Search found 1723 matches

by Park
06 Mar 2024 10:34
Forum: Under the Mattress: Protecting Your Money
Topic: High interest savings, GICs and MMFs (2024)
Replies: 179
Views: 14420

Re: High interest savings, GICs and MMFs (2024)

https://www.morningstar.com/etfs/boxx-p ... ble-income

The link is about an alternative to $US money market funds that results in no taxable income. Of course, I don't think it has the same credit risk as treasury bills.
by Park
04 Mar 2024 09:47
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 110
Views: 8725

Re: Clippings 2024

Has anyone seen a total return comparison excluding the US tech darlings and including the favourable tax treatment of Canadian dividends? That is what keeps my Canadian percent high (at 40%)! I think your asset allocation is reasonable. The following states what has been said before many times. When you invest in foreign stocks, you're really making 2 investments: you're investing in foreign stocks and also in foreign currencies. Foreign currencies have zero expected return, but they do have risk. However, that risk can diversify your portfolio. Swensen used to say that up to 25% foreign currency exposure was beneficial, but after that, it was counterproductive. I've never seen a comparable Canadian figure, but my guess is that it would b...
by Park
03 Mar 2024 10:42
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 110
Views: 8725

Home Bias



Good 10 minute video from Ben Felix on home bias.
by Park
28 Feb 2024 05:13
Forum: Under the Mattress: Protecting Your Money
Topic: High interest savings, GICs and MMFs (2024)
Replies: 179
Views: 14420

Re: High interest savings, GICs and MMFs (2024)

https://humbledollar.com/2024/02/every- ... ses-test_7

"If your savings exceed the FDIC insurance limit, you could split the balance up among multiple banks, but that can be cumbersome. An alternative: Open a brokerage account and buy a money market fund that holds only Treasury bills. Because Treasurys are backed by the same entity as the FDIC—the federal government—your money is effectively protected the same way, but with no limit on coverage."
by Park
10 Feb 2024 17:49
Forum: Under the Mattress: Protecting Your Money
Topic: High interest savings, GICs and MMFs (2024)
Replies: 179
Views: 14420

Re: High interest savings, GICs and MMFs (2024)

I would suggest exercising caution on that ZST analysis. ZST has a duration of < 6 months, and the cap gains component of Total Return will ultimately decline, if not totally disappear, as interest rates come down and the discount bonds roll off, replaced with bonds with low to no discount. There is no free lunch, at least not for long. I've heard more than once an argument for having your cash asset allocation in very short term bonds instead. Is it truly critical to have no principal at risk? If not, take a little interest rate risk. Interest rates are difficult to predict. But a decline in interest rates is a possiblity IMO. With a duration of less than 6 months, discount bonds could become premium bonds relatively quickly. And then whe...
by Park
03 Feb 2024 02:37
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151897

RRSP vs. CCPC

"You’ll almost always be best off if you pay yourself enough salary to cover your costs of living, then additional salary or a bonus to contribute as much as possible to your RRSP.It generally does not make sense to pay yourself salary strictly to create the maximum RRSP contribution room possible (salary of $175,333 will provide the maximum RRSP room of $31,560 for 2024) if you don’t otherwise need the salary to meet your costs of living. You’d be left investing any excess (amounts you don’t need to live on) outside your RRSP, which is taxable annually and is not as good as leaving the funds in your corporation to invest" Tim Cestnick, https://ourfamilyoffice.ca/articles/business-owners-need-to-weigh-rrsps-and-their-corporations-...
by Park
30 Jan 2024 09:04
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 110
Views: 8725

Active Versus Passive - Concentration

https://www.morningstar.com/funds/mutual-fund-managers-are-wrong-more-than-theyre-right "do-it-yourself investors should approach owning individual stocks with caution. Professional money managers...get most of their stock picks wrong. That does not bode well for someone seeking to build a do-it-yourself portfolio while working a day job. Complicating the challenge is the need to size portfolio positions appropriately, which is tougher in a managed portfolio than a passive one that lets the market do the rebalancing. The real challenge active managers (and DIY-ers) face is not in getting more picks right than the market but rather in sizing them in a manner that leads to outperformance. On the whole, active managers tend to be right ab...
by Park
27 Jan 2024 00:03
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151897

