Author: Mike Holman

Categories
Announcements

LinkStuff For a Hot Saturday, July 17 – Kids Driving Me Nuts Edition

I personally think kids are great and I enjoy spending time with mine. However, like everything – too much of a good thing isn’t so good. It can get tiresome after a while.

Judith Timson wrote about how parenting is no fun. She is reacting another post about parenting in New York Mag which outlines all the problems of being a parent.

Jennifer Senior wrote that NY Mag article about parenting called All Joy and No Fun. Some great quotes like “They’re a huge source of joy, but they turn every other source of joy to shit”. Couldn’t agree more.  🙂

Garth Turner wrote an absolutely hilarious post about property virgins. I don’t agree with much of what Garth has to say, but this post was spot on.

My Wife Quit Her Job is a site that I just started reading – it is fantastic for those of us who are into online entrepreneurship. The writer Steve is one smart guy and I love reading his posts.   This post was just excellent: Starting A Business: Convincing Yourself To Take Action

Canadian Tax Resource is starting a new tax advisory service. I’m interested in the question of whether or not to incorporate.

Million Dollar Journey had an interesting post about investment loans.

The Oblivous Investor shows how to calculate real estate investment return.

The Financial Blogger reveals how we evaluate our online business.

Larry MacDonald says that retirement pensions improvements might not be necessary.

Squawkfox put together an expense tracking spreadsheet for the holidays.

Preet says that the Eco Fee is a tax.

Canadian Capitalist put together some useful used car pricing resources.

Canajun Finances wrote about pet insurance.

Carnivals

Carnival of Financial Planning

Carnival of Personal Finance

xx

Categories
Money

$8,000 First Time Home Tax Credit Extended to September 2010

It was announced recently that the closing deadline to be eligible for the $8,000 tax credit was extended from June 30, 2010 to September 2010.  This will be a big benefit for people with new construction who are having trouble getting the house completed in time.

Originally, first time home buyers were eligible for an $8,000 credit for homes purchased before April 30, 2010 with a closing deadline of June 30, 2010.  Now the closing deadline has been extended to September 30, 2010.  Please note that to qualify for this credit, a purchase contract must have been entered into buy April 30, 2010 – that date has not been changed.

This change came about because of bill H.R 5623 – Homebuyers Assistance and Improvement Act of 2010. It was introduced and approved by the House (409-5) to extend the home buyer credit for new and existing home buyers

An $8,000 credit is available for first time home buyers.  Up to $6,500 is available for qualify current home owners.

How to claim for the home buyer tax credit

This information can be found on the IRS website.

You can claim this credit on your 2009 or 2010 return.

To claim on your 2009 return, the tax return must be file a paper return and attach Form 5405.  You must also include a properly executed copy of a settlement statement used to complete the purchase.

Purchasers of conventional homes

Include a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties’ names, property address, sales price and date of purchase.

Purchasers of mobile homes

If you are unable to get a settlement statement then include a copy of the executed retail sales contract showing all parties’ names, property address, purchase price and date of purchase.

Purchasers of newly constructed homes

If a a settlement statement is not available, then include a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Note Regarding Signatures

While the Form 5405 instructions indicate that a properly executed settlement statement should show the signatures of all parties, the IRS recognizes that the elements of the settlement document, often a Form HUD-1, may vary from jurisdiction to jurisdiction and may not reflect the signatures of the buyer and seller. The settlement statement that must be attached to the return is considered to be properly executed if it is complete and valid according to local law. In locations where signatures are not required the IRS encourages the buyer to sign the settlement statement prior to attaching it to the tax return even in cases where the settlement form does not include a signature line.

Long-Time Residents

The November 2009 legislation extends the credit to long-time residents of the same main home if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. For long-time residents claiming the credit, the IRS recommends attaching, in addition to the documents described above, any of the following documentation of the five-consecutive-year period:

  • Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
  • Property tax records or
  • Homeowner’s insurance records.

General Information

Home buyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit:

  • Applies only to homes used as a taxpayer’s principal residence.
  • Reduces a taxpayer’s tax bill or increases his or her refund, dollar for dollar.
  • Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
Categories
Announcements

Hot and Humid LinkStuff

Wow, it is hot, hot, hot in Toronto this week.  But not as hot as last weekend during the G20 summit – what a complete embarrassment for everyone involved (including the city of Toronto).

On with the links!

