Author: Mike Holman

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Announcements

Plasma TV and the Five Hottest Women on Business TV

The Leafs in happier times

I bought a plasma tv recently.  This may not seem like a big deal for most of you, but I have been thinking about buying a flat screen tv for over a decade.  In 2000, I couldn’t decide what kind of flat screen to buy and I ended up buying a 27″ tube tv instead – it was awesome.  The tv it replaced was older than I was, had no remote and the channel changer was broken, so I had to use pliers to change the channels.  I finally replaced it when I couldn’t see the score during football games.

The 27″ tv was still ok, but the colour and screen were fading.  When I saw a 42″ plasma for sale at Best Buy for $550 a month ago, I knew my time had come.  $650 with tax!  It was so cheap, it would have been financially irresponsible not to buy this tv.

The moral of this story is that sometimes it’s good to wait.  🙂

Funniest post

The funniest post of the week was written by Financial Uproar – a very entertaining blogger who has never heard the term “politically correct”.  His article on the five hottest women on business tv is just plain funny.  Read it even if you don’t want to look at the pictures.

On with the links

Oblivious Investor says that index funds are mediocre.  Luckily “mediocre” is the new black.

The Globe & Mail had some good investing articles this week:

Adam Goodman from Moneyville.ca explains how to save $7,000 without pain.

Million Dollar Journey had a guest post how much does a year of happiness cost? Good post and great comments.

Free From Broke writes about his daughter’s allowance.

Canadian Capitalist warns that new financial products can have a short shelf life. He’s referring to high interest saving accounts.

Rob Carrick has some great advice for DIY investors. Get that cash invested!

Michael James tells us how to negotiate a line of credit. I think the only way to get a better rate is to move to another bank.

Larry MacDonald has a list of books that would make a good Christmas gift. Unfortunately I think he left my book off the list. 🙂

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Announcements

Nicest And Most Concise The RESP Book Reviews Yet – Krystal & Preet

I want to tell you a little secret.  I really like it when people say nice things about me.  🙂  That’s one of the reasons I’ve enjoyed reading all the various RESP Book reviews, because they have all been pretty positive.

But this RESP Book review by Krystal Yee, who writes at Gimme Back My Five Bucks as well as Moneyville.ca was super-nice.

Not only is Mike Holman an amazing writer, but he was one of the bloggers I really looked up to when I first started my personal finance journey. And now, years later, I couldn’t be more excited to review his new book, The Complete Guide to Registered Education Savings Plans for Canadians.

Mike makes learning about RESPs so easy. Unlike a lot of other financial guides which are dry and hard to understand, he writes in a clear, straight forward manner. This book is a fantastic guide for anyone interested in learning more about RESPs.

Thanks so much, Krystal.  Krystal is also holding a contest for a free book, so head on over and enter.

Preet Banerjee from Where Does All My Money Go and the Globe & Mail also reviewed my RESP book.  I have to say that Preet’s review is the one review most like the book itself.  Short, to the point, and tells you all you need to know.  🙂

Here’s what you need to know: This is a very straight forward book on Registered Education Savings Plans and the information is solid. If you have kids and are interested in helping them out with funding their higher education: get the book. Don’t ask questions, just plunk down the $15.99 to Amazon.ca and get the book. In my opinion, you won’t regret it.

Thanks Preet!

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Investing

CIBC Investor’s Edge Discount Brokerage Review

CIBC Investor’s Edge is owned by the Canadian Imperial Bank of Commerce (CIBC), which is not too hard to figure out from the name.

Overall impressions

Investor’s Edge is pretty typical for the big bank-owned discount brokerage in that the trading fees are sky high unless you are an active trader.  They recently made a big change to their fee structure so that you can qualify for cheaper trades if you have $50,000 in household assets with CIBC.  These assets include mortgages and bank accounts.  I’m assuming they use the positive value of the mortgage.  🙂

Please note that the cheaper trades don’t come into effect until January 1, 2011.

If you already bank with CIBC and qualify for the cheaper trades or if you trade 50 or more times per year, then it’s a pretty reasonable option.

Online trading commissions

  • $28.95 is the default commission.
  • $6.95 – If you have at least $100,000 in household assets.  This includes any CIBC products including bank accounts, mortgages.
  • $9.95 – If you have at least $50,000 in household assets.  This includes any CIBC products including bank accounts, mortgages.

If you would like to compare all the different Canadian discount brokerages, check out the Canadian discount brokerage comparison.

Phone trading commissions

  • $50 minimum for a phone trade placed with a representative.
  • The basic cost is $35 plus a fee per share.  The exact pricing is here.

Annual account fees

  • RRSP, RRIF, LIRA, LIF – $100 unless balance of all registered accounts is greater than $25,000
  • RESP – $50 unless balance is more than $15,000
  • TFSA – $50  This fee is starting Sept of 2011 – waived if you have a registered account as well
  • FundPlus account – $25  This account can only contain GICs, mutual funds and fixed income
  • Non-registered – $60 unless balance is greater than $10,000 or you have a registered  account

Foreign exchange fees

  • Spot rate + 1.4%

If you are exchanging a larger amount ($10k or more) or have a lot of assets, then phone and try to negotiate a better exchange fee.