Re: Money Out of Corp Solely To Invest In RRSP

https://www.cibc.com/content/dam/small_business/advice_centre/business-reports/RRSPs-for-business-owners-en.pdf From the above link by Jamie Golombek: "As a rule-of-thumb, it generally would not make sense to receive $162,278 salary / bonus for the sole reason of making the maximum contribution of $29,210 to a tax-deferred RRSP if the remaining after-tax salary / bonus would be invested in non-registered investments that produce taxable income. It would be preferable to leave after-tax business income in your corporation to take advantage of the significant tax deferral (See Figure 1) that provides additional corporate funds for investment" So in most situations, it doesn't make sense to take money out of a CCPC solely to contribu...
by Park
26 Jan 2024 04:42
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 110
Views: 8725

Volatility Drag

https://www.fortunesandfrictions.com/po ... ge-matters

"As an investor, though, you want smooth returns. The broader distribution of possible outcomes you accept, by doing things like putting a lot of your money into one stock or tactical idea, or timing in and out of the market — the less smooth your expected investment experience.


So if you get cheeky, it won't be enough to be right with a more volatile portfolio, but instead you'll need to be right to an extent that also overcompensates for volatility drag."
by Park
21 Jan 2024 23:31
Forum: Financial Planning and Building Portfolios
Topic: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg
Replies: 49
Views: 2913

Re: Portfolio Construction Based on Rational Reminder #284 w/Scott Cederburg

From the link given to the Cederburg paper by MA: "An allocation strategy of 50% to US stocks and 50% to international stocks is roughly in line with global equity market weights, which should be appealing to American investors. For investors in other countries, an even allocation across domestic and international markets would represent a strong home bias. In the Internet Appendix, we demonstrate that reducing the domestic stock weight to 35% (and investing 65% internationally) produces small performance improvements relative to the Stocks/I strategy. This 35% domestic weight remains a large home bias for non-US investors, but we show that further reductions in domestic investments come at a cost of worse performance. As such, our res...
by Park
21 Jan 2024 08:43
Forum: Financial Planning and Building Portfolios
Topic: Corporate Portfolio Review (300k)
Replies: 27
Views: 1753

Re: Corporate Portfolio Review (300k)

Marcus Aurelius wrote: 21 Jan 2024 01:10
Park wrote: 20 Jan 2024 23:23From the link:
If you read my post, it included the following detail:
Marcus Aurelius wrote: 20 Jan 2024 23:00 ...if you can make use of the extra T4 income for expenses...
The reason that I included the quote from Jamie Golombek is in my preceding post, i wrote

"I'm stretching my memory, but I think Jamie Golombek has said something similar."

The purpose of my post was to make others aware that he had indeed said that.
by Park
20 Jan 2024 23:23
Forum: Financial Planning and Building Portfolios
Topic: Corporate Portfolio Review (300k)
Replies: 27
Views: 1753

Re: Corporate Portfolio Review (300k)

When the corp starts to pay the general corporate rate, I've wondered about taking more salary to get more RRSP room. I believe Mark Soth has said that increasing salary solely to increase RRSP isn't a good idea. I'm stretching my memory, but I think Jamie Golombek has said something similar. I already linked the Golombek article, above: https://www.cibc.com/content/dam/small_business/advice_centre/business-reports/RRSPs-for-business-owners-en.pdf RRSP is generally worth it if you can make use of the extra T4 income for expenses, especially since small business tax rates and dividend rules are a political football. The goalposts keep moving around. RRSP rules are unlikely to change much. From the link: "As a rule-of-thumb, it generall...
by Park
20 Jan 2024 22:33
Forum: Financial Planning and Building Portfolios
Topic: Corporate Portfolio Review (300k)
Replies: 27
Views: 1753

Re: Corporate Portfolio Review (300k)

emsie wrote: 20 Jan 2024 11:51 Or take out more salary and start spending more and gifting to children.
When the corp starts to pay the general corporate rate, I've wondered about taking more salary to get more RRSP room. I believe Mark Soth has said that increasing salary solely to increase RRSP isn't a good idea. I'm stretching my memory, but I think Jamie Golombek has said something similar.