Carnivals

Carnival of Financial Planning

Categories
Real Estate

10 Resources To Check Before You Rent In An Apartment Building

This article was written by Rachelle: a real estate guru who works as a property manager and helps investors find rental properties in Toronto and surrounding areas.  She has recently started a very interesting blog called Landlord Rescue.  You can subscribe to the RSS feed here.

Read Rachelle’s last story – The Stripper With Dirty Feet – A Tenant From Hell Story.

After years in the business, if I were to rent again, these are the places and people I’d check before renting in any building.  Rent the landlord, not the apartment.  Most apartments in buildings look remarkably similar, but your experience for a whole year is likely to be hellish if you don’t do your homework.

1 – Make sure the apartment you have seen is the apartment you are going to rent, not a sample suite.

Needless to say, the old bait and switch is not unheard of.  Ask to see the apartment that you will be renting.  Don’t believe a word your rental agent says about all the work that will be done to the suite.  After they get your money, you’re stuck with it in many cases. If your application is approved you will not get your money back!

2 – Check the Police Department

One place I worked at had 3-5 cars stolen out of the underground parking PER WEEK. Nothing was ever done about security!  Ask the police department.  A police car parked out front doesn’t mean much.  With so many people living in a decent sized building, they could be there for anything.

3 – Talk to some current residents

After the showing by the rental agent, go back in the evening after the office is closed.  The culture in the building will be obvious.  Are there a bunch of drug dealers out front?  Or is it seniors?  In any case, ask people coming or going out of the lobby how they like the building.  Tell them you are thinking about moving in.  Question them in detail.  One bad report doesn’t necessarily mean anything – you could be talking to a guy who’s getting evicted next week!  A majority of “NO WAY’s” means bad news – stay away.

4 – Google your building name and address

A quick Google of the address or building name including the city name may reveal something interesting.  Two of the buildings I worked in have reviews on them.  Country Club Towers and 3400 Riverspray both have poor reviews, and I can assure you with good reason.

5 – Pest Control

The first place I lived when I first moved to Toronto was a huge one bedroom in Parkdale.  The rent was cheap, it was very spacious and newly renovated.  By the second day I knew why.  The place was full of cockroaches.

I went to the super and she actually told me I brought them in.  The next two years were a nightmare of spraying and fighting to get sprayed.  All it did was knock the numbers down.  Within a few days they were back.  Disgusting and unbelievable amounts of cockroaches.

Since then I have learned more about pest control.  Every building has in Toronto has pests occasionally.  It’s what they do to control them that counts.  Look up your potential new building.  Bedbugs are becoming a fact of urban life in Toronto and Vancouver.

6 – Check Google News Archives

Use Google news archives so you can look at any articles that come up on the building and decide if you want to live there.  For 2460 Weston Road, I found this article and this one.

For 3400 Riverspray Crescent In Mississauga, I found this article.

If nothing recent has happened in the building, it won’t show up.  On a regular news search you will find only news for the last 30 days.  If you don’t find any results, click on Advanced Search and then click on Archives.  Don’t be too freaked out if there’s something in the news about your building.  Buildings house a lot of people and there’s always something happening.  If there’s a ton of bad news you may want to take a pass.

7 – Building staff

If your rental agent/super/property manager is showing any signs of being mean, snarky or inconsiderate, take a pass.  If they look stressed/overworked or not happy at their job, find a different place to live.  Believe me this is the best treatment you’ll get when renting in a building.  If service is already poor and you’re not even in the door, what will it be like when your tap is leaking or you find a pest or have a problem?  I don’t like dealing with rude people and I doubt most people do.  Watch how other residents are treated.  Don’t believe any excuses.

8 – Google Search the Property Management Company

Search for “Property Management Company Name” Review.  Don’t be surprised if you have to go back a few pages.  The larger companies have website and ads out so you’ll need to filter that out.  This will give you an idea of what’s in store for you in terms of customer service.

9 – Search for By-law Building Code Infractions

Toronto has a searchable form you can use to check if your potential building has any outstanding building code infractions or city work orders.  I’m not sure about every city or town you’ll have to do your own searching on this one. This is a huge red flag. You really have to be grossly negligent to be written up by the city. Inspectors give multiple warnings and inspections so if a building you are moving into is listed here seriously reconsider. Search the City of Toronto’s database here.

10 – MyHood.ca

This website and others like it exist for many major centers.  This site has searchable reviews and for many buildings.  Keep in mind that anyone can submit a review including building staff.  If you see a large number of distressed complainers and then a couple completely positive reviews, you may want to draw your own conclusions.

