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Tony Montana posted:Either I'm misunderstanding you, or you're misunderstanding me. Why we buy bonds is a fundamental, but why the index rather than actual bonds? Liquidity? As it's a exchange traded stock you can sell out your position very quickly. Or do you mean diversification and in an index fund that indexes a combination of bonds - corporate and government, perhaps even different government's bonds - all further diversifying the position? I think he means the second one.
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Nov 13, 2013 13:41
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Why? Are bond prices plummeting? That would be a Good Thing.
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Nov 13, 2013 23:16
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Lexicon posted:A side point, but bonds (and the bond market) are the most mysterious thing to me in all of finance. If anyone has a good source for learning more about them, I'd be all ears... Yeah I really don't have a good grasp of bonds as well and I tried very hard to focus on the part in The Four Pillars where he discusses how interest rates, price, volume, maturity and risk all tie together to produce something that bonds give people who buy them. 
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Nov 13, 2013 23:37
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Yeah no, the market is smarter than you. Gambling is fine but that's all it is.
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Nov 14, 2013 22:49
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Tony Montana posted:edit: Does that sound right? What do you guys pay for a cup of coffee in a cafe? How about a basic meal in a pub? Something that could be masking it is you're right above the US, so for instance petrol prices would have a lot to do with us shipping everything in. You've got fairly close access to the mighty machine of the US economy. Yeah the US-CAN relationship is kind of weird. Our gasoline is much more expensive than theirs because of taxes, but we're the largest supplier of petroleum to America by a factor of nearly two. Fuel is cheapest here in Alberta at around $1/litre but service costs are huge. A regular oil change is like $80. Adult movie tickets are 10-13 bucks with most theatres offering a "cheap night" where you can get a ticket for $7. Beer in Alberta is like $30 for a 24-pack, at a bar it's around $5 for domestic but in Montreal I once paid $14 for a Heineken at a club on top of a skyscraper (err, tall building). Worth it. If you save your money at 4% it'll still take like 18 years to double, my bank is offering a 2.5% promotional rate which almost reaches past inflation rates.
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Nov 15, 2013 03:28
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http://www.milliondollarjourney.com/top-canadian-discount-brokerages-with-u-s-dollar-usd-rrsps.htm Million Dollar Journey does a new wrap-up of the best Canadian Discount Brokerages that let you buy USD poo poo in your RRSP. Questrade rolls in at number 2.  (not that this is a problem for people who just want to buy some US market TD eseries ETFs but yeah)
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Nov 18, 2013 15:42
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DariusLikewise posted:So I started putting 300 dollars a paycheck into a TFSA, I want to trade stocks eventually, but looking for something short term to dump the money into for some growth until I accumulate a decent amount of cash(5k+). What would be my best bet? Canadian couch potato model portfolios. Don't gamble (read: buy "stocks").
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Nov 19, 2013 23:11
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Grouco posted:I'm glad to hear that, especially with the outrageous interest rates on my Federal student loan that I'll need to be paying back. You're way ahead of the game. I'm 25 and I didn't learn about any of this stuff until like January!
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Nov 23, 2013 01:16
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Well, to be fair anybody in this thread could be Joe from HR. The reason to be skeptical of investment advice from coworkers is not because they're coworkers. Now if Joe is telling you to get in on the twitter IPO or buy buttcoins or something, then he's an idiot. But I don't even know how I'd communicate about index investing in a water cooler context. "Man, I'm rocking market matching returns while only paying .4% in fees, you should get in on this!" Just doesn't sound exciting.
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Nov 24, 2013 22:53
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No they don't, they suck at motivating themselves to talk about something new that they don't consider to be part of their current identity. People can tell you the most complex esoteric details of celebrity lives or the royal family or baseball averages or MMA politics or loving pop music, but most people are not "finance people" and they've attached a huge portion of their identity to the otherness of those people to the point where they react with hostility if you suggest they learn about finance. You might as well ask a catholic to go to a mosque or a republican to do democrat things.
