Clippings 2017

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ghariton
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Re: Clippings 2017

Post by ghariton » 07 Feb 2017 15:49

David Duff, professor of tax law at UBC, is recommending increasing the capital gains inclusion rate to 80%. In today's Globe & Mail, but I refuse to pay for online access, and so have no link. (I read a free copy lying around in Starbucks.)

Back to last year's conundrum: How much of my capital gains should I crystalize now? And anyway, is it too late for this year?

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Re: Clippings 2017

Post by Koogie » 07 Feb 2017 15:57

If cap gain rates are treated the same way as non eligible divvys...

viewtopic.php?f=32&t=119820&p=590464&hi ... le#p590464
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Re: Clippings 2017

Post by ghariton » 07 Feb 2017 17:01

Koogie wrote:If cap gain rates are treated the same way as non eligible divvys...

viewtopic.php?f=32&t=119820&p=590464&hi ... le#p590464
I dunno. If they give advance notice of an increase in the effective tax rate on capital gains, by the time the change comes into force, there will be precious few uncrystalized capital gains to tax, at least in the short term. Dividends are different, they're much more difficult to speed up.

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Re: Clippings 2017

Post by Shakespeare » 07 Feb 2017 17:08

IIRC CG rate changes are effective midnight on the day of the budget.

Personally, I wouldn't be surprised at 60%.
Last edited by Shakespeare on 07 Feb 2017 17:09, edited 1 time in total.
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Re: Clippings 2017

Post by Koogie » 07 Feb 2017 17:09

I would agree if we were talking in terms of eligible dividends. Non eligible dividends from private corporations however are on a much less fixed schedule. MegaCos. have to stick to their quarterly or whatever dividend schedule. You or I can grant non eligible divvys pretty much willy nilly to shareholders in a CCPC.
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Re: Clippings 2017

Post by ghariton » 07 Feb 2017 17:52

Koogie wrote:I would agree if we were talking in terms of eligible dividends. Non eligible dividends from private corporations however are on a much less fixed schedule. MegaCos. have to stick to their quarterly or whatever dividend schedule. You or I can grant non eligible divvys pretty much willy nilly to shareholders in a CCPC.
You have to have the cash on hand, to pay out a non-eligible dividend. Either that or get a bank loan -- and banks don't look kindly on loans when the purpose is to pay out dividends. Now a few CCPCs may have built up significant retained earnings to fund the owner's retirement. I know I did to cover the years from 60 to 70. But I gather that's pretty exceptional.

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Re: Clippings 2017

Post by Koogie » 07 Feb 2017 18:03

ghariton wrote:Now a few CCPCs may have built up significant retained earnings to fund the owner's retirement. I know I did to cover the years from 60 to 70. But I gather that's pretty exceptional.
George
Sadly, it's beginning to look like it might be exceptional and foolish, if the budget rumors prove true. I will be honest. We have large retained earnings in our CCPC and the last few days I have begun to feel increasingly sick to my stomach at the prospect of very significant tax hikes.

Although I understand it is foolish to worry before the details are revealed, I can't help it. If the very worst comes true, we are looking at an accumulated tax increase that could reach into the mid six figures when the dividends are fully paid out over time.

Of course the budget will likely come down while we are on holiday. My wife is worried it will spoil the vacation for me and is threatening to make me leave my computer and phone at home. :?
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Re: Clippings 2017

Post by AltaRed » 09 Feb 2017 18:46

The following link isn't so much about why money managers of actively managed mutual funds think more of them can beat the index with their funds, as it is about the data points of how miserable their success rate has been over the years. And that doesn't even consider survivorship bias. But then we knew all this already.

After years of faltering, stock pickers see signs of hope
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Re: Clippings 2017

Post by DenisD » 07 Mar 2017 22:03

Do you understand your personalized rate of return? by NormR
There is a big difference between time-weighted and money-weighted returns. Confusing the two can lead to vastly different perceptions of how your portfolio is performing

...

The index had a compound annual growth rate of 4.18% per year from the start of 2000 to the end of 2016. ... Happy Henry ... 5.21% ... Sad Sam ... 3.56%

...

When it comes to money-weighted returns both the sequence of returns and the flow of money into, and out of, the portfolio matter. It’s a big reason why it’s important to be careful when comparing money-weighted returns to time-weighted returns. (Generally speaking, when evaluating funds, or indexes, one should compare their time-weighted returns.)
And it's important when comparing the returns of individual investors as in our yearly returns threads.