So there you have it, a complete and exhaustive list of resources you can check before you rent and sign a one year lease. If you rent the wrong place, one year will seem like one hundred years. If you’re on a budget you can pick the best available in your price range.  It’s unrealistic to expect the same kind of service and amenities in a $650 per month apartment in Parkdale as a nice high end condo for $1200 per month.

Happy Renting!

Do you have any other tips for potential renters?

Categories
Investing

Low Cost Ways To Buy Dividend Stocks

I recently did a review of ShareOwner discount brokerage, which promotes regular dividend stock purchases.  One thing that came out of that review, is that regardless of how cheap the trading costs are – regular purchases of stocks are quite expensive.

In this post, I’m going to discuss some strategies to buy dividend stocks (or any other kind of stocks) in the cheapest manner possible at discount brokerages.

Some low cost strategies for buying stocks

  1. Buy one stock at a time.
  2. Buy less often.  Save up for your purchases until the commissions are less than 1% of the purchase price.
  3. Shop around for lower account administration fees.
  4. Pick the appropriate brokerage for trading fees.

1)  Buy one stock at a time

If you want to make regular purchases with your money, then don’t buy more than one stock each time.  For example if you have $500 per month to invest and a portfolio of 5 stocks to add to – just pick one stock each month and buy $500 worth of that stock.  Regardless of your trading costs, doing one trade per month vs five is 80% cheaper.

2)  Save up your money and buy less often

If you can handle keeping some cash in your trading account for a while, then how about saving up your coins for six months and then make some purchases.  If you have been purchasing stocks monthly and then switch to twice a year – your trade costs will be reduced by 83%

3)  Shop around for lower account administration fees and other costs

Annual administrative fees vary quite a bit between financial instituation and between account types.  At Questrade, there are no account fees regardless of the type of account or your balance.  Most of the big banks charge $50/year in fees until your account balance is greater than $25,000.  ShareOwner has no account fee for their unregistered account, but their annual RRSP fee is a whopping $79.  ShareOwner also charges “withdrawal fees” which are applied if you remove money from your account.

4)  Pick a brokerage that fits your trading patterns.

I picked Questrade discount brokerage because they meet my needs and are the cheapest brokerage in Canada.  The trades are $4.95 and there are no annual account fees.  However, it’s important for investors to look at their own situation when deciding on which brokerage to use.

If you like to buy several stocks at a time, then ShareOwner might be the best choice.  They have a maximum fee of $40 per trade batch so you can make a purchase in 40 stocks and it will only cost $40.  Bargain.

Active traders have to look at costs, but they also need to consider the trading platform.  There is no point in saving $4 per trade if the best available trading platform doesn’t allow them to trade the way they want to.  If you like to get more services, such as research reports then you might have to go to a more expensive brokerage.

Converting currencies? Interactive Brokers has the cheapest currency conversion rates by far.  However, don’t even think of opening up an RRSP at IB because they don’t have them.

Any other suggestions on what to look for in a brokerage?

Categories
Announcements

Carnival of Financial Planning – Edition #146 – June 18, 2010

Best Personal Financial Planning and Personal Investment Articles this Week from Personal Finance Blogs

Welcome to the June 18, 2010 Edition #146 of the Carnival of Financial Planning.

The Carnival of Financial Planning takes a long-term view of personal financial planning for individuals and families. We focus on efficient and sustainable personal financial planning practices that can lead to lifetime financial security.

Budgeting and EconomicsLearn Save Invest presents The Best Financial Advice posted at Learn Save Invest.

KCLau presents Global Spending: How People Spend their Money posted at KCLau’s Money Tips, saying, “Results from a World Bank study entitled Global Purchasing Power Parities and Real Expenditures 2005 International Comparison Program spanning 2003 to 2008.”

The Financial Blogger presents May Net Worth Update (+13.5%!!!!) posted at The Financial Blogger, saying, “with the recent sale of GLBL and the sale of our home, I am starting May with a big jump in terms of net worth.”

Roshawn Watson presents Savings Down, Spending Up but What Does it Mean? posted at Watson Inc, saying, “New data suggests that Americans are saving less and spending more, as the vicious economic cycle repeats itself once again. It appears that despite proclamations that our newly-embraced frugality reflected a permanent change in behavior, frugality for many was a passing fad induced by momentary fear rather than a substantive shift in consumer spending”

The Skilled Investor presents Save More Money posted at Personal Finance Strategy, saying, “Budgeting and self-control in consumption is far more important than clever investing. Expenditure control and budgeting works, while “clever” investing usually is counter-productive.”