Those conclusions likely assumed that the relevant corporate rate is the small business rate. Perhaps a different conclusion would be drawn, if the general corporate rate is used.
by Park
19 Jan 2024 23:41
Forum: Financial Planning and Building Portfolios
Topic: Corporate Portfolio Review (300k)
Replies: 27
Views: 1753

Re: Corporate Portfolio Review (300k)

Tim Cestnick recently had an article on forms of taxation that aren't indexed to inflation. And he pointed out that the small business deduction is one of them; IIRC, the $500K small business limit (I believe Saskatchewan is the exception at $600K) hasn't changed since around 2009. I think it is possible that the SBD might increase with time. However, I'm less optimistic that the passive income effect - when it becomes greater than $50K - will increase with time. Why is this relevant? Some would consider investing in a CCPC as another form of tax advantaged investing, similar to a RRSP or TFSA. RRSP and TFSA contribution limits are adjusted with inflation, but that is less so for CCPCs. As someone in your mid 20s, it's possible that you may...
by Park
17 Jan 2024 09:13
Forum: Financial News, Policy and Economics
Topic: Clippings 2024
Replies: 110
Views: 8725

Retirement Spending Trivia

https://www.morningstar.com/retirement/ ... ent-income

"Research from the Employee Benefits Research Institute [1] demonstrates that inflation-adjusted household spending has historically fallen by 19% from age 65 to 75, 34% from age 65 to 85, and 52% from age 65 to 95"
by Park
05 Jan 2024 23:28
Forum: Taxing Situations
Topic: Investment income in a CCPC
Replies: 1100
Views: 151897

Re: Investment income in a CCPC

https://www.jamiegolombek.com/

If you go to Jamie Golombek's website (above link), there's a 2024 Tax Toolkit that you can download. At the end of the download, there's a section on both active business income and investment income taxation in a CCPC for each province/territory. He once again assumes top personal tax rate. I'm bringing this up, because there's a relative paucity of information on the web about CCPC taxation.
by Park
21 Dec 2023 13:11
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Synthetic ETFs: HXS vs I500 vs SPXS
Replies: 19
Views: 1202

Re: Synthetic ETFs: HXS vs I500 vs SPXS

Thanks for the response Clason. You're basically pointing out that estate tax law is not enforced, when it comes to those without American ties. That doesn't surprise me a lot, as the moral basis of enforcement is debatable. Some might interpret such enforcement as a mild form of economic imperialism. Although as you mention, attitudes towards enforcement could change.
by Park
21 Dec 2023 00:50
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Synthetic ETFs: HXS vs I500 vs SPXS
Replies: 19
Views: 1202

Re: Synthetic ETFs: HXS vs I500 vs SPXS

One exception is in an RRSP, where a US domiciled stock fund would not be exposed to US withholding tax. There are likely other exceptions, that I'm not aware of. I use US-domiciled ETFs for my US allocation inside my RRSP. That makes perfected sense. Zero withholding and zero estate-tax implications. I also keep a US-domiciled ex-North America ETF in my RRSP. It's near impossible to differentiate tax implications between US and Canadian domiciled ones in this case. You would have to analyze hundreds of tax treaties to see if the US or Canada has the best terms. My logic had to do with lower-MER rather than taxes. But if you wanted to invest in an exCanada stock fund in a TFSA, you could purchase an Irish domiciled synthetic ETF. I doubt t...
by Park
20 Dec 2023 11:06
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Synthetic ETFs: HXS vs I500 vs SPXS
Replies: 19
Views: 1202

Re: Synthetic ETFs: HXS vs I500 vs SPXS

One acceptable use of synthetic accumulating ETFs might be in a registered account, e.g. RRSP. If you have foreign stock exposure in a registered account, then there will be foreign withholding tax on dividends, and you will not be able to recover it in a registered account. One exception is in an RRSP, where a US domiciled stock fund would not be exposed to US withholding tax. There are likely other exceptions, that I'm not aware of. But if you wanted to invest in an exCanada stock fund in a TFSA, you could purchase an Irish domiciled synthetic ETF. I doubt that the CRA would have an issue with that. This could be done in a cost effective manner at IBKR. I'm referring to a synthetic accumulating fund. I'd think the tax advantage with a phy...
by Park
19 Dec 2023 16:49
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32150

