Stingy Investor

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BRIAN5000
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Re: Stingy Investor

Post by BRIAN5000 »

NormR wrote:
BRIAN5000 wrote:
Any feedback
On your minimizing regret slide you have seven different "choices" of investments over 10 years. I would like to see a total return at the end of the ten years for each of the "choices". How much more return over the balanced fund would each get compared to the volatility experienced.
It's counter to the point to the slide. The idea being to compare the experience of two investors. The first holds the balanced fund. The second holds the individual components of the balanced fund.

A similar point could be made by comparing an investor who holds fund x to one who holds all of the stocks fund x holds.
aHH I thought you were trying to show by holding the balanced fund you beat all the other individual components.
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Re: Stingy Investor

Post by OnlyMyOpinion »

Norm,
On slide 9 you refer to Mawer Canadian Balanced and Mawer Canadian TE Balanced. I've not seen the "Canadian" used in them before. I assume these are the funds Mawer refers to as Mawer Balanced (MAW104) and Mawer TE Balanced (MAW105) ?
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Re: Stingy Investor

Post by NormR »

OnlyMyOpinion wrote:Norm,
On slide 9 you refer to Mawer Canadian Balanced and Mawer Canadian TE Balanced. I've not seen the "Canadian" used in them before. I assume these are the funds Mawer refers to as Mawer Balanced (MAW104) and Mawer TE Balanced (MAW105) ?
Good catch, it's a hold over from many years ago.
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Re: Stingy Investor

Post by Taggart »

Almost missed this article from Andrew Hallam he posted April 6th.

Tips From The Best Stock Investor That You’ve Likely Never Heard Of
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Re: Stingy Investor

Post by Taggart »

A few days ago Norm had an article in Moneysense magazine.

Making long-term return forecasts

So, if you read the article he's predicting a nominal return for equities at 6%.

If we take the current inflation rate at 2% then the predicted real return on equities is now down to 4%.

Then again, perhaps I'm a bit enthusiastic but if I look at the long term returns on dividend stocks I may be able to squeeze in an extra positive 1% since the dividends are growing faster than inflation, so that would bring the long term real return for equities back up to 5%.

What's not shown is costs to run the portfolio. I'm referring to a taxable portfolio that contains all Canadian dividend equities. Since commissions are $10 per trade and I'm making very few trades per year, my estimate is anywhere between .5 to 1% per year for costs. So at worst, I'm now down to 4% real return.

An American author, Allan Roth, assumes their U.S. tax would take the portfolio return down by 2%. I don't know how you would figure the real cost of tax on a portfolio of Canadian dividend stocks? I know that in some Canadian provinces you'd have no taxes if your dividend income was around $30,000 with all your income in Canadian dividends. I don't know of too many investors who can pull that one off, so the vast majority of dividend investors here in Canada are going to have to pay some tax on their yearly dividend income in a taxable account. I'm not even including any capital gains tax in the mix.

So anyone good in math, can come up with an estimate on what the yearly real tax bill would be on those Canadian dividends? 1%, 2%, 3%? I haven't a clue. Gulp, 3% would bring the real return on stocks down to 1% in a taxable portfolio and I may even be wrong on the negative side in my rough calculations above.
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Re: Stingy Investor

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Taggart wrote: 01 Jun 2017 04:40 A few days ago Norm had an article in Moneysense magazine.

Making long-term return forecasts

So, if you read the article he's predicting a nominal return for equities at 6%.

If we take the current inflation rate at 2% then the predicted real return on equities is now down to 4%.

Then again, perhaps I'm a bit enthusiastic but if I look at the long term returns on dividend stocks I may be able to squeeze in an extra positive 1% since the dividends are growing faster than inflation, so that would bring the long term real return for equities back up to 5%.

What's not shown is costs to run the portfolio. I'm referring to a taxable portfolio that contains all Canadian dividend equities. Since commissions are $10 per trade and I'm making very few trades per year, my estimate is anywhere between .5 to 1% per year for costs. So at worst, I'm now down to 4% real return.

An American author, Allan Roth, assumes their U.S. tax would take the portfolio return down by 2%. I don't know how you would figure the real cost of tax on a portfolio of Canadian dividend stocks? I know that in some Canadian provinces you'd have no taxes if your dividend income was around $30,000 with all your income in Canadian dividends. I don't know of too many investors who can pull that one off, so the vast majority of dividend investors here in Canada are going to have to pay some tax on their yearly dividend income in a taxable account. I'm not even including any capital gains tax in the mix.

So anyone good in math, can come up with an estimate on what the yearly real tax bill would be on those Canadian dividends? 1%, 2%, 3%? I haven't a clue. Gulp, 3% would bring the real return on stocks down to 1% in a taxable portfolio and I may even be wrong on the negative side in my rough calculations above.
Depends on the amount of dividends and province of residence. Also income splitting or not. We paid slightly less than 2% this year (2016). We live in a high tax province and income split.

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Re: Stingy Investor

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2 yen wrote: 01 Jun 2017 07:18 Depends on the amount of dividends and province of residence. Also income splitting or not. We paid slightly less than 2% this year (2016).
2% of the portfolio value, or 2% of the dividend amount? I'm guessing the latter, which makes it around a handful of basis points of the portfolio value.
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Re: Stingy Investor

Post by 2 yen »

adrian2 wrote: 01 Jun 2017 11:33
2 yen wrote: 01 Jun 2017 07:18 Depends on the amount of dividends and province of residence. Also income splitting or not. We paid slightly less than 2% this year (2016).
2% of the portfolio value, or 2% of the dividend amount? I'm guessing the latter, which makes it around a handful of basis points of the portfolio value.
2% of dividends amount.