Super Saver presents Living on a Cash Basis was a Good Experience posted at My Wealth Builder, saying, “Living on a cash basis quickly taught me financial responsibility.”

The Financial Blogger presents Why The Loonie Is As Strong as a Bear? posted at The Financial Blogger, saying, “It has been more than a year that our Canadian Loonie has been beating on the greenback and we have now reached the moment when most economists predictions will become reality: the elusive state of parity between the Canadian and US dollar.”

Economics

Roshawn Watson presents Will the Economy Collapse In 2011? posted at Watson Inc, saying, “With the steep increases in federal, state, and local taxes scheduled for next year, will economic activity be stifled to the point of economic collapse in 2011?”

Estate Planning

BIFS presents The Importance of Estate Planning posted at Budgeting In the Fun Stuff, saying, “Estate planning is a very important part of a person’s overall financial portfolio. This post is part of a series to evaluate a person’s financial health.”

Jeff Rose, CFP presents Should You Do a Charitable Remainder Trust? posted at Jeff Rose.

Sam presents Do You Need a Living Will? A Common Sense Guide to Living Wills posted at Surfer Sam and Friends, saying, “1. What Is a Living Will 2. How Is a Living Will Used 3. What Should Your Living Will Mention 4. When Does the Living Will Take Effect 5. What Is a Durable Power of Attorney for Health Care 6. A Living Will Is Part of an Advance Health Care Directive 7. How to Prepare Your Living Will Do you need a Living Will? A Living Will is your opportunity to express your directives for your own medical care, should you become incapacitated. The Living Will is a clear written statement of your desire regarding continuing treatment at the end of life. It addresses the the questions of life support and aggressive medical intervention. This is a legal document, but it is voluntary, and not compulsory.”

Financial Planning

Joe Plemon presents Which Comes First: Earning or Saving? posted at Personal Finance By The Book, saying, “The number one financial principle is to live on less than you earn. Right? Or do you need to get those earnings up first? This post helps the reader think it through.”

Frank Knight presents Roth IRAFinancial Software posted at Financial Freedom Plan, saying, “Whether to invest in a Roth IRA or Roth 401k versus their traditional retirement account alternatives is one of the most complex personal financial decisions. Roth accounts do not make sense financially for most people. They are a good deal, for a minority, but you need to do the analysis.”

Dividend Tree presents Building Core Competency for Long Term Survival posted at Dividend Tree, saying, “whether it is running a business or individuals investment portfolio, it is important to build a core competency for long term sustainability. In my case, I focus on good quality companies that consistently pay or have potential to pay growing dividends over time.”

jim presents How Long Should I Keep Financial Documents? posted at Blueprint for Financial Prosperity

Larry Russell presents No Load Mutual Funds posted at Top Index Mutual Funds, saying, “Superior past performance has simply not been shown to be a reliable predictor of superior future performance. However, low costs can lead you to the best mutual funds.”

Financing a Home

Bucksome presents Is it Better to Rent or Buy? posted at Buck$ome Boomer’s Journey to Retirement, saying, “I live in one of the top 10 cities it’s better to rent than buy. Sometimes it might make sense to buy anyway.”

MoneyNing presents How to Recast Your Mortgage posted at Money Ning, saying, “You may be able to reduce your monthly mortgage payment without any cost.”

PT presents Stated Income Mortgage: No More Liar Loans Available posted at Prime Time Money, saying, “How to finance a home if you are a newly self-employed person. I discuss liar loans or stated income mortgages and why they aren’t available anymore.”

Ryan @ MFN presents How to Apply for a VA Loan posted at Military Finance Network, saying, “A VA Loan is a great way to finance a home, but there are several steps you need to take before you can qualify for and obtain a VA Loan.”

Financing Education

MoneyNing presents How to Use a 529 Plan to Improve College Savings posted at Money Ning, saying, “A 529 plan can help your college savings tremendously. Check out how the government can help contribute!”

Ryan @ MFN presents History of the GI Bill posted at Military Finance Network, saying, “A brief history of the GI Bill, one of the best ways for military veterans to pay for college.”