Mutual funds

  • Full range of mutual funds available.

Free real-time quotes

  • No

Minimum to open account

  • None

Some opinions on CIBC Investor’s Edge

I asked a few people over at the Canadian Money Forum what their opinion of Investor’s Edge was:

Scomac:

I’ve been a CIBCIE client for many years, in fact we do all of our banking with CIBC. This has a lot to do with the strength of relationships we have with the individuals at the local level. That said, I don’t feel as though we are missing out on anything.

I will preface my remarks by stating that I am typically a buy and hold type of investor. Our investments consist of common and preferred shares, a few trusts/REITs, investment grade bond ladders and a high interest savings account. My taxable investment account is marginable.

Trading platform

1) The trading platform is fine for my needs. Execution is quick and I’m not getting whip sawed on the spread. The interface between the web broker and on-line banking is seamless which really simplifies moving moneys around. Margin interest rates are pretty typical at prime +2.5-3. The only weak spot from my perspective is with the bond desk. The inventory isn’t as broad as some of their competitors and spreads can be plenty wide at times. Never-the-less, with patience, I’ve always managed to find something that would work for our bond ladders. If I was predominantly invested in fixed income securities, then I might be more likely to switch to a provider with a broader inventory such as BMOIL.

Customer Service

2) My experience with customer service has been generally excellent. Sometimes, you may not get the most knowledgeable individual on the other end, but all issues have been solved readily. No problems executing Norbert’s Gambit on several occasions or connecting with a knowledgeable bond trade to source corporate strip bonds.

Research reports

3) I do most of my own research, so I don’t rely on the brokerage’s research reports. That said, I have full access to CIBC World Markets, Reuters and S&P research. The equity research from CIBCWM is pretty typical of sell-side analysts. I find the economic reports more useful. For US stocks, the S&P reports are particularly well done and provide a very good overview without a lot of bias. For those who like to read, there is a lot of choice.

In terms of tools, I’m not really keen on the functionality of their proprietary stock selector tool. They have a few pre-set screens that may offer something to others. The universe of stocks I follow is generally fairly small, so these features don’t have a lot of value to me.

Belguy:

No problems but I don’t trade much or ask much of them. I just invest for the long run mainly in broad-based ETF’s and trade periodically for rebalancing purposes.

Mario 1

Great pricing , if you’re a trader.
Terrible platform/interface.
Decent customer service and research tools.

Categories
RESP

RESP Warfare – Reader Question

Recently Michael James wrote about the possibility of using an RESP account as a financial weapon.

Michael suggested that a fiendish person could open up an RESP account for his enemies’ kids, maximize the annual contributions and prevent the parents from receiving any RESP grants in their own RESP accounts.

I didn’t think this would be a likely scenario, since it’s a rather expensive way to “get someone”.  Plus, the evil neighbour would need the child’s SIN in order to set up the RESP account.

But then, last week, Rob left the following comment:

I have provided my parents with my 3 children sin# and birth certificate to open up resp for them.

They have opened up three resp for them.

My concern is that we no longer get along and i dont be believe they will give the cesg money to the kids when they eventually start college.

In the meantime i have opened up a family resp plan for them. I need the cesg space to maximize my contributions every year.

I am worried that my parents are using up all the cesg grant room with their contributions that my kids may never see. I have no idea how much they are contributing at this time if anything. What can i do about this?

Unfortunately, there isn’t anything Rob can do to prevent the grandparents from continuing to contribute to the RESP accounts they have set up.

He also asks if it is possible to find out if anyone else is contributing to an RESP which has your child as a beneficiary.  Yes, there is.  You can call the HRSDC Resp phone line at 1-888-276-3624 and ask for all the grant and contribution information regarding your child.  This should allow you to figure out if other people are contributing for your child.

Another idea for Rob is to make his contributions at the beginning of the year.  If a child has $2,500 of grant-eligible contribution room in a year, then the first $2,500 of contributions will get the grants.  Any further contributions that year will not get any grants.  Assuming the grandparents aren’t following the same strategy, Rob’s contributions should get the grants.

Conclusion

Rob, suck it up and call your parents.  Patch things up so that you can get this RESP problem fixed and so your grandkids can spend time with their grandparents.  They won’t be around forever.

Categories
Announcements

Canadian Real Estate Blog Carnaval #3

I’m proud to be hosting only the third ever Canadian real estate blog carnival.  This carnival was started by Rachelle from Landlord Rescue and contains posts relating to real estate.

