- Comments (11)
- Text Size: Down Up
moneysense.ca, 14/08/08
This and That # 105
- The benefit of stock ownership accrues to those who are able to survive the inevitable downturns. Money magazine featured a story on 21 ways to stomach a sour market. Some, like the tip on ditching energy stocks (entirely?), are debatable, but the article does offer some valuable tips.
- Half the battle in investing is resisting the siren song of exotic investments. James Daw of The Toronto Star wrote a series of columns on investing in viatical settlements (buying insurance policy from sick or elderly people in return for an upfront cash payment): an introduction, tax treatment and allegations of fraud by the OSC.
- Tim Cestnick explains the tax benefits of marriage for newlyweds in his column in the Globe & Mail.
- Larry Swedroe’s next book, The Only Guide to Alternative Investments You’ll Ever Need, is a guide through asset classes such as hedge funds, precious metals stocks, junk bonds etc. writes Jon Chevreau in The Financial Post.
- Million Dollar Journey’s take on good debt and bad debt.
- The Dividend Guy on his best investment mistake.
- Preet is writing a series of posts on Dimensional Fund Advisors.
- Money Gardener wonders why Petro-Canada is trading so cheap.
- Michael James questions the need for too many safety margins in investing.
- Canadian Financial Matters is grappling with the financial issues surrounding severance.
Have a great weekend everyone!
moneysense.ca, 14/08/08
Thanks for the mention CC. Have a good one!
FT
Thanks for the mention. Based on the review, it looks like Swedroe’s book is interesting. Have a good weekend.
Hi CC – thanks for the link. I’ll keep my professional executioner away from Ottawa this weekend so you can enjoy it.
Thanks for the mention CC, severance and job chasing are now my job, but its interesting so far.
Hey CC, thanks for the link.
Ditching the energy stocks?! This is nuts!
Now is the time to buy, not to get out…
A proper life settlement fund (the difference between life settlement and viatical settlements is that life settlement funds target healthy people with years to live and, to be crass, you are really betting whether the person dies before your calculation of their life expectancy) is supposed to pay out a cash discounted value of the policy at once (most reputable large life settlement funds have funding vehicles to fund the buy-out since the policies are aggregated and sold as corporate paper).
Under most insurance acts in Canada (insurance being a provincial jurisdiction), a Canadian cannot set up a life settlement fund or viatical settlement fund and purchase policies from other Canadians. Canadians can only buy policies from jurisdiction that allow this to occur so if anyone in Canada is offered to sell their policy, it is statute barred. The Star articles seems to miss this fact.
I would dovetail on your thought about exotic instruments. Remember that these were created as “fun money” instruments for the ultra rich. If they lost their money on it, so what? They have millions of dollars in safer investments.
But they have moved down to retail and sold as the end all and by all of our financial woes. They continue to be “alternatives” and not staples to a portfolio.
Have a great weekend.
Most of those so-called “exotic investments” are really leisure pursuits that “might” make money. I have one friend who loves to collect vintage guitars. He has about 30 guitars in his collection, some are limited edition makes, some are autographed by famous musicians, some were played (but not autographed) by famous musicians which hold more sentimental value than monetary value. I find his collection to be more like a museum than an investment, but it is certainly interesting nonetheless! I have a different friend who is into wines and he has a collection of countless bottles of the right vintages of some of the most famous wines in the world. I can’t even hazard a guess as to what his cellar is worth on the open market, but it’s his “thing” and I respect that… Others collect sports cards and memorabilia, stamps, coins, artwork, classic cars and numerous other things which may potentially have high value.
For me personally, I have no collections of anything other than dust. But it’s all personal preferences and I certainly respect my friends for collecting all of those things that they adore. I just don’t take any particular liking to anything enough to want to become a collector of it – aside from shares of companies, I guess…
Of the 6 tax-saving ideas mentioned, 4 aren’t available to newlyweds getting married at a “conventional” age: one requires that one of us be dead, two require us to be older than 65, and the dividend transfer is unlikely to be useful among young people with small nest eggs.
If there is a stay-at-home parent then the spousal credit is handy. And if the spouses are in different marginal tax brackets, and if the higher earning spouse has sufficient savings capability to reduce their taxable income to the threshold between the spouses’ marginal tax brackets, then the spousal RRSP can also result in good tax savings.
If you’re unlucky / lucky enough to marry someone who has no or little income, update your TD-1 (item 7) with your employer to claim your spouse’s basic tax credit.
With regards to the Money article, I definitely agree with:
1. simplify your portfolio
4. turn off CNBC
5. read a good book
7. make sure your cash s really safe
8. keep expenses low
9. gauge your stomach for risk
10. tweak your portfolio
19. hang up on the sales pitch
21. think about something besides money
I have been moving my investments towards to models that I discuss on my blog. Essentially the models are based on market timing. For many years, I wasn’t comfortable getting completely out of the market because doing so then requires deciding when to get back in. I am almost completely out of stocks and now use ETF’s. This simplifies my portfolio and therefore I don’t have to spend near as much time monitoring my holdings.