Canadian Capitalist » Miscellaneous

Hear Carl Richards Speak in Toronto, Ottawa or Montreal

Canadian Capitalist — Mon, 16 Apr 2012 13:41:06 +0000

Carl Richards, author of The Behavior Gap: Simple Ways To Stop Doing Dumb Things With Money, will be delivering a speech in Toronto (May 22, 2012 at 6 pm), Ottawa (May 23, 2012 at 11:45 am) and Montreal (May 23, 2012 at 6 pm). Behavior gap refers to the difference between the returns of an investment and the returns of an investor. Many studies have established that a behavior gap exists due to the prevalent tendency to chase “hot” investments and sell out at times of panic in the markets. Mr. Richards, who also writes for the NY Times Bucks Blog, uses a sharpie pen and napkin to capture the behavior gap and other complex ideas for the investing public. For example, here’s how he describes the concept of behavior gap:

Source: New York Times Bucks Blog

The talk in organized by PWL Capital, a financial planning firm that builds passively-managed portfolios for its clients. Cameron Passmore, Portfolio Manager at PWL Capital, has once again kindly offered to invite ten readers to Mr. Richards’ talk in each of the three cities – Toronto, Ottawa and Montreal. If you are a resident of these cities and are free at the times mentioned earlier and would like to attend this event, just leave a comment in this post mentioning which city you would like to attend and do not forget to include your email address. If you are reading this post via e-mail or your favourite RSS Reader, you have to click through to the website and scroll to the bottom of the page and type in your comment. Some quick rules:

(1) Deadline for entries is 11:59 p.m. EDT on Friday, April 20, 2010. (2) One entry per person.
(3) Canadian residents only.
(4) I treat your privacy very seriously. Your e-mail will be used for the sole purpose of sending you an invite for the event.
(5) If I receive more than ten entries, I’ll pick ten entries at random for each of the three cities.
(6) You will be responsible for any expenses incurred in attending the event.

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This and That: Portfolio Diversification, Direct Energy and more…

Canadian Capitalist — Fri, 16 Mar 2012 03:14:13 +0000

Financial Advisor Carl Richards explained how to think about portfolio diversification in a Bucks blog post in The New York Times.

Recently, Direct Energy, which rents water heaters in Ontario, managed to yet again anger customers with a confusingly-worded agreement that would impose stiff buyout fees for clients who want to switch to a competitor. If you still rent your water heater, you can likely save a bundle by buying out your current heater and then replacing it on your own later.

A Canadian Money Forum member rounded up some of the free tax preparation software options out there.

Zvi Bodie co-authored a column in The Wall Street Journal in which he explained that investors should buy risk-free assets to cover their needs and manage stock market risk through options strategies to pay for their wants.

The Blunt Bean Counter explains the finer points of the Children’s Arts Amount and the Children’s Fitness Credit.

Million Dollar Journey wrote a post on what testamentary trusts are and when they should be considered.

Michael James on Money observed some quirks when trying to convert Canadian dollars into US Dollars with DLR/DLR.U at BMO InvestorLine.

Canadian Financial Stuff who is now a civil servant explains that working for the Federal Government is not all la vie en rose as it is often made out to be.

My Own Advisor featured a guest post that explained why premiums on permanent life insurance policies are going up.

Financial Highway put together an infographic based on a survey on investment fraud.

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This and That: Data Mining by Retailers, Interest rates and more…

Canadian Capitalist — Fri, 09 Mar 2012 16:19:51 +0000

A story in The New York Times revealed the lengths retail stores go to entice consumers to establish new shopping habits. I suppose this is one downside to using a credit or debit card to pay for your purchases.

The Bank of Canada decided this week to maintain interest rates at 1 per cent. The Prime Rate to which variable-rate mortgages and lines of credit are tied remains at 3 percent. In its accompanying statement, the Bank gave no indication of where interest rates are headed only saying that it will “continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term”.

Jason Zweig of The Wall Street Journal wrote about new research that suggests that the increase in assets invested in index funds coincided with increasing correlation among stocks. Critics point out that correlation isn’t the same as causation.

Robert Shiller reports on provocative new research from Finland that concludes that people with a high I.Q. score were more likely to also invest intelligently by diversifying their portfolios, investing heavily in stocks and favouring small-cap and value stocks.

Jon Chevreau reported that the CRA is targeting aggressive TFSA transactions with “punitive audits”. Unless you were one of those smart people who swapped assets back and forth between TFSA and taxable accounts to increase the TFSA balance, you have nothing to worry. It is completely within the rules if you had taken a flyer on a stock and cashed in after it skyrocketed in value.