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Nov 25, 2013 00:01
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But does it become available as contribution room later?
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Dec 3, 2013 21:00
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Saltin posted:FX is complex, but in this case it is about the US economy bouncing back and Canada's commitment to a low interest rate environment for the foreseeable future. Don't underestimate the power of the latter. Well I guess I might as well claim my pension then. It took a huge hit in value as interest rates fell and I was waiting for it to bounce back since I don't have to claim it until August 2014 when I'll be switches to a deferred annuitant.
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Dec 5, 2013 13:40
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rhazes posted:So, everything I've read suggests this, but just to be clear, the Canada home buyers' plan is in fact tax savings, as you are essentially able to take $25,000 pre-tax money from your RRSP and use it for a home without it being taxed ever, right? And you can also replace it in your RRSP specifically on years where you may earn more money, to reduce your overall taxes paid, during the duration? I'm nowhere near buying a house (probably 5+ years to even start thinking of it, more if the Vancouver housing market is still a mess), but this seems right? I'm not sure I understand your first question but the HBP is basically an interest-free loan that has to be repaid within ten years. It does not free up new RRSP room for future contributions and your repayment does not count as new contributions for tax benefits. As for the second one: I use PC Financial for no-fee chequing and their MasterCard and world MasterCard offer fairly good returns that can be used for groceries at PC stores (1% on every dollar spent for both, 2% for groceries on the world card). But one of the best cash back cards is the MBNA Smartcash Platinum Plus. No fees and it has good returns for everyday spending. I spend <2k per month on it and we get a nice 50 dollar cheque every 90 days or so.
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Dec 8, 2013 03:48
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Man I never even considered using the PC Card for gas. I usually just go to Esso and use my MBNA and Aeroplan card for extreme double dipping. Though I think the aeroplan points can be better had through some other card and splitting rewards like that shoots yourself in the foot. I just have no idea how to calculate % return on travel cards and ones with fees and stuff.
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Dec 9, 2013 19:07
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Is it a portion of your income that you volunteered to go toward your RRSP or an employer match or what? If it's just post- or pre-tax income earned and you have it transferred for convenience, then it shouldn't matter at all. You could put it in your RRSP now or at any point before the deadline (March?) and it would have the same tax implications. My understanding is that this is more problematic if it's a misplaced RPP contribution. You should still check but you shouldn't worry too much.
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Dec 12, 2013 15:27
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FrozenVent posted:It's on top of my income, the employer cuts my In that case, if you don't deposit it by the deadline you'll have to pay tax on that income at your marginal rate.
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Dec 12, 2013 15:38
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rhazes posted:What do you folks use to calculate your internal rate of return on your investments? I'm with questrade, so I have to do it myself. Feeling quite good about myself this week, I managed to rope in 6 people to sign up for ING Direct's (Tangerine soon) $50 promo for new account holders too, so I'm pushing even more money into my taxable account than I was expecting to. I'm okay with buying software (I think my dad has Quicken actually) to calculate it as well.. The only software you need is a calculator. A. Figure out the amount that you put into the account. B. Figure out its present value. Subtract A. From B., that's your gross return. Divide A by that amount and that's your rate of return. I'm pretty sure that's how you do it, anyway.
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Dec 23, 2013 00:59
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rhazes posted:When you are constantly adding money into an account, it will have a different return since it hasn't had the same increase necessarily as money that was in it initially. I'd like to know my actual return. Obviously if you have $100k and it grows to $110k, you have earned 10%. But if you then add $100k more right after, giving you $210k, has your overall return shrunk to 5%? Does it matter? Average your rate of return over years, not weeks. I mean that seems like a really deep rabbit hole to me. You could look at every stock or ETF you bought and find the return on each one but why?
