May 242018
 

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So you are ready to start investing in Exchange Traded Funds (ETFs). You understand how mutual funds are costing you tens of thousands of dollars and it’s time to take control of your own future. Or maybe you are a crazy gambler and want to try your hand in the stock market. Either way it’s time to actually open an account. But where should you start?

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Feb 082018
 

So you’ve decided to move back to Canada eh? Maybe you didn’t like your new country, or maybe Canada lured you back through family, friends, access to nature, relative political stability, employment, universal healthcare, politeness, excessive skiing…. should I keep going?….. beavers, mild summers, few natural disasters, legal cannabis (pending July 2018), funny accents (or lack thereof), hockey, poutine, flannel shirts, immigrants, subsidized education, and of course the majestic moose.

Regardless of your motives for returning you’ll need to figure out how to re-establish your financial life to maple country. It’s not going to be simple, but it can be relatively cheap.

The information here will also be relevant to new immigrants. If you are a new immigrant or refugee there are additional government services to help with your transition that us former residents don’t get.

PICK A RE-ENTRY DATE

It’s very important that you pick a firm date to regain Canadian residency. Both countries will be after your precious taxable income and this date determines who gets first dibs. Typically it’s the day you physically arrive in Canada. The CRA will use this date to determine when to start taxing you. Here’s some things to do before and after that date:

ORGANIZE YOUR INTERNATIONAL FINANCES BEFORE YOU RETURN

You’ll need to decide what to do with your foreign financial accounts. This decision will mostly depend on your plans for the future and how the other country deals with non-residents.

If you’ve spent a significant amount of time abroad you’ve probably established some roots in your new country. Maybe you found a beautiful spouse who will want to visit their family back home every year. If you expect to be making repeat visits you’ll probably want to keep a bank account open for spending money. First check to see if the foreign bank allows non-residents to hold accounts, and check what you need to do to avoid monthly fees. The money will be just sitting there for months at a time and you wouldn’t want it to get eaten by fees.

Depending on your country you might want to keep some of the currency anyways. USD have always been valuable and should continue to be in the future. The downside is that the money will be just sitting there losing value to inflation. I’d advise against holding your overseas money in a savings account that earns interest. Chances are you’ll be earning 0.1% which might be a few dollars per year and you’ll have to deal with more complex foreign taxes.

REASONS TO KEEP A FOREIGN BANK ACCOUNT

  • Frequent visits to said country
  • Currency diversification
  • Easy purchases in foreign currency
  • Bank diversification

REASONS TO NOT KEEP A FOREIGN BANK ACCOUNT

  • No plans to return to said country
  • Avoiding losing money to inflation
  • Avoiding losing money to bank fees
  • Avoiding foreign taxes on bank interest
  • Simplicity of financial account consolidation

What’s that? you got fired and your visa is void and you’re returning to Canada tonight? Bummer. Most reasonable banks should let you transfer your money and close your account remotely. Probably best not to mention that you got deported till after your money is safely back in Canada.

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Sep 272015
 

A common fear for beginners is “what if I lose all my money?” Well friends, if you lose everything it’s entirely your own fault for betting it all on a single stock! With even a little diversification you’ll never lose ALL your money. You are more likely to lose “a lot” of money. And don’t forget that you haven’t lost a dime until you actually SELL. You can live in denial the rest of your life!

Here are a few creative ways to lose “a lot” of money:

 

1. Short Selling

Short selling is borrowing shares, selling them, and buying more to cover what you borrowed at a future date. It’s used to make money on a falling stock price. Unfortunately stocks tend to go up 70% of the time. If you buy stock, the worst that happens is that the company goes bankrupt and you lose everything. But what happens if you short the stock and the company does exceedingly well? Lets check a quick example:

  1. Short 100 shares at $10 – You put $1000 in your pocket
  2. Company discovers elixir of eternal life, stock price jumps to $100,000/share
  3. To cover those 100 borrowed shares, you now owe $10,000,000 (100 x 100,000)
  4. Total loss -$99,999,000

As you can see the loss is theoretically infinite, instead of only losing your initial investment in the case of stocks. In the case above a good scenario would be the stock dropping to $5 in step 3. You’d get to keep $500.

How to avoid: Don’t short sell. Remember that stocks go up 70% of the time.

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