Archive for October, 2006

Canada Savings Bonds

October 26, 2006

20 comments

Canada Savings Bonds are currently on sale and offer 3% for the first year. The Premium bonds, which can be redeemed once a year on the anniversary of the issue date or the following 30 days, pay 3.15%, 3.25% and 3.35% during the first three years.

I have never purchased a Canada Savings Bond and most people I know prefer to park their money in a high-interest savings account or a money market fund. Given that demand for these bonds seems to be low, why does the government continue to spend taxpayer dollars to heavily promote them?

Google Search Terms

October 25, 2006

Comments are Disabled

I get a fair amount of search hits from Google and sometimes I wonder why Google them my way. Here are some recent search hits that I am fairly sure did not get much help on this website:

  1. Canadian Tax on Bonuses: A bonus is taxed exactly like your regular salary.
  2. Dividends vs. bank interest Canadian Tax: Dividends are taxed more favourably than interest income. Click on your province of residence here to find out your marginal tax rate for income and dividends.
  3. Currency neutral equity funds primer: Currency neutral funds tend to hedge the exposure to exchange rate fluctuations. Of course, this hedge has a cost and it comes out of your pocket.
  4. Very best Canadian equity stocks to buy: Please don’t pick up stock tips from any website. If you must pick equities, be prepared to do your own research.
  5. How much money can Canadian premium bonds make you: Not much and you can find the rates on the Canadian Savings Bond website.
  6. What does a Canadian 20 dollar bill look like: You can find it on the Bank of Canada website.
  7. Canadian RRSP US Equities: You can buy US equities in a self-directed RRSP. There are currently no foreign content restrictions.
  8. Difference between iShares EFA and XIN: XIN tracks the returns of the EFA in Canadian dollars and charges a 0.15% fee hedging the currency exposure.
  9. Where will the Canadian Dollar go in 2007: 82 cents US. Seriously, I have no idea and remember that all predictions are guesswork.
  10. Opinion how to make a 1,000,000 in the stock market automatically: Earn money, spend less than you earn, invest the difference for the long-term, sit back and relax. It’s that simple really.

Why You Shouldn’t Listen to Media Gurus

October 24, 2006

9 comments

Garth Turner, currently in the news for being kicked out of the Tory caucus, used to write a weekly column on personal finance. Over six years worth of columns are archived on his website and not to pick on Mr. Turner, but the columns provide a perfect illustration on why you shouldn’t pay any attention to finance gurus in the media.

November 20, 2000: After Nortel has fallen 50% in a month and trading $40: “So, here’s a strategy: If you own Nortel, or a mutual fund holding it, don’t bail out now. We are near, but not at, the low point. If you do not own Nortel, then this is the time to start accumulating it, or a good science and technology fund with exposure to the company. If you’re a gambler, then roll the dice and leverage. If you’re a wimp, don’t read or watch any news for the next six weeks.” (NT changed hands at $2.60 today).

December 4, 2000: Mr. Turner is wildly bullish on equities and is dismissive of an email from a financial advisor who is suggesting bonds: “Will the Nasdaq again reach 5,000 and the TSE 300 attain 11,000? Will it be warmer again in April? How about clipping this column and taping it to the fridge? Let’s see who was truly dangerous, when the flowers are back.” (Nasdaq closed today at just above 2340).

February 19, 2001: Nortel has just announced that it is losing money and laying off 10,000 employees and is trading around $30: “Now the bright side of this is that since every market correction is also an opportunity; since we all know the Internet and technology will still be the backbone of the future; since the economy will resume its growth in a while; and since the markets will reflect that, this is an excellent time to be buying, and the wrong time to be selling.”

July 2, 2001: In a column titled The Four Lessons of Nortel, Mr Turner writes “Don’t get your investment advice from the media”. Something we can agree with.
September 29, 2002: NT is trading just over $0.70. “As for Nortel, is it worth buying at 70 cents? Sure — a few shares. If the big tank happens, you can frame them for the bathroom.”

Like I said, I am not picking on Mr. Turner (in all fairness, almost every analyst had a “buy” rating on Nortel), but just don’t listen to anyone making predictions that stocks will be up by the time flowers are blooming.