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Re: Stingy Investor

Post by NormR »

Taggart wrote: 01 Jun 2017 04:40A few days ago Norm had an article in Moneysense magazine.

Making long-term return forecasts

So, if you read the article he's predicting a nominal return for equities at 6%.
It's just a guess - and it may well be an optimistic one given the no change in P/E assumption. (Particularly when it comes to U.S. stocks.) It follows Bogle's approach. So, everyone can fiddle with it to form their own guess. i.e. change growth, P/E change levels, inflation expectations, etc.

I suspect that mid-to-low single-digit nominal returns on equities is about right. But I'm also usually a little pessimistic about such things.

Add in fees/taxes/frictions to arrive at a less happy result.
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Re: Stingy Investor

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Taggart wrote: 01 Jun 2017 04:40 So anyone good in math, can come up with an estimate on what the yearly real tax bill would be on those Canadian dividends? 1%, 2%, 3%? I haven't a clue.
Why do you guys fumble around so much for answers after so many years of doing this?

Just go to a reliable tax calculator and enter your amount:

http://www.taxtips.ca/calculators/canad ... ulator.htm
Search for cell labeled: "Cdn dividends eligible for enhanced div tax credit (T5 box 24) ".
You enter the actual amount of dividends not the grossed up amount.

As an example, $30,000 will yield a tax bill of $450 if you are in Ontario which is 1.5% (450/30000).
However, this is with no other income and no splitting so enter your specific situation into the calculator.
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Re: Stingy Investor

Post by biggreydog »

Taxtips (complete and fantastic) or Simpletax (quick and dirty) show the same thing - very little to no tax for these levels and more, up to the inflection points that vary by jurisdiction and other income inputs. I agree with the question as to why this is a mystery to anyone on this forum.

Your "tax bill" is inconsequential on dividend income of that nature. It effectively has no impact on your net yearly cash flow to pay for your desired lifestyle. That is a major benefit (the whole point?) of the strategy.
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Re: Stingy Investor

Post by Shakespeare »

The ongoing dividend tax friction may be minor but the end tax bill on CGs is not and, depending upon hold time can have a significant effect.

Let's say a $100 non-reg investment doubles. That's 12 years at 6% (Rule of 72). At that point you croak and pay tax.

$200-$100=$100 CG. 50% inclusion is $50. 35% tax is $17.50 - 17.5% of the original investment.
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Re: Stingy Investor

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Shakespeare wrote: 01 Jun 2017 12:40 The ongoing dividend tax friction may be minor but the end tax bill on CGs is not and, depending upon hold time can have a significant effect.

Let's say a $100 non-reg investment doubles. That's 12 years at 6% (Rule of 72). At that point you croak and pay tax.

$200-$100=$100 CG. 50% inclusion is $50. 35% tax is $17.50 - 17.5% of the original investment.
I'm thinking I might liquidate my non-reg holdings after retiring at 60 but prior to taking CPP/pensions over 5 years so as to minimize the tax hit on the capital gains and boosting my CPP/pension payouts. I might take some RIF withdrawals to supplement the equity sales. So hopefully the effective tax rate is around 15-20% or 7.5-10% of the original investment. Still ouch.
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Re: Stingy Investor

Post by DenisD »

The latest Stingy News Weekly has links to the top Canadian and US stocks for 2018 according to NormR's criteria. There's a recap of the performance of the 2017 All-Stars too.
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Re: Stingy Investor

Post by DenisD »

The latest Stingy News Weekly has links to the top Canadian and US stocks for 2019 according to NormR's criteria. The lists are now hosted by Canadian Business. And they're Heroes, not All-Stars. :wink:
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Re: Stingy Investor

Post by BRIAN5000 »

Norm on holiday? No post since 06/06/2021 The Stingy News Weekly:
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Re: Stingy Investor

Post by peter »

BRIAN5000 wrote: 19 Jun 2021 21:58 Norm on holiday? No post since 06/06/2021 The Stingy News Weekly:
There was a News Weekly email on the 13th.
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Re: Stingy Investor

Post by NormR »

From last week ... http://www.ndir.com/SI/SNW/061321.shtml

A new one should come out tomorrow. Also working on a monthly letter for subs.

Add: Looks like I didn't update my "latest letter" landing page last week. My apologies.
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Re: Stingy Investor

Post by BRIAN5000 »

Link to Sept 25 New Stingy Headlines not showing up on this page.

http://www.ndir.com/SI/SNW/092522.shtml
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Re: Stingy Investor

Post by NormR »

BRIAN5000 wrote: 28 Sep 2022 01:28 Link to Sept 25 SNW not showing up.
Thanks, I think I've corrected things.
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Re: Stingy Investor

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No new post The Stingy News Weekly :(
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Re: Stingy Investor

Post by BRIAN5000 »

Also since after the Aug 27 post their has only been two screens on the Dow 30 instead of three is this correct? Has P/B been dropped.
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Re: Stingy Investor

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BRIAN5000 wrote: 13 Nov 2023 02:09 Also since after the Aug 27 post their has only been two screens on the Dow 30 instead of three is this correct? Has P/B been dropped.
Yes, P/B was dropped. It doesn't backtest that well and, theoretically, raw P/B shouldn't be great when dealing with old companies.
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