Health Care

freefrombroke presents What is a Health Savings Account? posted at Free From Broke, saying, “A Health Savings Account can be a great tool to save for health care. Here is an overview of what an HSA is.”

Income

Mike @ Green Panda presents 10 Promising Sectors for the Next Decade posted at Green Panda Treehouse, saying, “Choosing your career at the age of 20 is not an easy thing.Which jobs will be paid well by employers for the next 10 years? Here are my top ten picks (in no particular order) of the best sectors”

Investing

2 Cents presents Where Is the Stock Market Headed Next? posted at MapleMoney, saying, “Here’s a look at one person’s answers to some good market questions posed by Kevin at Out of Your Rut.”

Praveen presents Strategic Purchase By Abbott Laboratories Will Make It Largest Prescription Drug Seller In India posted at My Simple Trading System, saying, “How Abbott Laboratories recently made a strategic purchase in India, which makes the stock valuable over the long term.”

Praveen presents Lichello’s AIM System posted at My Simple Trading System, saying, “A look at Robert Lichello’s AIM stock investing system, which was popular in the 1970’s and then went out of style.”

Tushar Mathur presents Can’t Control the Markets? Try controlling the Costs posted at Everything Finance, saying, “As 2008 proved, the financial markets are prone to unpredictable periods of turbulence. That can make investing feel a bit like a roller-coaster ride. The disappointing results that many mutual funds posted in 2008 and at the outset of 2009 may have left you feeling concerned over your financial future. You’re not alone.”

jim presents Goldline Scam posted at Blueprint for Financial Prosperity, saying, “Goldline has been in the news alot as gold prices continue to soar and legislators, specifically Anthony Weiner of NY, taking a look at their business practices. This begs, the question, is investing in gold through Goldline a scam?”

Zach Scheidt presents Express IPO Looks Good for a Bounce posted at ZachStocks, saying, “Express Inc. (EXPR) has traded down since its IPO earlier this month. The company is still primarily owned by a private equity firm who has a vested interest in making sure the stock price is stabilized.

Madison DuPaix presents How to Redeem Savings Bonds posted at My Dollar Plan, saying, “Here is a great how-to on redeeming savings bonds.”

Consumer Boomer presents Making Use of a Discount Brokerage to Invest posted at Consumer Boomer.

The Skilled Investor presents Market Timing posted at Investment Portfolio Management, saying, “Always stay invested to earn risk premiums. You must have your money invested and at risk to get risk premium returns. Jumping out and in or “timing the markets” doesn’t work.”

Frank Vertin presents Top Index Funds posted at Noload Mutual Fund, saying, “Top ten no load index funds that track the Standard and Poors 500 composite index in terms of lowest costs.”

Mike @ Green Panda presents Asset Allocation Basis Part 1: Know Your Asset Classes posted at Green Panda Treehouse, saying, “You want to learn how to manage your asset allocation properly? You first need to know which kind of asset classes you can invest in! Today, I will first review the major asset class categories and in a second post, I will subdivide each of them, but let us just start with a definition of asset class and asset allocation:”

Tomas Escent presents Stock Trading Automation posted at Nerds on Wall Street

Zach Scheidt presents Solar Selloff Close To Exhaustion? posted at ZachStocks, saying, “Solar stocks are off sharply due to Euro-Zone concerns. Trina Solar could end up being an exceptional value if earnings remain somewhat stable and management is able to calm investor fears.”

Dividend Tree presents Dividend Investing and Businesses with Moat posted at Dividend Tree, saying, “In general, companies with moats in their business are very good dividend growth providers. However, the opposite may not be true.”

Frank Knight presents Municipal Bond Financial Software, posted at Personal Finance Software, saying, “Municipal bond investments and your state and federal marginal income tax rates: Some investors hold municipal bonds in an attempt to reduce their tax burden. This article discusses the relationships between tax-exempt municipal bonds, bond market returns, marginal tax rates, and investment asset tax location.”

Dividend Growth Investor presents Is BP’s dividend safe? posted at Dividend Growth Investor, saying, “With liabilities expected to reach several billion dollars, investors have been selling off BP’s stock, which has caused it to decline almost 50% from its highs in April. The uncertainties regarding BP’s future liabilities, have caused the Obama administration to push for a dividend cut, in order to ensure that the company would have the cash to pay its obligations.”

Managing Debt

Barb Friedberg presents The Secret to Cutting Your Debt IMMEDIATELY posted at Barbara Friedberg Personal Finance, saying, “Get rid of debt now! Quit with the excuses. A simple plan to become debt free immediately.”