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Dec 23, 2013 01:36
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Sounds like Questrade is perfect for you. Free ETF purchases and you don't have to actually go to a branch. Edit: as for setup and ease of use, I find the scanning and electronic signing of documents much less obnoxious than speaking to a tuyop fucked around with this message at 04:18 on Dec 28, 2013 |
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Dec 28, 2013 04:15
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Vehementi posted:I'm finally smartening up about my finances. For the first few years of my career, I've been the typical sucker following the recommendations of my financial advisor guy, and am in a pile of stupid 2%+ MER mutual funds. 1. Yes, but only if everywhere else has a similar financial system to North America in the whole active-passive fund dynamic. 2. Yes, in a way. I would direct interested people to the same sources that convinced you and let them internalize that and get motivated on their own terms. 3. See 1. And the population for which it makes sense to invest at all is very limited in the whole world, most people would do well just to save for a margin of independence and find happiness and security whatever way they can. 4. Yes. The only game to play is the market's game by mercilessly rebalancing and dispassionately allocating your assets. 5. The reason is to consolidate wealth away from customers into funds and managers. The industry does not exist to benefit the customers. As for how to fix it now, I'd say you should open a discount brokerage account first and then get in contact with that brokerage and explain your situation. They can probably help grease the wheels of the transfer behind the scenes.
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Jan 1, 2014 23:20
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slidebite posted:So what are your plans with the tfsa this year? I am seriously looking at being uncharacteristically lopsided for me at least and putting it all in Amazon. I'm just going to take $5500 to a casino and play poker. Same thing, really, but I'll have to pay taxes on my returns! Are there any casinos that are TFSA compatible other than the stock market?
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Jan 2, 2014 23:28
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I think poker is the perfect analogue to market timing or buying individual securities. The market is not trying to take your money like a casino is, so it's not like roulette or keno or whatever, and with a bit of knowledge and luck you can "win" and come out ahead. It's still gambling rather than investing but it's not a rigged game of chance.
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Jan 3, 2014 01:06
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slidebite posted:Flipside, no taxes whatsoever on gains. I think the chances of gains over losses on "good" (loaded term I know) mitigate the loss side, but that's my opinion. TFSA in my opinion, although admittedly idealistic, is looking at the upside. I don't have all ups completely in my portfolio, but they certainly outnumber the downs, all things being equal I'd prefer to take the tax free gains than worry about capital losses, no question. Do you differ? When I get to that point, I'm just going to treat all my accounts as part of the same portfolio, so yeah, the TFSA holdings are part of the same 80/20 stock/bond mix that I have and so on. But this whole capital losses thing adds another dimension to it that I hadn't thought of. What asset classes are best to have in a TFSA? I think we're both now asking the same question.
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Jan 3, 2014 16:31
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Lexicon posted:I'm almost certain it applies to both. Ah, so how does the RRSP mitigate those problems?
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Jan 4, 2014 04:16
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Guest2553 posted:Dick move by TD, but Rich_gettin_richer.txt Needs more sex. Consider some twitter and Amazon and maybe do a multi-leg short call on RIM.
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Jan 7, 2014 04:07
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. CCP recently updated their
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cowofwar posted:What fund do you use for emerging market exposure? The cheapest ones that I can find are 1.8% MER, most are over 2%. I bought VXUS, but that's only if you have USD, I suppose.
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Jan 7, 2014 20:06
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LIRA and RPP, no. The RPP depends on your company's pension policy. RRSP can be transferred into an RIF at any time so if you want to take two years off at 25k/year when you're 35 and you were contributing at an income of 75k, then you'll see some benefit to using an RRSP this way.
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Jan 8, 2014 23:58
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Crell posted:Thanks a bunch Kal Torak, I'll make sure to look into early redemption rules on the funds I buy and weigh my options about putting the savings into the market. I certainly haven't made any final decisions yet, this was more for fact finding and clarity on the subject so I can make the (hopefully) right choice. The general rule of thumb is to stay away from the market unless you don't need the money for at least 5 years, and then to stick pretty hard to a low risk/bond-heavy allocation. ING has a promotional rate of 2.5% on right now. If I were you I'd just troll around the promotional savings rates that PCF and ING go through all the time and move your money in and out as the offers expire.
