and said "it is not economic to pay off the debt. but there is greater value in being at peace. that is what we are buying by paying off the debt."

This month, I liquidated over a hundred thousand dollars worth of stocks, crystallizing gains, stopping dividends from coming in. We will face minimal tax consequences, thanks to some prior capital losses that are available to me, which related to part #1 above. By the end of September, we will be completely debt free.

Three years ago, we became mortgage-free in 2009.

It feels strange to have absolutely no debt. Because our inflows had always exceeded our outflows, our net worth continued to climb throughout our marriage.

One of the benefits of de-leveraging that makes such a decision wise is the risk of rising interest rates. Nobody knows when Canada will raise rates, and it's an open debate because the money supply continues to be enormous relative to demand. But if our Bank of Canada governor and finance minister's foretelling of rising rates comes to pass, two things will happen:

1. stock values will fall - this happens due to rising risk-free rates vs dividends
2. business profits will fall - the rising interest costs of any leveraged business will shrink net profits.

Having already sold off a significant amount (about a quarter) of our stock portfolio prior to the rise may, in the future, look like great timing.

RICKLEE

I put the finishing touches on the debt this morning.

All debt is now ZERO, from a previous level of $108,000.

It took about 3 weeks from the time we decided to pay it all off, to sell the shares, settle the amounts in cash, withdraw the funds and settle the debts.

We celebrated with a fine dinner and wine. My wife should feel more at peace. More peace-inducing moves are forthcoming.

Good for you for being able to see your wife's side of this. I would be just like her.

Thanks, Kate, yes it was for her. I know that in later years we can rebuild the stock portfolio, but making her happy today is my main concern.

Congrats on your article today!