Silicon Valley Blogger presents On Travel Credit Cards: How To Travel With Money posted at The Digerati Life, saying, “I review travel credit cards and share tips on how to travel with money.”

marjorie presents Walking Away From Your House ? Cut Losses and Save Money posted at Wealth Junkies, saying, “Millions of homeowners are facing the reality of a house that is worth far less than they owe. This leads to a very tough situation where they must decide whether they should stick it out or walk away. Here are 5 things to consider when facing this decision.”

Jessica Bosari presents Trying to Save Money But Don’t Know Where to Start? How to Prioritize. | billeater.com posted at Billeater, saying, “How to prioritize debts to pay them down faster.”

The Smarter Wallet presents Are Debt Counseling Services The Way To Debt Relief? posted at The Smarter Wallet, saying, “On debt counseling services.”

Big Cajun Man presents Found Money Trap posted at Canadian Personal Finance Blog, saying, “Found money should go on debt no matter what!”

Learn Save Invest presents 5 Steps To Debt Reduction posted at Learn Save Invest, saying, “Here are 5 tips you need to master in order to reduce your debts.”

Adam Williams presents How To: Manage your debts without using Debt Management Programs posted at RabbitFunds.com, saying, “If you constantly find yourself thinking things like “If only I hadn’t bought that, then I could have this” or running short of cash a fortnight before payday, then you could do with taking action, kicking a few bad habits, and tackling some debts before they take over your life completely.”

Miscellaneous

MoneyNing presents Three Expensive Habits that are Putting Your Financial Future at Risk posted at Money Ning, saying, “Improve your habits and you will prosper. Here are three that you absolutely must change first.”

Sustainable Life Blog presents When To Go It Alone posted at Sustainable Life Blog, saying, “When should you go it alone in personal finance? Sometimes, your friends may not always want whats in your best interest. When do you need to say “sorry guys, not this time” to spending money”

Joe Plemon presents How Learning to Say “No” Will Help Your Life and Your Finances posted at Personal Finance By The Book, saying, “This post examines compliants: those who say yes to bad things because they haven’t learned how to say “no” or even think it’s OK to say “no”.”

Pasadena Financial Planner presents Vanguard Investment Performance posted at Top Mutual Fund, saying, “Compares Vanguard’s actively managed mutual funds and Vanguard’s passively managed index mutual funds. Vanguard investors should read and understand this study.”

Super Saver presents Disputed Price Increase on Phone Bill and Won posted at My Wealth Builder, saying, “Last month, our phone bill was up 12%, with no changes made on our part. We disputed the increase and the phone company agreed.”

Joe Plemon presents To Buy or Not to Buy? The Cost per Use Method posted at Personal Finance By The Book, saying, “It isn’t just the upfront cost that matters. You should also consider how much you use what you buy.”

Ryan @ CML presents How to Sell Your Car on Craigslist posted at Cash Money Life, saying, “Tips on how to quickly and easily list and sell your car on Craigslist.”

nissim ziv presents Samples Interview Questions and Answers posted at Job Interview Guide, saying, “The interviewing performance is always one of the selection criteria for a position as it demonstrates the presentation abilities as well as the communication skills of the candidate.”

Retirement Planning

FMF presents Spending Retirement Income Can Be Risky posted at Free Money Finance, saying, “You must be careful in planning how to spend your retirement income — there’s often very little room for error.”

Larry Russell presents Roth IRA Conversions posted at Best Financial Planning Software, saying, “Trying to decide about a traditional IRA to Roth IRA conversion without first having a comprehensive lifetime financial plan in place makes absolutely no sense. Without such a plan, you cannot figure out whether or not you are likely to achieve the tax savings in retirement that would warrant paying higher taxes now.”

Super Saver presents Our Three Financial Measures posted at My Wealth Builder, saying, “We measure three values to determine our financial health: investment income, total savings, and total debt.”

Jules Wells presents Retirement Calculator–Retirement Savings Software, posted at Retirement Financial Planning, saying, “This article helps you understand the trade-offs between traditional and Roth tax-advantaged retirement plan contributions, including Roth 401k and IRA retirement plans. It helps with the 2010 Roth conversion decision.”

FMF presents Five Retirement Considerations posted at Free Money Finance, saying, “Be sure you consider these five issues as you plan your retirement.”

