Archive for January, 2006

This and That

January 31, 2006

  1. Since it is RRSP season, it is a good bet that we will be bombarded by surveys of all kinds. This one by Royal Bank finds that the average foreign content in Canadian RRSPs is 14% and 79% of us have no intention of increasing our foreign investments.
  2. Here is yet another story on the importance of the “latte factor” on our finances. It suggests that we should brown bag our lunch, buy bottled water in bulk and take public transit and use the savings to fund our retirement.
  3. Maestro Alan Greenspan ended his reign as Chairman of the Federal Reserve by boosting interest rates by 25 bps.
  4. Many market commentators had predicted that the TSX Index would return less than 6% in 2006. The index is up 5.6% in January alone. Is a correction looming?
  5. The Globe and Mail is reporting that the incoming minority government is planning to table the federal budget in March and plans to enact the 1% cut in the GST and also eliminate the income tax cuts in the fiscal update for 2006 and beyond.

RRSP Tip # 3: Know the Rules

January 30, 2006

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  1. New this RRSP season: No foreign content restrictions. The 30% cap on foreign content was eliminated in the 2005 Federal Budget.
  2. Also new this season: Investment-grade gold and silver bullion coins, bars and certificates are now “qualified investments” for a RRSP.
  3. A RRSP help you defer your income tax. Earnings inside it accumulate tax-free. Withdrawals are taxed as income.
  4. Since contributions to a RRSP are made in pre-tax dollars, it usually results in a tax refund. Many calculators are available online (like this one from Morningstar Canada) to estimate the size of your refund.
  5. A contribution to your RRSP reduces your net income, which is used for calculating, for example, the Canada Child Tax Benefit. A bigger RRSP contribution might result in other benefits than a bigger tax refund. See CRA’s Child and Family Benefits page for more information.
  6. To find out how much you can contribute (for the 2005 tax year) look at your 2004 Notice of Assessment from Canada Revenue Agency. The contribution room for 2005 is 18% of your earned income in 2004 or $16,500 whichever is lower.
  7. Excess contributions may attract a penalty as high as 1% per month. It is best not to over contribute.

All the information you wanted to know about RRSPs, but were afraid to ask are available at the Canada Revenue Agency website.

Carnival of Investing # 7

January 29, 2006


Welcome to the 7th edition of the Carnival of Investing dedicated to posts that cover stocks, bonds, real estate or anything related to investing. Last week’s edition was hosted by Blueprint for Financial Prosperity.

Without further ado, here are the highlights:

Instability as Investing Tool: Frugal Wisdom From Wenchypoo’s Warehouse says investors can take advantage of political instability.

Emotional investing doesn’t work! Kirby on Finance shows that emotions are the enemy of the rational investor with a personal example.

The World’s Best-Kept Retirement and Investment Secret: Free Money Finance highlights the attractions of Nicaragua both for tourists and investors.

When Do You Sell A Stock? Wealth Junkie tackles one of the hardest questions an investor faces.

Stock Options, And Why Thinking About Them Makes Me Squeal Like a Schoolgirl: Funny Munny discusses the basics of stock options and what to do with them if you’re ever lucky enough to get your hands on some.

5 Tips To Prepare Yourself For Risk: Journey To Financial Freedom talks about the steps to take to control risk.

Frugality and Index Fund Fees: Blueprint for Financial Prosperity asks: The price of an index fund is in its fees, why pay more when you don’t have to?

Common Stocks and Uncommon Profits – A Dangerous Book: Big Mike’s Contrarian Investing Blog has a contrarian take on the classic investing book by Philip A. Fisher.

Chipotle…The Starbucks of Burritos: Daily Dose of Optimism offers a few thoughts on Chipotle (CMG) based on watching the roadshow presentation, his experience as a customer, reading the S-1 and observing management.

I’m Done Saving For Retirement… According to Amerivest: MyMoneyBlog test drives Amerivest’s investment simulations and finds that he might just be done saving for retirement at the tender age of 27.

Microsoft Discusses MSN, Internet Ads and Search (MSFT): Seeking Alpha finds out what Mr. Softee had to say about its search business in the Q4 earnings conference call.

Simple Investing: Personal Finance Advice provides a summary of the simple investing plan he has been discussing recently.

Investing vs. Starting a Business: Investor Geeks briefly shares his thoughts on the choice between investing and starting a business.

Exploring Greenblatt’s Magic Formula: Fat Pitch Financials explores the Magic Formula detailed in Joel Greenblatt’s latest book, The Little Book That Beats the Market.

An Interview With Ben Stein, Part 2: Five Cent Nickel offers an interview with economist, attorney, actor, comedian and writer Ben Stein.

Next week, tune in to Wealth Junkie for more investing ideas.