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Jan 9, 2014 22:20
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swagger like us posted:Stupid question for babies first financing. Last September I opened a Savings Account as a TFSA, and popped the $5000 into it. I ended up withdrawing it in December, but now I have money to put into it again. How does the yearly limit "contribution" work? I just want to park a couple grand of my student loan that Im not needing month to month so it collects what pathetic amount of interest it could get. Does constantly putting in and pulling out money screw me over? No, but it's really a crappy use for a TFSA. You want to invest with that thing and keep your sweet tax-free gains. Just park your money in an ING or PCF account and don't sweat the .5% difference.
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Jan 17, 2014 13:55
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The stagnant growth depends on the population. For instance, aboriginals and immigrants have much higher fertility rates than "local" Canadians. It's very interesting, but it's true that natural increase in Canada is leveling off, if not declining. In the future, 80% of our population growth will be from migration into the country. Have some graphs:  When you have a situation like this, where your social security depends on more premium-payers (workers) than beneficiaries (pensioners), and you experience an upset in that balance, you have to increase premiums (taxes) and/or decrease benefits. We'll probably have to do both, at least for about 20 years until most of the baby boomers die. It behooves most of us, as people who will be beneficiaries in a dramatically different environment, to figure out ways to provide for our own retirement in case benefits are cut extraordinarily. The problem is that we don't know how much premiums will be increased so we find Lexicon's anxiety about the future tax structure and value of the RRSP is a fairly popular position. My understanding is that a good way around it is to earn a relatively high income now and maintain a lifestyle or project a future lifestyle that draws a relatively low income so that you can avoid the problems of a possible future with really high taxes. The TFSA is, unfortunately, not enough to provide for most retirements except the very frugal (~18 000/year in future inflation-adjusted dollars*). So I guess we have to take our chances with registered accounts or eat the taxes on non-registered accounts. * Assuming: Inflation of 3%, market return of 8%, maxed out TFSA contributions, 40 years of saving, 4% withdrawal rate
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Jan 17, 2014 22:07
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I don't understand how a tax-sheltered account limited to $5500/year is especially useful for the wealthy. Even if you only make $31 000 net, saving $460/month, or ~18% of your income, is probably doable in most cost-of-living areas if a person is motivated and educated. If motivation and education is the reason that the TFSA favours the wealthy, then there's really nothing special about it, finances and life in general favour the motivated and educated regardless of wealth. Without motivation and education as your primary reason, wealth doesn't seem to be that important because contributions are limited to such a small amount. It's not like the upper classes have trouble evading tax anyway, TFSA or no TFSA.
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Jan 18, 2014 02:00
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Some asset classes return in ways that are tax-expensive. Like REITs. The TFSA lets you buy assets with net (post-tax) income and then collect the returns forever without paying taxes on those returns. In a nonregistered account you pay capital gains or dividend taxes on your returns, which can eat up like 15-30% of those returns, so eliminating those taxes is huge. In an RRSP you pay the return taxes but get to declare your principal against your income so it can reduce your marginal rate and lower the taxes paid.
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Jan 18, 2014 02:18
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n00b posted:Thanks for the response, but my financial literacy is still at the level of a grade 9 drop-out. I don't understand how a savings account can buy assets? I need to do more reading on the TFSA... The TFSA and RRSPs are types of accounts like any other, but unlike checking and savings accounts, they can be opened with a brokerage and used to hold stocks (aka securities) and bonds. Mutual funds can also go into RRSPs and TFSAs if your broker, like TD, supports it. Ask TD about opening "mutual fund TFSA" and fill it with e-series index funds and you will be way ahead of nearly everyone you will ever know. The advanced option is to learn about Exchange Traded Funds (ETFs), which are mutual funds that are traded like stocks, open a self directed account at a discount brokerage like Questrade, and roll that way with more control and slightly lower fees and more access to asset classes like REITs and foreign index funds.