Using money-weighted returns makes it harder to create a benchmark. Your custom benchmark has to mirror your asset allocation AND your money flow. Makes me glad I use time-weighted returns. :wink:

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Re: Clippings 2017

Post by ghariton » 08 Mar 2017 00:36

DenisD wrote:Using money-weighted returns makes it harder to create a benchmark. Your custom benchmark has to mirror your asset allocation AND your money flow. Makes me glad I use time-weighted returns. :wink:
Yes, but when it comes to how much money I have available to spend, it's money-weighted returns that matter, not time-weighted returns.

For me, rates of return aren't important anyway. What's important is how much money I have and how much I can afford to spend or give away this year. Rate of return would be important if someone else were managing my money for me and I had an agreement, implicit or explicit, to compensate him on how I do against an external benchmark. But when the money manager is me, the issue loses its importance.

After all, past performance is no guarantee -- nor even an indicator -- of future performance, without a lot of context. True for regulated funds, equally true for my portfolio.

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Re: Clippings 2017

Post by DenisD » 08 Mar 2017 01:24

If I was running a Couch Potato portfolio, I'd be less concerned about returns. Since I'm not, I'm interested in how I'm doing compared to my benchmark.

If I want to know how much money I have available to spend, I don't look at either type of return. I just look at the total dollar value of my portfolio.

If I want to know how much I can spend per year for the next 20 or 30 years, I have to make some assumptions. And they're not based much on past returns. But rather, low end estimates of future returns. 4% nominal for equities? 2% for bonds? 1.5% for cash? Who knows.

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Re: Clippings 2017

Post by DenisD » 19 Mar 2017 23:21


longinvest
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Re: Clippings 2017

Post by longinvest » 24 Mar 2017 07:54

In a video about Asset allocation for retirees on Vanguard Canada's web site:
https://www.vanguardcanada.ca/individua ... -video.htm

(transcript)
Bill McNabb: [...] If you really can't withstand a fair amount of volatility in your portfolio, which typically as you're getting closer to retirement may be the case, then you need to have a pretty healthy allocation of fixed income, because fixed income is the ballast, if you will, to the equity markets.
[...]
Bill McNabb: The other thing that comes up in this discussion, and I'm sure we've gotten some questions on it as we're talking, is, "Hey, that's great, but in a rising-rate environment, won't I see the value of my bonds go down?"

Rebecca Katz: Right.

Bill McNabb: And the answer to that is yes, you will, if you're looking at the value of your bond fund. If rates go up tomorrow by 50 basis points [0.5%], you're going to see a decline in the value of that portfolio.

But what you really need to think about is as long as your time horizon is longer than the duration of your bond portfolio, you actually want rates to go up because you're going to be reinvesting at higher and higher yields. And, actually, when you do the math on this, you're better off. And this is completely contrary to the way most people look at bond funds.
It's a reminder that the typical role of bonds it to dampen stock volatility, in a portfolio, and that rising rates are actually good for bonds, as long as the time horizon is longer than the duration.
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Re: Clippings 2017

Post by ghariton » 24 Mar 2017 11:27

longinvest wrote:
24 Mar 2017 07:54
It's a reminder that the typical role of bonds it to dampen stock volatility, in a portfolio, and that rising rates are actually good for bonds, as long as the time horizon is longer than the duration.
I wholeheartedly agree with the first half of that. But I think that the second part has to be qualified. For example, if I know with pretty high confidence that interest rates are going up in the next six months to a year, by at least 1 per cent, then I might want to be in cash until the increases happen. Then I would be able to buy more bonds (or whatever) for the same amount of money. Duration risk is still duration risk, no matter what my time horizon, once I have properly accounted for my opportunity cost.

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Re: Clippings 2017

Post by longinvest » 24 Mar 2017 14:57

ghariton wrote:
24 Mar 2017 11:27
For example, if I know with pretty high confidence that interest rates are going up in the next six months to a year, by at least 1 per cent, then I might want to be in cash until the increases happen.
One would better be sure that the increase will be across the yield curve of one's bond investment. Otherwise, one might be surprised by what happens.

In the U.S., when the recent Fed increase was made, BND (Vanguard's total bond market ETF) actually increased in value. I think that some people said that it's because rates on the long end of the curve actually went down due to lower expectations about future increases in Fed rates. Go figure.

