To download the latest version go here.

If you give it a try I would love to hear your feedback. Drop me an email at andrew@moneyandwealth.ca

Don’t worry, its really not that hard to get going. I’ll walk you through the basics of setting up an account with online discount brokerage Questrade and guide your through your first stock trade.

Why Questrade?

If you’re new to buying and selling stocks I recommend starting out Questrade as your broker. Some of the main reasons include:

• Stock trade commissions are $0.01/share ($4.96 min, $9.95 max). This is a lot lower then most big bank commission rates. Low transaction costs are important when you don’t have a lot of money as a new investor.
• For RSPs, RRSP and TFSA account types there are no fees to open an account or annual fees to maintain your account with Questrade.
• Low minimum funding requirement of $1,000 to open an account. This is lower then other brokers out there and a reasonable minimum for a new investor
• Great promotions such as 100 free trades for new accounts and opportunities to win prizes like an iPad when you open a new account.
• Trading platform “IQ” is simple and easy to use for the new investor
• Customer service and support has been very helpful whenever I have had to engage them regarding my accounts

All in all, I’ve never really had any problems or major issues with Questrade.

Opening An Account

To buy and sell stocks you’ll need to open an account with Questrade. You can do that through an “online application” directly on the Questrade website.  Simply go to the “Open An Account” tab to begin.

The process to complete the online account application takes roughly 15 minutes or so.  You will need several pieces of information to complete the application including.

• Your Social insurance number or social security number
• Your Email address
• Your valid photo ID (your driver’s license, passport or citizenship card will do)
• Your bank account information
• Your employer’s address and telephone number
• Your financial information (annual income, liquid and total net worth).

You’ll also need to decide what type of account you want to open. Questrade offers several different account types including TFSAs, RRSPs and individual margin accounts for you to choose from.

Once your account application is complete you will be assigned an account number and receive an account password via email.

Funding Your Account

Once you have completed the online application and it has been processed the next step is to fund your account. Remember that the minimum funding amount is $1,000.

There are 7 options available to you to fund your Questrade account including:

1. Online banking
2. Pre-authorized deposit
3. Wire transfer
4. Transfer from another broker (unlikely you’ll be doing this if you are a new investor)
5. Certified cheque or bank draft
6. Non-certified cheque
7. Stock certificate (unlikely you’ll be doing this if you are a new investor)

Personally I prefer to fund my accounts through online banking as it is quick and easy. All you have to do is setup Questrade as a payee through your bank’s web portal and associate your Questrade account number that was assigned to you with that payee. To fund your account simply make a one-time payment to the Questrade payee in the amount that you wish to invest (min $1,000). It will usually take between 2-10 business days for your funds to show up in your Questrade account, so don’t panic when you don’t see it there the very next day.

Once your account is funded you will be granted access to Questrade’s IQ trading platforms.

Managing Your Account

To manage your account you’ll need to login to “myQuestrade” with your email address and account password. The myQuestrade login can be found on the Questrade website in the top right hand corner.

From myQuestrade you can do several things including:

• View account balances, positions & assets
• View monthly account statements
• View account history and activity
• Update your contact information
• Access research tools
• Access tax information
• And more…

Part One Conclusion

So now you know how to setup an account with Questrade. The hard part is essentially done. Next in Part Two I will walk you through logging into the IQ trading platform and buying your first stock.

Want to compare mortgage rates across Canada’s top lenders? Look no further. Today I’ve added comparison tables of variable and fixed mortgage rates across a range of mortgage term for Canada’s top brokers.

Check it out at the following link. Compare Mortgage Rates.

Check out this little tool I created in Google Docs to track the 60 largest publicly traded companies on the Toronto Stock Exchange.

The tool is meant to be a quick screen of the market to identify potential stocks that may represent good value and warrant further investigation. The tool includes useful stats such as current market price, EPS, P/E ratio, dividend yield, and current price as a percentage above the 52 week low.

The data is pulled directly from Google Finance using Google Docs so the tool is completely automated.

Let me know if anyone finds this quick screen of the TSE 60 useful.

Now that my CF exam is over I will pick up where I left off and begin to post more frequently.

Andrew

Ever find yourself searching the internet for statistics on your local real estate market? I often do.

Here is a summary list of useful housing market statistics for major Canadian cities from around the web.

Toronto Housing Market

• Toronto Housing Charts
• Toronto Market Watch Report
• Toronto Condo Market Report

Vancouver Housing Market

• Vancouver Monthly Statistical Reports
• Vancouver Listed vs. Sold Charts

Montreal Housing Market

• Montreal Resale Market Trends and News

Calgary Housing Market

• Calgary Housing Statistics
• Calgary Monthly Housing Summary

Edmonton Housing Market

• Edmonton Monthly Housing Statistics

Housing Price Indicies

• MLS Home Price Index
• Teranet Composite House Price Index

The first stock valuation that I have completed with my new DCF Stock Valuation Model is on PotashCorp (POT), which trades on the Toronto Stock Exchange (TSE).