Inflation and Tax Efficiency

https://www.aqr.com/Insights/Research/Tax-Aware-Investing/Inflation-and-Tax-Efficiency Nice link from AQR (HT to Abnormal Returns) on the relationship of inflation to tax efficiency. Points out that as inflation increases, your aftertax real return tends to decrease. Assume your return keeps up with inflation, so real return stays the same. But you have to pay tax on both the real return and the part of the return that compensates for inflation. Also "“bracket creep” The idea is that tax bracket cutoffs adjust upward with inflation, but at a lag. So, if your income this year moved up one-for-one with inflation, in real terms, you’re no better off than you were last year; but from a tax perspective, that nominal increase gets taxed at y...
by Park
23 Nov 2023 01:28
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32150

Private vs. Public Real Estate

https://www.morningstar.com/retirement/meet-new-landlord-your-target-date-fund "Separately from diversification, interest in direct real estate is also a result of higher potential income. Direct real estate investments can have higher yields than publicly traded REITs. There are a lot of reasons, but at least two are structural: Private strategies have a higher capacity for leverage than public REITs and can invest in lower-quality properties than publicly traded REITs can. Because they’re in less-desirable areas or have less up-to-date infrastructure, these properties’ values generally are not as likely to appreciate over time, but investors get a better yield as a reward... According to NAREIT, public REITs only own about $2.5 trill...
by Park
23 Nov 2023 01:05
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32150

Understanding Your Portfolio

"Know the drivers. Part of what makes a stock-bond portfolio such a powerful combination, in my view, is that stocks and bonds are so different. More to the point, their prices are driven by different factors. Stock prices are driven by changes in companies’ earnings per share (EPS) and by investor sentiment. Investor sentiment is captured by a stock’s price-to-earnings ratio (P/E). To learn more, you might pick a company and look through its profit and loss statements, which are all available online. There, you’ll see how EPS is calculated. Then look at a chart of the company’s historical P/E ratio. Bonds, on the other hand, are driven by changes in market interest rates, time to maturity and an issuer’s creditworthiness. Textbooks ha...
by Park
19 Nov 2023 16:19
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32150

Re: Clippings 2023

Is there a limit to quantitative easing? From Joseph Wang, Central Banking 101 (2020) at page 44: There does not appear to be a limit to the amount of quantitative easing a central bank can do. While the Fed has purchased a few trillion in assets, that is only a fraction of U.S. GDP. The BOJ has purchased assets amounting to over 100% of Japan's GDP, and there does not yet appear to be any sign of financial instability or currency weakness. However, the BOJ's large government bond holdings have effectively destroyed the Japanese bond market. Rather than reflect underlying economic conditions, the Japanese market appears to reflect only the dictates of Japanese policy makers. On some days, no Japanese government bonds are traded at all. Geo...
by Park
16 Nov 2023 01:14
Forum: Financial News, Policy and Economics
Topic: Clippings 2023
Replies: 343
Views: 32150

Your House As A Diversifying Asset

https://awealthofcommonsense.com/2023/1 ... recession/


Image

My guess is that the home prices column doesn't take into account inflation. And housing prices did poorly in the 2007-2009 recession, as housing prices played a critical role in that recession. But overall, house prices haven't done too badly in recessions.
by Park
04 Nov 2023 23:50
Forum: Property: Owning, Renting, Managing, Investing and Mortgaging
Topic: First Home Savings Account (FHSA)
Replies: 116
Views: 12315

Re: First Home Savings Account (FHSA)

I phoned TD Direct Investing. Rep was uncertain, as to when FHSA coming, but guessed March/April 2024. I phoned TD Bank. They said you could set up an FHSA. The rep thought it wouldn't be a problem moving an FHSA from TD Bank to TDDI, as it's relatively easy for a TFSA or RRSP. Here's the catch. My plan was to invest in the e series of TD Bank's index funds, specifically their Canadian index fund. But the rep told me that the e series aren't available in the FHSA - only the higher cost i series is available. I had an appt at TD Bank, and I emailed beforehand to say that the purpose was setting up an FHSA. When I got there, I told the TD person that my plan was to set up an FHSA with them, and when TD Direct Investing sets up FHSAs in 2024,...