Comments on: This and That # 103 http://www.canadiancapitalist.com/this-and-that-103/ Helping you invest and prosper Sat, 11 Feb 2012 18:51:59 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: This and That: Generic advice, debt worries and more… | MoneySense http://www.canadiancapitalist.com/this-and-that-103/#comment-231716 This and That: Generic advice, debt worries and more… | MoneySense Fri, 09 Jul 2010 13:13:06 +0000 http://www.canadiancapitalist.com/?p=1052#comment-231716 [...] This and That # 103 [...] [...] This and That # 103 [...]

]]> By: ThickenMyWallet http://www.canadiancapitalist.com/this-and-that-103/#comment-145868 ThickenMyWallet Fri, 01 Aug 2008 15:51:28 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145868 Thanks for the mention. Have a great long weekend. Thanks for the mention. Have a great long weekend.

]]> By: Doug http://www.canadiancapitalist.com/this-and-that-103/#comment-145866 Doug Fri, 01 Aug 2008 15:24:10 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145866 This is a followup to what I've just written. Canadian dividends get preferential tax treatment. The effect of this may not be small, and cannot be disregarded in determining one's foreign stock allocation outside an RRSP. For 20 years ending in 2005 for the S and P 500, 38% of the return came from reinvested dividends. This came from the TRowePrice website. I don't have comparable information for the Canadian and global stock markets. For 20 year total returns as of December 31/04, the Canadian stock market returned 7.8% and the global stock market returned 10%. For the Canadian stock market and the global stock market over that period, I assume that 38% of the return came from reinvested dividends. I am assuming 46.4% tax on foreign dividends, 24.6% on Canadian dividends and 23.2% on capital gains over that time period. This is not an accurate assumption for the whole time period, and will also vary depending on an investor's circumstances. Based on those assumptions, the after tax return of global stocks was 6.80%; for Canadian stocks it was 5.95%. I welcome comments on this. This is a followup to what I’ve just written. Canadian dividends get preferential tax treatment. The effect of this may not be small, and cannot be disregarded in determining one’s foreign stock allocation outside an RRSP.

For 20 years ending in 2005 for the S and P 500, 38% of the return came from reinvested dividends. This came from the TRowePrice website. I don’t have comparable information for the Canadian and global stock markets. For 20 year total returns as of December 31/04, the Canadian stock market returned 7.8% and the global stock market returned 10%. For the Canadian stock market and the global stock market over that period, I assume that 38% of the return came from reinvested dividends. I am assuming 46.4% tax on foreign dividends, 24.6% on Canadian dividends and 23.2% on capital gains over that time period. This is not an accurate assumption for the whole time period, and will also vary depending on an investor’s circumstances. Based on those assumptions, the after tax return of global stocks was 6.80%; for Canadian stocks it was 5.95%.

I welcome comments on this.

]]> By: Doug http://www.canadiancapitalist.com/this-and-that-103/#comment-145865 Doug Fri, 01 Aug 2008 14:56:11 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145865 This is from the Global Investments Yearbooks Synopsis. For 1900-2006 in 17 developed countries that constitute almost 90% of the 2006 world stock market, real return on average was 5.8%. For Canada, it was 6.3%; for the USA, it was 6.6%. Canada ranked 5 out of the 17. Best return in stocks was Sweden (7.9%); worse for stocks was Belgium and Italy (2.6% each). Will the addition of foreign stocks to one's portfolio increase return? I think that is uncertain: it could be positive, negative or neutral. Canadian stocks are heavily concentrated in financials, energy and minerals (75%). Historically, how do the financial, energy and mineral sectors do relative to the stock market as a whole? I would not consider these sectors to be high growth areas, as compared to technology. Whether this translates into decreased stock market return, I don’t know. My worse case scenario is the Canadian stock market ends up being like Belgium. Does anyone have any information as to how those 3 sectors do historically compared to the stock market as a whole when it comes to return? This is from the Global Investments Yearbooks Synopsis. For 1900-2006 in 17 developed countries that constitute almost 90% of the 2006 world stock market, real return on average was 5.8%. For Canada, it was 6.3%; for the USA, it was 6.6%. Canada ranked 5 out of the 17. Best return in stocks was Sweden (7.9%); worse for stocks was Belgium and Italy (2.6% each).

Will the addition of foreign stocks to one’s portfolio increase return? I think that is uncertain: it could be positive, negative or neutral. Canadian stocks are heavily concentrated in financials, energy and minerals (75%). Historically, how do the financial, energy and mineral sectors do relative to the stock market as a whole? I would not consider these sectors to be high growth areas, as compared to technology. Whether this translates into decreased stock market return, I don’t know. My worse case scenario is the Canadian stock market ends up being like Belgium. Does anyone have any information as to how those 3 sectors do historically compared to the stock market as a whole when it comes to return?

]]> By: Gail http://www.canadiancapitalist.com/this-and-that-103/#comment-145853 Gail Fri, 01 Aug 2008 13:04:37 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145853 Ta, hope you have a lovely weekend and that all YOUR dreams come true! Ta, hope you have a lovely weekend and that all YOUR dreams come true!

]]> By: Million Dollar Journey http://www.canadiancapitalist.com/this-and-that-103/#comment-145849 Million Dollar Journey Fri, 01 Aug 2008 11:29:38 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145849 Thanks for the link CC - enjoy the weekend! Thanks for the link CC – enjoy the weekend!

]]> By: The Financial Blogger http://www.canadiancapitalist.com/this-and-that-103/#comment-145847 The Financial Blogger Fri, 01 Aug 2008 10:49:49 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145847 Hey thx for the mention! post #4 of my Estate planning series live today :-D Hey thx for the mention!

post #4 of my Estate planning series live today :-D

]]> By: Four Pillars http://www.canadiancapitalist.com/this-and-that-103/#comment-145846 Four Pillars Fri, 01 Aug 2008 10:26:12 +0000 http://www.canadiancapitalist.com/?p=1052#comment-145846 Thanks for the link! Mike Thanks for the link!

Mike

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