PotashCorp is the world’s largest fertilizer company by capacity, producing the three primary crop nutrients – potash (K), phosphate (P) and nitrogen (N).

Positives

• Global reserves of potash are highly concentrated to a few countries. Canada alone accounts for 46% of potash reserves. Russia accounts for 35%.
• PotashCorp is the largest producer of potash controlling 20% of world capacity
• There are significant barriers to entry in the potash production industry. It takes approximately 7-8 to develop a new potash mine. This means that periods of short supply could persist for some time until new capacity is added, resulting in higher prices.
• PotashCorp is the lowest cost supplier to the US market
• As the world population grows so will the demand for food and in turn fertilizers like potash. Changes in diets and decreases in arable land will also contribute to increased demand for potash and other fertilizers.

Negatives

• KCI (Potash) prices has risen ~150% since 2007 and now sit at $500 per MT. Is this sustainable? According to PotashCorp there are several factors that will justify the current price and potentially push it higher in the long term. I do however see this as a potential risk because if KCI prices actually go down in the future it will hurt PotashCorp’s revenues and margins.

Valuation

• Assumed revenue would grow at 7%, 6%, 5%, 5%. 5% Y/Y over the next 5 years. Conservative given POT’s historical Y/Y revenue growth rates
• EBIT Margins have hovered between 30% and 45% over the last 5 years. Decided to go with an 35% EBIT margin going forward which isn’t overly aggressive.
• CAPEX intensity is a key variable in this valuation. Historically POT has had a high CAPEX intensity due to investment in new production. This is all growth CAPEX. According to POT’s guidance the CAPEX intensity should come down over the next couple of years and level off at about $500M per year which will be all maintenance CAPEX by 2013.

Based on an 8% discount rate I calculate an estimated fundamental value per share of $45.79. Compared to the market price of $45.40 at market close on March 16th, 2012 it appears that POT is fairly valued.

Download (PDF) my valuation report for POT at the link below.

PotashCorp – DCF Stock Valuation – 2012-03-16

Recommendation

Given that POT seems to be fairly valued at the current market price I am going to hold off on buying the stock for now. I require an additional margin of safety and will wait until it gets a bit cheaper (if it ever does) before I decide to buy. With a 25% margin of safety my buy in price would be ~$34.34.

Thoughts on POT?

Disclosure
I do not currently own any shares in POT

Model Features

• Quickly and accurately calculate the fundamental value of a company’s shares using a discounted cash flow valuation framework
• Automatically download company financial statement data from the internet with the click of a button
• Automatically download current price information and other background information on the company
• Automatically calculate key financial ratios to rapidly analyse recent trends
• Easily measure changes to fundamental value per share by performing sensitivity analysis on key inputs and assumptions
• The model works on most TSX, NYSE & NASDAQ listed companies

Initial Known Issues / Limitations

• Make sure macros are enabled in Excel or else the model will not pull financial data from the internet
• The model will not work on banking and insurance companies (yet).
• The model will not work on companies without at least a 5 year operating history

Instructions on How To Use The Model

I will follow up over the next couple weeks with tutorials on how to use my DCF Stock Valuation Model and provide example valuations on real companies.

Make sure to read Part 1 and Part 2 of the review if you haven’t already do so.

To keep it simple I’ll only focus on the two most common income forms including the Employment Income T4 and the Investment Income T5.

Employment Income (T4)

Entering your employment income from your T4 slips is fairly straightforward. All you have to do is input the information on your paper T4 slip into the matching box number on the TurboTax T4 form. There should be a corresponding box number on the TurboTax T4 form to match all items contained on your paper T4 form. Once you’ve entered all the information from your paper T4 form into the TurboTax T4 form, you can save your work and always come back to edit it later if you need to.

If you have multiple T4 forms from different employers it’s not a problem as TurboTax will allow you to enter and save multiple T4 forms.

Investment Income (T5)

Entering investment income information from your T5 slips is just as simple as entering your employment income. TurboTax provides a web based form that mirrors your paper T5 slip. Again all you need to do is line up the box number on your paper T5 slip with the box number on the T5 web form.

Income Summary

Once you are done inputting all of your income information TurboTax will provide you with an income summary which includes the calculation of your total income for the year. This summary is handy to review all of your income sources and verify if everything is accounted for.

In Part 4 of my review I will look at how deductions and RRSPs are handled in TurboTax Online.