  • Investing Thesis presents a guide to investing in REITs (Real Estate Investment Trusts) with Dennis Mitchell of the Sentry REIT fund.  Some interesting reasons for investing in REITs, even if you own your own house.
  • Landlord Rescue has some great suggestions to lower your property value.  Just because your building has some problems, doesn’t mean you have to tell the world about it.
  • Canadian Personal Finance Blog reports that the value of all the residential mortgages in Canada is now over $1 Trillion!  I think the key stat is that mortgage arrears rate is only 0.42% which is lower than it was in the 1990’s.
  • Money Smarts Blog commented on the recent CREA agreement to allow MLS listing for house sellers without a commissioned agent.
  • Bigger Pockets has 5 steps to holding a mortgage inside your RRSP.  Interesting post, but it seems to be missing some warnings about the high fees that are involved.
  • SVB from Digerati Life bought a house in a short-sale.  Can you guess which country this happened in?  SVB has bought and sold several homes before, so she knew what to expect.  Short-sale homes have their own difficulties however.
  • Landlord Rescue wonders about VIP tenants.
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Announcements

Linkstuff – Sick Week Edition

My whole family was sick this week, which is why I didn’t do my normal Wednesday post.  Next week, however will be jam-packed with great posts!

On with the links

Canadian Couch Potato wrote a good piece about risk in RESPs.  He includes a few quotes from your’s truly.

Bob Aaron wrote about a house that was built on the wrong lot.  Quite amusing.

Larry MacDonald reported on Martha Stewart’s investing adventures.  Some pretty funny quotes about Martha.  Here is one:

In another email, he [broker’s assistant] complained that she had hung up on him, adding that at one point she made the “most ridiculous sound I’ve heard coming from an adult in quite some time, kind of like a lion roaring underwater.”

Jim Yih wrote about RRSP and RRIF tax traps.

Ending the Rat Race reviewed Smoke and Mirrors by David Trahair.  He’s hosting a giveaway of the latest version so go on over and enter.  I really enjoyed this book – it was the second personal finance book I ever read.  Can you guess the first?

Studenomics evaluates the best online bank for 20-somethings.

Million Dollar Journey evaluates if a TFSA or RRSP is better if you have a definied benefit pension.

Canadian Capitalist ponders the 2010 Globe & Mail discount brokerage rankings. Don’t forget about my comprehensive discount broker comparison.

Boomer & Echo bought a new car. I agree, I think used cars suck.

MapleMoney explains what is a stock.

Categories
Announcements

Globe & Mail Mention and RESP Book Reviews and Giveaways

Last week, I had the pleasure of chatting on the phone with Rob Carrick – who most of you know as Canada’s premier personal finance journalist with the Globe & Mail.

Reviews

Financial Highway also did a great review and is also hosting a giveaway.

  • This book is highly recommended.

  • Some of the charts in the book could (should) be cut and pasted to the government’s RESP site. I especially liked the one section where he used the lead in: “What This Means”, followed by “Just to Clarify”. For the reader, it’s not a ‘dumbing down’  exercise– his clarification process is both valuable and refreshing.

  • Sure, you can spend countless hours using web searches to locate a lot of this material, but you simply won’t get the clarity and conciseness that Holman’s process offers.

MapleMoney did a nice review and is also hosting a book giveaway.

  • I recommend The RESP Book to any new parents that want to help contribute to their child’s post-secondary education, but are not sure where to start or how it all works. Mike Holman’s book provides everything you need to know about RESPs in an easy to read 115 pages.

Canadian Dream wrote a review and is also continuing his book giveaway contest.

  • The book is just full of useful information to help you navigate the world of RESPs and better yet, he provides examples to help illustrate the complex parts.

  • Regardless of how familiar you are with RESPs, you are likely going to learn something about how they work in this book.

Sorry about the lack of a regular post this week. I was sick, my wife was sick, the kids were sick. My only goal for the week was to get healthy enough to be able to escape to work. 🙂

Categories
Announcements

LinkStuff – Media Week Edition

I had a ton of mentions in the media this week, which was a lot of fun.  Hopefully that will continue!

MoneySense interview

I wrote a while back about doing an interview with Dan Bortolotti of Canadian Couch Potato for an RESP article in MoneySense.  The article is online – it’s about couch potato investing in an RESP account.

Rob Carrick Newletter

The RESP book got a big mention when Rob Carrick linked to a book review and book excerpt on the Globe and Mail site.

Carnival winner

I won top prize in the Carnival of Canadian Real Estate hosted by Life as Real Estate Investors.  The post was actually written by Rachelle, but I’m keeping the prize.  🙂  I’m hosting the next edition so get your entries in.  Any real estate articles are ok (not just RE investing).

On with the links

Thicken My Wallet observes that investing in domestic companies is a safer way to invest in foreign markets.

Rob Carrick came up with some neat ways to juice up your GIC yields.  I didn’t know about any of these.

Beating The Index slams Eric Nuttal in a very entertaining post.  Nuttal is yet another equity analyst who doesn’t know sh*t, but spouts off on BNN to further his own interests.  Great picture too.

Rob Carrick has some suggestions for investing your cash.  I have a lot of cash in my RRSP, so I need to get on this.

Canadian Personal Finance wonders if cheques are passe.

Michael James on Money says that disagreeable financial advisors might be your friend.

Oblivious Investor says simple investing is better

Money Matters shows us the power of debt.

Smart on Money asks would you drink the most expensive bottle of wine?

Million Dollar Journey explains the difference between preferred shares and bonds.

Wisdom Journal explains how to write a business plan.

Canadian Capitalist reports from the frontlines of the discount brokerage price war.

Larry MacDonald thinks that TMX Group might be a buy.