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Jan 18, 2014 03:05
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Persona non grata posted:Every time a TFSA holder checks their statements and compares their TFSA with their non-sheltered accounts, they calculate how much they would make if all their investments were tax free. Man, that would be sweet. And just as Pavlov's dog's mouth watered when he heard the bell, middle class TFSA holders will be conditioned only to think of how much their chump change investments would gain if capital gains taxes were dropped entirely. That's a very interesting way to look at it, thank you!
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Jan 18, 2014 06:59
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cowofwar posted:Most Canadians are actually highly leveraged with consumer and mortgage debt. Their retirement savings, if any, are auto-contributions taken off their pay. Very few middle class Canadians can afford to make after tax contributions to additional retirement savings vehicles like RRSPs and TFSAs. They are relying on house appreciation to fund their retirement. It just depends on your definition of "afford". If you can't find at least 460/month to give future you a better life somehow, then I think the definition of "afford" that most of us in BFC work with implies that you can't afford your $2500 mortgage, or $300/month Starbucks habit, or second car payment. These are all staples of a modern Canadian "middle class" life while saving and financial acumen are not.
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Jan 18, 2014 20:27
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blah_blah posted:America is nearly half of the world if you go by market cap, so if you believe in indexing and diversifying there's never really a bad time to 'buy America'. Ok but I really don't want Florida or Idaho. Is there any way to just buy Massachusetts and Colorado?
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Jan 23, 2014 06:35
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Kalenn Istarion posted:Don't take this personally, but this comment shows just how little you understand about how shorting works and I would highly recommend against doing so until you learn more about it. To address some specific points: This an awesome post and I learned a lot from it. Thanks! Can you explain bonds in a similar way? Not that they're like shorts or anything, just in some way that makes sense. I know they have maturity rates, and they're basically the credit cards of large organizations (a city or country issues bonds to raise capital for a project or something, right?), but other than that they're very mysterious to me. I just have no idea why I'd prefer 5-10 year bonds for my portfolio, or how maturity rate changes anything since they remain liquid the whole time, or how some may be more tax efficient than others. I have a pretty loose grasp of tax efficiency in general, actually (in efficiency terms: REITs and dividends are low, capital gains higher, right).
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Jan 24, 2014 21:22
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I'm going to do some reading this weekend on these, because it's pretty interesting, but the biggest thing I'm wondering is this: So, I own XBB, which is a bond ETF. It has literally 769 bonds in it. As far as I can tell, it has been trading at ~$30 for the past ten years so I know that capital gains are not the reason I'm holding it. Instead, every month I get some money for owning this thing. Is this money a portion of the coupons of all those bonds, and the sum of those coupons (minus the price) the yield? When I sell a share of XBB, what happens? Do I just sign away the monthly income from it to the new buyer and collect my coupons/yields-to-date plus the trading price? What happens to my account when one of those bonds matures? Like, there's one from the province of Ontario for 3.8 million that matures on March 8, 2015. Do they then pay that 3.8mil back to all the bondholders (the ETF shareholders?) resulting in a small increase in my monthly haul from each share of XBB? And the most basic question of all: My statements say that I got, say, $100 this month from XBB for "dividends" or whatever. Where is that $100 going? Is it automatically reinvested into the ETF, buying me 3.3 more shares? Because it doesn't seem to be going into "cash" in my Questrade account but it's possible that I haven't noticed because the amounts have not been $100/month - I only own about 30 shares. Edit: I hope this doesn't seem like an offensively stupid post, I feel really ignorant but I haven't seen the "where is that dividend money going" question addressed anywhere other than people who write "that's yours!". tuyop fucked around with this message at 00:12 on Jan 25, 2014 |
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Jan 25, 2014 00:10
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Wait, you're concerned about ethics, so you want to invest in American companies? 
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Jan 26, 2014 14:36
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HookShot posted:Yeah, exactly. As I said, in the last seven months I've gotten enough for a free round trip ticket to Europe. Teach me, please.
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Jan 29, 2014 01:39
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