← →

This and That: Budget 2009 Edition

January 30th, 2009 · 15 Comments

  1. Of course, the budget was big news this week and as you might expect, there was bumper crop of coverage. Jon Chevreau of The Financial Post breaks down the tax goodies in the budget; Ellen Roseman finds that the advertised tax savings comes with a lot of fine print; Derek DeCloet pans the Home Renovation Tax Credit; Larry MacDonald provides some insight into what happens when you lock up a bunch of journalists.
  2. Rob Carrick writes the banks are introducing new fees and raising interest rates and reminds readers to check out the competition.
  3. Jason Zweig writes that we should be sceptical of predictions, including our own.
  4. Peter Schiff has achieved guru status by being very bearish on US stocks. So, he must have made a killing for his clients, right? Well, turns out his clients are not exactly jumping with joy over the past year’s returns.
  5. Four Pillars reports on the BMO dividend reinvestment program. With the scramble for capital, other banks may follow suit.
  6. Canadian Financial Stuff trolls through the National Film Board website and discovers a gem.
  7. Thicken My Wallet provides a road map for turning around your personal finances.
  8. Million Dollar Journey reviews No Hype and is giving away a copy of the book.
  9. Head over to Where Does All My Money Go? website for participating in a big fat book giveaway.
  10. Dividend Growth Investor posted an interesting chart of dividend yield of the S&P 500 versus 10-year treasuries.

Bookmark:  

Buzz Up Digg Mixx
Print

Related Posts:

Tags: Miscellaneous

15 responses so far ↓

  • 1 Dividend Growth Investor // Jan 30, 2009 at 10:13 am

    CC,

    Thanks for the link. Yields on the S&P 500 are higher than yields on 10 year treasuries for the first time in 50 years. Sure there is a risk of dividend cuts down the road, but I seriously doubt that ALL companies are going to cut dividends in 09.

  • 2 Million Dollar Journey // Jan 30, 2009 at 10:51 am

    Thanks for the mention CC!

  • 3 Phil // Jan 30, 2009 at 1:21 pm

    Love the blog! Keep it up!

    I think there may be a typo, “much” instead of “must”.

    Cheers!

    Peter Schiff has achieved guru status by being very bearish on US stocks. So, he much have made a killing for his clients, right? Well, turns out his clients are not exactly jumping with joy over the past year’s returns.

  • 4 Robillard // Jan 30, 2009 at 1:24 pm

    With regards to #2, even big corporations have to pay commitment fees on credit facilities. Paying the bank a fee for not using your line-of-credit is meant as compensation for the bank for the fact that they need to either hold reserves against possible drawings on the line-of-credit, or get access to a source of funding at a lower interest rate than they offer you under the line-of-credit. By extending you a line-of-credit, the bank is taking the risk that you will draw upon it when they are unable to make the loan or cannot secure funding at a lower interest rate. The commitment fee is compensation for this risk. What is really surprising is that customers have not been required to pay this before.

  • 5 Huzzah // Jan 30, 2009 at 4:48 pm

    CC, great to see your photo and quote in the Globe and Mail’s RRSP section on January 28!

    Thanks for maintaining the high quality of this blog.

  • 6 Ben // Jan 30, 2009 at 6:15 pm

    Quoting from Larry’s column: “It does not make much sense to fill your RRSPs with risky investments. If you lose a lot of money you cannot claim a capital loss.” While the point is correct, surely this blanket statement cannot stand on its own:
    1. One doesn’t invest in RRSP’s with the intent to lose money. Using a buy and hold strategy in index funds, why wouldn’t one hold stocks in an RRSP?
    2. The single greatest thing about RRSP’s is the tax efficiency afforded most people who will have lower incomes in retirement compared to working years. There is only so much money in household budgets, and if one put 18% into bond RRSP’s, that wouldn’t leave much left over for stocks held in taxable accounts, nor would one see a lot of growth in the bonds.
    Surely there are other pros/cons to holding stocks inside/outside RRSP. This could be a good blog posting, if not already addressed.

  • 7 Ben // Jan 30, 2009 at 6:21 pm

    And TD has backed down on the $35 inactivity fee for LOC’s.

    http://business.theglobeandmail.com/servlet/story/RTGAM.20090130.wtdfees0130/BNStory/SpecialEvents2/home

  • 8 Canadian Capitalist // Jan 30, 2009 at 6:40 pm

    Ben: Just to clarify, one final sentence that I added didn’t make the article: “These days, I make sure our RRSPs hold well-diversified portfolios that still have market risk but not individual security or sector risk”.

  • 9 Four Pillars // Jan 30, 2009 at 7:25 pm

    Thanks for the link!

  • 10 larry macdonald // Jan 31, 2009 at 8:10 am

    Ram
    My apologies for the omission. Space constraints were to blame. Anyway, I wonder if one would want to hold stocks in an RRSP even if they do earn capital gains over the long term? The RRSP converts the gain (and dividends) to fully taxed income in retirement, whereas in a non-registered account, only half the gain will be taxed. Couldn’t one end up paying a lot more taxes on stocks held within an RRSP than outside? Here is an example of Seymour Schulich. http://www.thestar.com/Business/article/410508

  • 11 larry macdonald // Jan 31, 2009 at 9:10 am

    Ram
    I should have mentioned that the link in my post above was sent to me by Warren MacKenzie (of Second Opinion Investor Services). And he said this about the article:

    “…they believed his RRSP was worth over $200 million. Now that is great but the decision to put the shares of his company in his RRSP will cost him probably about $40 million more in tax than if he did not put them in. Not that $40 million dollars would not matter to him but I am sure if he could go back we would probably hold his shares outside of his RRSP.”

  • 12 Canadian Capitalist // Feb 2, 2009 at 12:10 am

    Larry: Thanks for the article about the Schulich RRSP. Wow, $250 million is very impressive. But, I’d think of putting a lot of stock in a single company inside a RRSP as very risky. Even when it pans out, like it did for Mr. Schulich, the tax treatment would be better in a taxable account.

    Depending on an investor’s asset allocation, bonds go into a RRSP first. Then, provided there is room, go US and international equities (funds or ETFs). PH&N did a detailed study (I couldn’t find it online anymore) that found that even for Canadian stocks, the tax shelter provided by RRSPs make it an ideal vehicle.

    Finally, we come to stocks. It’s probably okay to hold blue-chip, lower risk stocks inside a RRSP. For instance, Royal Bank isn’t going to provide returns markedly different from the overall market. But, a hole-in-the-ground penny stock or go-go high-tech stock might. They are best held in taxable accounts. If they crash and burn, which is the likely outcome, there is tax loss to offset. If they become 50-baggers, only capital gains taxes are owed.

  • 13 Forone // Feb 2, 2009 at 6:09 pm

    It’s gotten to where Canadian bank dividend yields are high enough to warrant RRSP or TFSA sheltering, assuming payouts will be stable.

  • 14 Thicken My Wallet // Feb 3, 2009 at 2:24 pm

    A very tardy thanks for the link (on a mini-vacation this weekend).

  • 15 Michael Orman // Feb 4, 2009 at 10:51 pm

    Of course, the budget was big news this week and as you might expect, there was bumper crop of coverage. Jon Chevreau of The Financial Post breaks down the tax goodies in the budget.

Leave a Comment