Risk Management and Insurance

Jeff Rose, CFP presents What is a Term Life Insurance Policy? posted at Jeff Rose, saying, “You know that in order to protect your family’s financial situation, life insurance is necessary.”

Big Cajun Man presents Self Insured Company Disability Plans posted at Canadian Personal Finance Blog, saying, “Sometimes insurance is not as safe as you might think (in Canada at least)”

Ryan @ CML presents Flexible Spending Account vs Health Savings Account posted at Cash Money Life, saying, “HSAs and FSAs are a great way to use tax exempt money to pay for your health care costs. But do you know the difference between the two health care plans, or know which is best for your situation?”

Henry Bagdasarian presents Automatic Bill Payment posted at Free Identity Theft Prevention, Detection and Fraud Solutions, saying, “Prevent identity theft”

Savings

June Tree presents Ally Bank Interest Checking & 2 Year CD With Rate Increase Option posted at The Digerati Life, saying, “Reviews on some great savings products.”

Jim & Martha presents How to Save Money Booking Cruises posted at Wanderlust Journey.

Sun presents Are CDs from Troubled Banks Worth The Trouble? posted at The Sun’s Financial Diary.

KCLau presents Are You Rich in Internal Assets? posted at KCLau’s Money Tips, saying, “pay attention to the internal assets”

Taxes

Jeff Rose, CFP presents Small Business Owners May Face May New 1099 Headaches posted at Jeff Rose, saying, “Section 9006 says that starting on January 1, 2012, all businesses must issue 1099 tax forms not only to freelancers and vendors, but also to any individual, business or corporation from which they purchase more than $600 in goods or services in a tax year.”

Financial Freedom Plan presents Roth IRA ConversionFinancial Software, posted at My Financial Freedom, saying, “The Roth tax optimization puzzle for asset conversions, as well as for annual Roth contributions during working years, is one of the most complex decisions that the ridiculously complex US taxation and retirement planning system forces upon individuals.”

That concludes this edition. Submit your blog article to the next edition of Carnival of Financial Planning using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: carnival of financial planning, blog carnival.

Categories
Announcements

G20 Summit LinkStuff

Here in Toronto, we are gearing up for the G20 summit next week. I think downtown Toronto is quite possibly the stupidest place to hold this sort of event, but needless to say, they didn’t ask my opinion.

I doubt there will be any trouble at the summit. With the number of security people on hand – anybody showing so much as a protest sign, will be beaten down pretty quick. If you are planning to protest – I suggest you don’t.

Another set of great links this week.

The Oblivious Investor wrote a good post on how do you pay your advisor? He brings up an excellent point that you shouldn’t be paying your advisor continuously, if you only need an occasional checkup or adjustment.

Fabrice Taylor from GlobeAdvisor raised some interesting accounting questions in REITs’ value getting harder to see.  I decided to sell my REITs a while ago because I didn’t understand their accounting very well.  This article confirms my decision.

Million Dollar Journey shows how to use the “Funds From Operation” method to value REITs.

Rachelle from Land Lord Rescue had a pretty funny post called 10 Tips on Renting to The Worst Tenants

Canadian Capitalist says there are only modest changes to CPP in the works.

The Financial Blogger gives some career advice and says that not asking for a raise, can be the best strategy for getting one. I’ve been following this strategy for 17 years with very, very limited success.

Preet explains how a Capital Loss Transfer works.

Carnivals

Pop Economics featured a recent post – The Stripper with Dirty Feet in the
Carnival of Personal Finance. He complained that the articles weren’t original enough, and yet the stripper story wasn’t good enough for an editor’s pick.

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Investing

Canadian ShareOwner Discount Brokerage Review – Not Impressed

This post is a review of Canadian ShareOwner Investments Discount Brokerage, otherwise known as “Share Owner”.  I’ll be looking at the costs and comparing various scenarios with the cheapest Canadian discount brokerage Questrade.

What is Share Owner?

Canadian ShareOwner Investments is a different type of discount broker.  It is the only broker that allows you to set up regular purchase plans for stocks and allows you to buy fractional shares.  It promotes regular investing on it’s website, which sounds like a good idea, but I’m not so sure that regular contributions and stocks should go together.  ShareOwner started in the 80’s, and at that time were fairly ground-breaking since they were a very cheap option for buying stocks.

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

ShareOwner has a limited pre-selected list of stocks and ETFs you can buy – they are mostly Canadian and US dividend stocks and some ETFs as well.

