Archive for October, 2007

Adieu to Questrade

October 31, 2007


A few months back, I moved our investment accounts to Questrade to take advantage of their rock-bottom trading commissions. Since then, the bigger discount brokers (TD Waterhouse, BMO InvestorLine and RBC Direct Investing) have reduced commissions to $9.99 for some of their clients. Since we already have our RRSP accounts with TD Waterhouse and qualify for the low commissions, I have decided to consolidate all our accounts with TD Waterhouse.

While I would probably stick with Questrade if we still paid $29 per trade, a $5 difference is not enough to offset some of the problems faced with Questrade and one big advantage of consolidation:

  1. Parking Cash: If you are like me, often you have a bit of cash sitting around waiting for the right opportunity to buy and while you are waiting, it’s best to park cash in a money market fund or cashable GIC. With Questrade, depending on your cash balance and trading frequency, the amount you give up in interest earnings may negate any savings on the commissions.
  2. Customer Service: There must be some very satisfied Questrade customers as it was ranked #1 that category in The Globe & Mail ranking of discount brokers. Let’s just say I am not one among them.
  3. Funding Your Account: If you mail a personal cheque to Questrade, it may take as long as 20 business days for your account to be funded. While, it is true that there is an alternate way for the funds to appear in your account a little faster, it is still slow compared to TD Waterhouse. You can walk into any TD Canada Trust branch with your brokerage account number and deposit a personal cheque and fund your account within 2 business days.
  4. Benefit of Consolidation: Today, our RRSPs have some Canadian equities and investment accounts have some international index funds and I would like to swap their location because dividends from Canadian equities are taxed favourably. Of course, you can only swap if you consolidate all your accounts with one broker.

Tax Cuts in the Fiscal Update

October 30, 2007


Almost exactly one year after finance minister Jim Flaherty played Freddy Kruger and slashed the income trust sector to shreds, he is playing Santa Claus this Halloween and announcing a number of personal tax measures in the Fall fiscal update:

  1. The Goods and Services (GST) tax will drop a further 1% to 5%, effective January 1, 2008.
  2. The lowest personal tax rate will fall by 0.5% to 15%, retroactive to January 1, 2007.
  3. The personal exemption limit is raised to $9,600 for 2007 (from $8,929) and 2008 and $10,100 for 2009.

There are also significant corporate tax cuts in the fiscal update and accelerate the cut in the small business tax rate. The two retroactive cuts to personal taxes will save an average taxpayer about $200 per year and we’ll be paying a penny less for our double-double at our local Tim’s in the New Year.

Other Reaction to the Tax Cuts:

  1. Jonathan Chevreau in the Wealthy Boomer Blog points out that the reduction in the tax rate merely takes us back to where the lowest level was when the previous government cut taxes in its fiscal update.
  2. The Star calls the package “modest break” in income taxes.
  3. The Globe and Mail notes that Mr. Flaherty bragged about taxes not being this low since Lester B. Pearson was Prime Minister.
  4. The National Post notes that you can bank on the tax cuts because the Liberals have signalled that they would not trigger an election over the update.
  5. Larry MacDonald writes that the fiscal update funnels “unexpectedly large budget surpluses into broad-based tax reductions while continuing with debt reduction”.

Book Review: Your Money & Your Brain

October 29, 2007

[Front cover of Your Money & Your Brain]

How is that we can sometimes be pretty stupid with our money? We tend to sell winning stocks too early, hold losing stocks too long, regret the stocks we didn’t buy (think Apple or RIM), regret the stocks we did buy (think Nortel or JDS-Uniphase), play the 6/49 despite the lousy odds, believe we are above average investors, …

In this brilliant new book, Money magazine columnist Jason Zweig, provides fascinating insights into the inner workings of our brains based on research from the burgeoning field of neuroeconomics. Subtitled “How the new science of neuroeconomics can help make you rich”, the book shows that, whether we realize it or not, our brain is a cauldron of emotions and takes a deeper look at some of them: greed, confidence, fear, surprise, regret, happiness, etc. Helpfully, each chapter ends with a list of actions you can take to counteract or take advantage of a particular emotion.

My favourite parts are the fascinating experiments that illuminate some aspect of our behaviour and the chapter on risk. I’ve always thought that the questionnaire you fill out to figure out your risk tolerance is pretty much worthless. For one thing, thinking about losing money ain’t the same as really losing it. Also, losing 20% when your portfolio totals $20K is vastly different from losing the same percentage when the portfolio is worth $500K. In the chapter on risk, the author shows “how much risk you should take, how to stay calm during market storms, and how to distinguish false fears from real dangers”.

The book has gathered critical acclaim from the likes of Daniel Kahneman, Bill Miller, David Dremen, Peter Bernstein etc. and is likely to become one of the hottest business / investing books of the year. It is available for $20.16 from (affiliate link). A preview of the book can be found in some of the excellent articles Mr. Zweig wrote for Money magazine and other publications archived here.