Rob Carrick argues that buying a house beyond your means will wreck your retirement.

I’m a big fan of TD e-Series Funds, which allow investors to build intelligent portfolios at a rock-bottom price. However, the knock against them is that they are not very well-known and TD Bank, for obvious reasons, appears to want to keep the funds low-key. Therefore, it is nice to see TD taking some effort to explain what e-Series Funds are and why investors should invest in them.

I’m also a big fan of ETFs. Bloomberg ran a story on the twelve most important things you need to know about ETFs.

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Purchase Protection is a nice Credit Card Benefit

Canadian Capitalist — Thu, 08 Mar 2012 03:28:04 +0000

If you are able to pay off your balance in full every month, here’s one more reason to pay for your purchase with a credit card: purchase protection. Purchase protection insurance will cover eligible purchases against damage, theft or loss typically for 90 days from the date of purchase.

Pretty much every credit card offers this benefit — I checked the American Express, Visa and MasterCard that we carry in our household and all of them offer purchase protection. There are some exclusions such as food, liquor and other perishables, automobiles, boats and even golf balls but most purchases are covered. There are also some limits to how much purchase protection will cover: a lifetime maximum per account holder as well as a maximum per incidence is typical. President’s Choice Financial MasterCard, for instance, limits purchase protection benefits to a lifetime maximum of $50,000 per account as well as a maximum of $1,000 per claim.

Unfortunately, there is some work involved if you do choose to file a claim for purchase protection. You’ll first have to notify the insurance company which provides purchase protection for your credit card that you have experienced a loss or damage. The insurance company will open a claim file and ask you to make a written claim with the original receipt, copy of credit card statement, repair invoice or estimate or a declaration that the item cannot be repaired and a copy of the homeowner’s insurance with deductible. The insurance company may also want you to mail the damaged item to them at your own expense. If the claim is accepted, the insurance company will refund the full purchase price of the item.

I was only vaguely aware of purchase protection benefits available to credit card purchases until one of my sons broke his shiny new Nintendo DS (and promptly blamed his sister for it). Fortunately, I had kept the store receipt and a closer reading of the terms and conditions of the credit card revealed that the damage will be covered. I filed a claim and sent in the paperwork and the broken item and received the refund shortly thereafter.

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UFile Online 2011 Tax Software Giveaway

Canadian Capitalist — Fri, 24 Feb 2012 03:24:21 +0000

If you use UFile Online to file your taxes, this giveaway is for you. Thanks to UFile, I’m giving away ten (10) coupons that are good for filing your family’s tax returns online (valued at $24.95 plus tax).

Entering the giveaway is real simple. Just leave a comment in this post and don’t forget to include a valid e-mail address. If you are reading this through your favourite RSS Reader or via-email, you have to click on the headline, get through to the website and scroll down to the bottom of the page and type in your comment.

Some quick rules:
(1) No purchase necessary. A skill-testing question may be required.
(2) Deadline for entries is 8 p.m. EST on Thursday, March 1, 2012.
(3) One entry per person please.
(4) I treat your privacy very seriously. Your email will be used for the sole purpose of contacting you if you happen to win.
(5) I’ll pick ten (10) entries at random and announce the winner after the deadline. Thank you for entering and good luck!

PS: The winners in the H&R Block Tax Software Giveaway picked out at random were Dick, Sean, Jon, Kevin J and Jenn.

PPS: Jon, one of the winners in the H&R Block Tax Software giveaway has not replied to my email. Jon, if you are reading this, drop me a note and I’ll send you instructions to download your copy.

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This and That: Buffett on Stocks, Retirement Articles and More…

Canadian Capitalist — Mon, 13 Feb 2012 02:09:47 +0000

Buffett prefers stocks over bonds & gold: Warren Buffett doesn’t often express an opinion on the general level of stock prices. But when he does, he is usually worth listening to. In a recent article in Fortune magazine, Buffett explains why stocks look like a much better bet than bonds or gold over the long term.

Stocks aren’t so cheap: This column, which also appeared in Fortune magazine, offered a counterpoint to Buffett’s argument that stocks are cheap. It says that according to many measures stocks (profits as share of GDP, computing p/e with reported, not operating earnings, Shiller P/E etc.) are not so cheap. Maybe so but compared to alternatives, stock appear to be reasonably valued at these levels.