One of the big advantages of ShareOwner is the fact that you can automate your purchases.  For example, maybe you would like to buy $250 per month of a certain stock?  With ShareOwner, you can set that up quite easily.

However, when I took a look at the overall fee schedule, I was less than impressed.

Some stuff I didn’t like

The trading costs are $9.95 per trade which is no bargain.  At Questrade, the trade would be $4.95.  There is a limit of $40 per “order” so if you do a purchase of 9 stocks or more then it would be cheaper than Questrade.

Account administration costs were high as well.  The non-registered account doesn’t have an annual fee which is good, but all the other account types have high fees.  $79 for RRSP, $100 for RIF or LIF accounts.  RESPs are not offered.  Questrade on the other hand, has no annual admin fees.

The fee which I thought was most unusual was the “account withdrawal fee“.  This is a fee charged if you want to remove money from the account.  It is $12 for a non-registered account, a whopping $48 for a RRSP account and $100 for a home buyers withdrawal!
I’ve never heard of any other brokerage charging a fee for account withdrawal.  This fee is charged on top of trading fees so if you sell some stock in a non-registered account and want to withdraw the money, the trading fee will be $9.95 and the withdrawal fee will be $12 for a total of $21.95.  The same action would cost $4.95 at Questrade.

Let’s take a look at some scenarios and see which brokerage is better.  Keep in mind that these scenarios assume you want to do monthly purchases in several securities which is not the cheapest way to buy stocks.  A future post will go over some cheaper strategies.

Scenario 1 – buying a few stocks every month

Investor wants to invest $350 each month, spread out into three different stocks.

Questrade total fees for one year would be 3 x $4.95 x 12 = $178.20 which represents 4.2% fees on the purchases.

ShareOwner total fees for one year would be 3 * $9.95 * 12 = $358.20 for an open account which is 8.5% of the purchase price.  For an rrsp account the total charge would be $437.20 which is 10.4% of the total purchase amount.

Winner: Questrade.

Please note that both these percentages are excessive – buying stocks on a regular basis is not a cost-effective strategy, unless you are buying large amounts ie $1,000 per stock per transaction.

Read Low cost ways to buy dividend stocks.

Also note that using this method of purchase, you would need to have $17,820 in the Questrade account to get the total fees down to 1% of the assets.  In the open ShareOwner account you would need almost $36,000 in assets to bring the total fee down to 1%.

Scenario 2 – buying a large number of stocks every month

Investor wants to invest $350 each month, spread out into 12 different stocks.

Questrade total fees for one year would be 12 x $4.95 x 12 = $712.80, which represents 17% fees on the purchases.

ShareOwner total fees for one year would be $40 (max) * 12 = $480.00 for an open account, which is 11.4% of the purchase price.  For an rrsp account the total charge would be $559.00 which is 13.34% of the total purchase amount.

Winner: ShareOwner

Clearly, the advantage ShareOwner has is the $40 maximum commission.  If you buy 9 or more stocks at a time, then ShareOwner will be cheaper than Questrade.

Here are some pros and cons of ShareOwner:

Pros of ShareOwner

  • Automated transactions which aren’t available anywhere else.
  • Can purchase fractional shares.
  • Trading costs are reasonable, especially compared to big banks.
  • No minimum investment amount.
  • “Philosophy of investing” – they do some stock selection for you.

Cons of ShareOwner

  • Limited selection of securities.  If you want the big dividend players, however then you should be able to find what you want.
  • Dividends must be reinvested.
  • RRSP annual administration fee is $79.  Even the big banks charge less than this.  TFSA annual fee is $50 and RIF/LIF annual fee is $100.  This is not competitive at all.
  • Account withdrawal fees are $12 for open account, $48 for RSP, $25 for TFSA. Home buyer withdrawal is $100!???
  • The purchase automation might be convenient, but I think if you are buying shares in individual companies that you should be more hands on.  If you really want a minimum effort investment plan, then do a couch potato portfolio using TD e-funds.

Summary

ShareOwner is fairly unique broker that comes with it’s own investing philosophy and education if you wish to use it.  The trading fees are ok, but account admin fees and withdrawal fees are excessive.  I really don’t like how they promote regular purchases and then charge $10/purchase.  This is not a good way to invest. 

Read:  Cost effective methods for dividend stock investing.

If you are only looking to do the occasional purchase and no withdrawals in a non-registered account, then ShareOwner is not a bad choice.  Otherwise, shop around.