Jul 282019
 



SuperDuperBankrupcy

I’ve noticed that most new investors, myself included, will check their investments every day, sometimes multiple times per day. If you only have index funds you’re setting yourself up for trouble. Although it applies to nearly any stock. I can tell you’re addicted, and it’s going to backfire if you’re not careful. Mainly because of loss aversion:

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May 132019
 



Step 1 – Open Account

Ready to buy ETFs? Great! First you’ll need a brokerage account. I recommend Questrade. Any brokerage will do but a low cost online brokerage is going to be the easiest and cheapest for most people. Go ahead and open that account now and come back when you’re done.

Step 2 – Fund Account

Your account is open now? Good. Time to deposit some money, or transfer your account from another financial institution. Did you know that you can have multiple TFSAs and RRSPs? As long as you don’t go over your total contribution limit between all your accounts you’re good. If you’re transferring your registered account (i.e. TFSA, RRSP, RESP etc.) make sure you first contact your NEW brokerage(like Questrade). They will send a form to your old brokerage to transfer your funds.

DO NOT withdraw money from your RRSP to your bank account and redeposit it. If you do you’ll pay taxes and early withdrawal fees. If you withdraw money from your TFSA you’ll have to wait till next year to get that contribution room back (i.e. maxed out TFSA, withdraw $50k on January 2nd 2019, you can’t redeposit that till January 1st 2020 and it just sits). Not as bad as the RRSP fees and taxes but still a problem for you money bags with your maxed out TFSAs.

Does your account have money yet? No? Don’t worry it takes a few days for a deposit and a few weeks for a transfer. Come back when you’re ready.

Step 3 – Invest

Ok your account is finally funded! You’re ready to buy! But wow this interface is a lot more confusing than you thought….

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Oct 152016
 

 

Be sure to read Part 1 before continuing

What to hold in a frozen investment account:

Remember that in your frozen account there is no rebalancing, no buying, no selling, no withdraw. You can take no action until you return to Canada and unfreeze. Good thing you are read this before you leave Canada and it’s not too late! Your ideal frozen funds should have these characteristics:

  • No dividends
  • No re-balancing required
  • Steady, reliable growth
  • Low fees
  • Allocations: 15% Canadian equity, 40% US equity,  25% International equity, and 20% bonds

If you are under thirty I’d normally suggest 10% in bonds, but since you can’t re-balance it’s best to give your slower growing bonds a head start. In a few years your entire portfolio will be higher(probably), but the bonds will have grown at a slower pace, reducing their share of the total. Ideally that 20% will be closer to 10% or 15% where it belongs. (and yes that will keep shrinking, but there’s really nothing we can do about it if your account is frozen for ten years or longer).

I’ve come up with two options: One single balanced fund, or a set of three or four stable ETFs. Amix of both will also work well:

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Oct 042015
 

Sell your losing positions

Thanks for reading!

Oh I should elaborate a little.

Mistake #1 – Assuming market trends continue indefinitely

Last year I bought into ZUH (BMO Equal Weight U.S. Health Care). I was attracted by the massive gains over the past 3 years…surely they would continue indefinitely? right? right??? (Mistake #1 – assuming the current trend will last forever) But even if the gains relaxed, the aging baby boomer population will surely continue to savage devour healthcare services? Considering these points was enough for me to scoop up some shares.

As you may or may not know the health care index recently got taken out back and savagely tenderized. No doubt helped in part by Mr “lets raise the price of this life saving drug by 5000%“. Naturally my first thought was “If only I had sold at the top I would have made sweet sweet bank!”. Alas if only I could predict the future! Marty Mcfly arrives from 1984 in a couple weeks, maybe he can help.

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Sep 202015
 

So you own a few ETFs and you’re ready to optimize your accounts. Especially you rich chumps and chumpettes with taxable accounts! Well swap ETFs are a crazy scheme with the primary benefit being tax savings. I mean, what’s with these governments! How dare they use our hard earned money to pay for roads, schools, and fundamental basic services! Even the so called “Tax Free Savings Account” is subject to some foreign withholding taxes.

Never fear, your crazy uncle has a scheme for those taxes!

 


Get to the point! What’s a swap ETF?

Well let me break it down for you wizards. A swap ETF essentially turns dividends or interest income into capital gains. Why would you want that? Because foreign dividends and interest are taxed at your full income tax rate, meanwhile capital gains are only half that. If you make over $138,586 your federal tax rates will be like so: Continue reading »