Help with Retirement Planning: The Society of Actuaries has published a series of 11 articles to help people plan for their retirement. It tackles questions such as when to retire, how to deal with unplanned early retirement, retirement income planning etc. Though the articles are targetted at Americans, many of the concepts discussed also apply to those of us living north of the border.

Avoiding Baggage Fees: During a recent trip, we got dinged with extra fees because the weights exceeded the maximum allowed these days. This column in The New York Times describes the lengths (stuffing the carry on luggage, wearing trenchcoats) travellers go these days to skirt those annoying baggage restrictions.

Around the Blogs

Canadian Couch Potato finds that active funds are trailing index funds even after adjusting for the cost of advice and trading expenses.

Canadian Personal Finance Stuff shows that it is much better for regular commuters to buy a monthly bus pass than paying for each bus ride.

Money Smarts Blog wonders why more Canadians are not taking advantage of the RESP Canada Learning Bond.

Million Dollar Journey explains why he doesn’t use a dividend ETF for his leveraged investments.

Michael James weighs in on whether you should pay your bills as they come in or wait until the last minute.

Jim Yih breaks down the new rules around CPP in his Retire Happy blog.

My Own Advisor says that for those who are able to stay on budget, credit cards offer many unique advantages over cash.

Thicken My Wallet puts on his lawyer hat and answers some frequently asked questions on severance.

The Blunt Bean Counter offers useful tips for mitigating exposure to 5 popular CRA audit target areas.

Can you smell the fear in the mortgage industry? Where Does All My Money Go? scoops the news that many lenders are quietly tightening mortgage rules.

With the RRSP deadline fast approaching, Larry MacDonald has seven suggestions for investing your contributions.

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H&R Block At Home 2011 Tax Software Giveaway

Canadian Capitalist — Fri, 10 Feb 2012 02:29:52 +0000

If you use H&R Block At Home to file your taxes, this giveaway is for you. Thanks to H&R Block, I’m giving away five (5) coupons that are good for downloading one copy each of H&R Block At Home desktop software (valued at $29.99 plus tax). Please note that the downloaded software will only work on PCs. A Mac version of the software is not available.

Some quick rules:
(1) No purchase necessary. A skill-testing question may be required.
(2) Deadline for entries is 8 p.m. EST on Thursday, February 16, 2012.
(3) One entry per person please.
(4) I treat your privacy very seriously. Your email will be used for the sole purpose of contacting you if you happen to win.
(5) I’ll pick five (5) entries at random and announce the winner after the deadline. Thank you for entering and good luck!

PS: My weekly links post will be published over the weekend.

PPS: The winners in the TurboTax giveaway are Henria O., Chris and Andrew F. Thank you to everyone who entered.

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This and That: Pension Return Assumptions & TurboTax Giveaway

Canadian Capitalist — Fri, 03 Feb 2012 03:28:08 +0000

Aggressive Pension Return Assumptions: The Wall Street Journal’s Jason Zweig points out that many private pension plans have unrealistic expectations of double digit returns from stocks. On the other hand, Berkshire Hathaway, whose pension plan is overseen by Warren Buffett, expects stock returns to range between 8% and 9%.

Pricey Dividend Payers: This column in the New York Times points out that investors attracted to dividends should note that the sectors that a rich in dividend-payers such as utilities, REITS, health care and consumer staples are now trading at rich valuations.

Canada’s Housing Bubble: The Economist magazine weighs in on housing prices in Canada pointing out that the ratio of housing prices to income is now 30% above the historical average.

Modest Housing Returns: Larry Swedroe points out that a long view of history shows that returns from residential real estate are rather modest. In any case, he suggests that we think of housing as a consumption item rather as a pure investment.

TurboTax Online Giveaway

With T-slips and tax receipts starting to roll in, it is time for a tax preparation software giveaway. Thanks to Intuit, I’m giving away three (3) coupons that are good for any version of TurboTax Online (valued at $17.99 for Standard and $32.99 for Premium). As always, entering the giveaway is real simple. Just leave a comment in this post and don’t forget to include a valid e-mail address. If you are reading this through your favourite RSS Reader or via-email, you have to click on the headline, get through to the website and scroll down to the bottom of the page and type in your comment.

Some quick rules:
(1) No purchase necessary. A skill-testing question may be required.
(2) Deadline for entries is 8 p.m. EST on Thursday, February 9, 2012.
(3) One entry per person please.
(4) I treat your privacy very seriously. Your email will be used for the sole purpose of contacting you if you happen to win.
(5) I’ll pick three (3) entries at random and announce the winner after the deadline. Thank you for entering and good luck!