Anyway, good luck to anybody who claims to be able to time the bond market by predicting interest rates. :wink:
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Re: Clippings 2017

Post by AltaRed » 24 Mar 2017 15:25

longinvest wrote:
24 Mar 2017 14:57
In the U.S., when the recent Fed increase was made, BND (Vanguard's total bond market ETF) actually increased in value. I think that some people said that it's because rates on the long end of the curve actually went down due to lower expectations about future increases in Fed rates. Go figure.
Or that nipping possible inflation now reduces the risk of higher inflation later....and hence the long end of the curve gets flatter. Wouldn't be the first time for the latter to happen.
Anyway, good luck to anybody who claims to be able to time the bond market by predicting interest rates. :wink:
Agreed. That is why even the Bill Gross's and Hank Cunningham's of the world work very hard trying to bet the right way with limited success.
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Re: Clippings 2017

Post by gaspr » 26 Mar 2017 16:24

An interesting post regarding condos as investments by Hilliard Macbeth

http://dir.richardsongmp.com/web/MacBet ... -to-condos

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Re: Clippings 2017

Post by DenisD » 27 Mar 2017 13:21

Looks like TMXMoney.com is now giving free real time quotes for Canadian stocks. But they're not giving the bid/ask any more.

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4% Inflation Indexed Yearly Withdrawals in Retirement?

Post by Park » 28 Mar 2017 13:46

https://papers.ssrn.com/sol3/papers.cfm ... id=2201323

"The safety of a 4% initial withdrawal strategy depends on asset return assumptions. Using historical averages to guide simulations for failure rates for retirees spending an inflation-adjusted 4% of retirement date assets over 30 years results in an estimated failure rate of about 6%. This modest projected failure rate rises sharply if real returns decline. As of January 2013, intermediate-term real interest rates are about 4% less than their historical average. Calibrating bond returns to the January 2013 real yields offered on 5-year TIPS, while maintaining the historical equity premium, causes the projected failure rate for retirement account withdrawals to jump to 57%."

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Re: Clippings 2017

Post by Park » 30 Mar 2017 19:27

http://www.azquotes.com/quote/1260161

Cliff Asness:

"Market-cap based indexing will never be driven from its deserved perch as core and deserved king of the investment world. It is what we should all own in theory and it has delivered low-cost equity returns to a great mass of investors... the now and forever king-of-the-hill."

From someone whose net worth of $3 billion has come from active management, that quote should be taken seriously.

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Re: Clippings 2017

Post by Koogie » 31 Mar 2017 13:13

A step in the right direction. Pity it isn't national but we know the provinces rule their own financial fiefdoms..

Ontario targets unethical financial advisers with new industry measures
http://www.theglobeandmail.com/repor...ticle34516452/

""The Ontario government announced new measures on Friday aimed at protecting investors from unethical advisers and enhancing oversight of the financial services industry.""

""Among the policies under consideration are a registry of financial planners and advisers, the limiting of the use of professional titles that might lead to consumer confusion, and a statutory duty to act in the best interests of consumers.
Mr. Sousa also signalled his support for new standards to regulate qualifications and titles used by financial advisers, which can be confusing for many investors.""
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Re: Clippings 2017

Post by gaspr » 01 Apr 2017 11:11

Canadian Couch Potato weighs in on ETF's ruining the markets!!

http://canadiancouchpotato.com/2017/04/ ... -in-smoke/

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Re: Clippings 2017

Post by adrian2 » 01 Apr 2017 11:52

gaspr wrote:
01 Apr 2017 11:11
Canadian Couch Potato weighs in on ETF's ruining the markets!!

http://canadiancouchpotato.com/2017/04/ ... -in-smoke/
Hint: check the date! :rofl:
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Re: Clippings 2017

Post by gaspr » 01 Apr 2017 13:18

adrian2 wrote:
01 Apr 2017 11:52
gaspr wrote:
01 Apr 2017 11:11
Canadian Couch Potato weighs in on ETF's ruining the markets!!

http://canadiancouchpotato.com/2017/04/ ... -in-smoke/
Hint: check the date! :rofl:
Aw, now you ruined it. :( It's an annual tradition over at CCP.

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Eligibility For Foreign Social Security If Canadian

Post by Park » 03 Apr 2017 16:12

I worked in the USA for a period of time. I thought I wasn't eligible for any US Social Security benefits, as I didn't meet the 10 year work requirement.

But today I found out that I likely have a 1.5 year work requirement to be eligible for US Social Security, based on the Totalization Agreement between the USA and Canada. This is because credit is given for CPP/QPP contributions.

https://www.ssa.gov/international/Agree ... anada.html

So it looks like I'm eligible for US retirement, disability and survivor benefits.

I'm writing this post, because there will be many Canadians who have worked outside Canada. And a cursory eligibility examination may lead to a conclusion that they aren't eligible for a foreign pension.

However, Canada has agreements with more than 50 countries regarding social security, and that cursory examination might be misleading.

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