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This and That: Pension Return Assumptions & TurboTax Giveaway is brought to you by Canadian Capitalist -- Helping you to invest & prosper.

Under 40? Forget Retirement Planning

Canadian Capitalist — Wed, 01 Feb 2012 02:36:58 +0000

Prime Minister Stephen Harper’s speech in Davos last week set off a mini firestorm when he briefly touched upon the need to make social programs sustainable as the population ages rapidly:

We have already taken steps to limit the growth of our health care spending over that period. We must do the same for our retirement income system. Fortunately, the centerpiece of that system, the Canada Pension Plan, is fully funded, actuarially sound and does not need to be changed. For those elements of the system that are not funded, we will make the changes necessary to ensure sustainability for the next generation while not affecting current recipients.

Newspapers immediately started speculating that the Federal Government is contemplating raising the age of eligibility for Old Age Security (OAS) from 65 to 67. Other rumours suggested that the Government might lower the threshold at which OAS benefits are clawed back. We might have to wait for Finance Minister Jim Flaherty to table the budget document for insight into exactly what the Federal Government is planning to do.

The current brouhaha clearly illustrates the futility of detailed retirement planning for anyone under 40 years of age because a lot can change in the quarter century left until retirement. Perhaps, as the rumours suggest, Old Age Security will be radically altered by the time today’s 40-year olds retire. There may even be significant changes made to the Canada Pension Plan. Therefore, younger Canadians should spend most of their energies in building a strong financial base — establishing a savings habit, investing the savings prudently, paying down debt etc. — and worry about the minutiae of retirement plans as they get closer to retirement.

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Economic Impacts and Social Values of Credit Unions

Canadian Capitalist — Tue, 17 Jan 2012 04:01:00 +0000

[Note: The following is a guest post by Norm Klatt, Senior Vice-President at Concentra Financial, which made a winning bid of $5,000 in the Bloggers for Charity initiative. I thank them for the generous donation to charity.]

In today’s uncertain economic times, there’s value in taking a closer look at a group of reliable financial institutions that are operating within an under-utilized and largely misunderstood alternative business model. These organizations, which began in December 1900, are positioning themselves to re-assert their differences and become more prominent in the financial industry.

This alternative business model is a co-operative; the institutions are credit unions.

Adhering to a basic philosophy that the most important business strategy is to serve the member/owners has enabled credit unions to develop into the competitive organizations they are today. Understanding of, and adherence to, the co-operative principles is the raison d’etre for Canada’s credit unions.

If you weren’t already aware, 2012 has been designated International Year of Co-operatives by the United Nations. What better excuse to share some numbers about Canada’s 419 credit unions. According to the Credit Union Central of Canada, credit unions in Canada employ over 25,000 individuals to serve the 5 million-plus member/owners. This service is delivered in over 1730 credit union branches located in all areas of the country from the largest cities to small rural settlements. Credit unions hold over $117 billion in assets. Together, they constitute the second largest lender to small businesses in Canada…a significant contribution and critical to the economic strength of the country.

But, when talking about credit unions it is important to look behind or perhaps beyond the economic impact. In addition to lending to the businesses that fuel the economy, credit unions are critical to the community itself. In many instances, if it were not for the credit union, the community would not have access to a financial services provider. More often than not, employees of credit unions also live in the community they serve. This allows them the advantage of being able to understand the needs of that community and support the objectives that are important to its growth and well-being.

Credit unions epitomize ‘co-operative’ social responsibility by making a real and sustainable difference in the lives of their member/owners and their community. They lead the way in community giving and volunteerism; through donations, services, scholarships and volunteerism, credit unions contributed more than $37.5 million to individuals and organizations in their communities in 2010.

The small community of Churchbridge, Saskatchewan is a great example. One of the flagships of their community is the town’s public swimming pool. When the staff of Churchbridge Credit Union learned of the need to replace the worn, 40-year old relic, they dove right in as it were. By pioneering initiatives such as staff and board matched donations, holding community BBQs and offering town residents a 0% interest free loan program to encourage participation, over $32,000 was raised. And if that wasn’t enough, staff members voluntarily sat on the planning committee and worked on the building and on the fundraising efforts to support. A true community approach for the 900 residents.

There are success stories like this one all across Canada. With help from local credit unions, many communities continue to prosper, both economically, and in corporate giving thanks to the creation of the co-operative principles over 100 years ago. Those principles are still alive – and are a viable alternative for us all in 2012 and beyond.

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