Author: Mike Holman

Categories
Personal Finance

Converting to RBC Direct – Problem With Trade Fees

As I’ve outlined in past posts – we are moving our money from Questrade to RBC Direct to take advantage of their 1% rebate offer.  So far the process has gone very smoothly with 1 rather annoying exception.

The money in my wife’s rrsp and spousal rrsp was in mutual funds – in order to do the transfer we sold the mutual funds and moved the money “in cash”.  As a result we have to make some purchases once the money got to RBC.  First problem was that RBC didn’t tell us when they received the money – I was checking periodically and one day noticed that it was there.  Second problem was the amount of trading fees.  RBC default rate is $29 per trade which is a ripoff.  If you have $100,000 (by household) in assets there, then you qualify for the lower rate of $10 per trade.  Still not cheap but that is ok given the 1% rebate we will be getting.

Now my wife’s two accounts have less than $100k in them so we needed to make sure they were including my accounts when setting the fee schedule.  First of all she called on a Thursday to see if they could set the fees to the lower rate.  The guy she talked to said yes, but it wouldn’t take effect until the following Tuesday.  I thought that was pretty ridiculous but whatever – no rush.   The following Tuesday she called again and the fee had still not be set.  The guy then told her to make the trades and then call back and they will manually adjust the fees.  At this point I’m pretty annoyed – how many phone calls do we have to make to get the fees that they advertise?  This is one of the reasons we will be moving back to Questrade eventually – they have $4.95 fees for EVERYONE and you don’t need to jump through hoops (or make multiple phone calls) to get it.

Anyway, we made the trades – my wife called to get the fees adjusted to everything will be fine.  Only problem is that we made the US$ trades on one day and will do the Cdn$ trades on a different day (so we know exactly how much money there is) so we will probably have to phone again.

So far, I’m not impressed.

By the way – we bought VTI at $44.31, VEA at $26.31 and VWO at $23.61.

VTI – this is Vanguard’s “All American” stock index – basically all the publicly traded stocks in the US.

VEA – Another offering from Vanguar – Europe and Asian stocks etf.

VWO – from…you guessed it…Vanguard.  This is their “emerging markets” etf.

Categories
Announcements

LinkStuff Dec 1

We had a big media mention last week in the National Post – unfortunately they are a pay site so no direct link, however the article also appeared in the Calgary Herald.

In yet another media mention, a fine post by Mr. Cheap called Does passive income really exist? was mentioned in the Wall Street Journal’s Wallet blog.  In case you are thinking this might be some little nothing blog under the WSJ umbrella – none other than Jason Zweig (your money or your brain) published a post a bit after our mention.  He wrote about “Has pessimism gone too far?” – I respectfully disagree – there is never enough pessimism!! 🙂

Rob Carrick, my favourite finance journalist did a live chat last week and yours truly managed to sneak in a question.  The topic was market volatility – check it out.

The Globe and Mail had an excellent article on the potential future of the big 3 American auto makers – and it’s not pretty!

Squawkfox created a great list (with pics) of 10 frugal homemade gift ideas for Christmas.

Canadian Capitalist thinks that Buffett is not losing his touch.  I’m not so sure.

Million Dollar Journey had a good post on cash flow damming.  This is a tax technique where you pay expenses for your small business from your line of credit and use your revenue to pay down non-deductible debt (ie mortgage).  The net result is that you end up legally transferring non-deductible debt to deductible debt.  Mr. Cheap suggested this to me a few weeks ago and I am going to consider doing this.

Financial Blogger says that money is falling from the sky is his post about the US government bailout plan of 2008.

Clever Dude says he is officially stuck in his house because it is worth less than he paid for it.  I would argue he is only psychologically stuck.

Blunt Money has some great advice about how to cut down on over-the-top gift exchanges.  Couldn’t agree more!

Money Ning asks if saving money is always worth it.

The Intelligent Speculator says that corporate bonds are not so safe.

Investing School explains 401(k) retirement plans.

Credit Toolbox has some advice for dealing with credit agencies.

ABCs of Investing wrote about index funds and explains what interest payments are.

Carnivals

Living Almost Large hosted the Carnival of Personal Finance.

Carnival of Financial Planning.

Categories
Investing

Best Questrade Review 2020 – Plus $50 Free Promo Code

Who is Questrade?

Questrade discount brokerage is an independent (not owned by a bank) brokerage which has been in business since 1999.  Their office is in Toronto, but anyone who is a resident of Canada can trade with them.

Good things about Questrade

  • Cheap, cheap trades.  $4.95 trading fees for trades with 495 shares or less – maximum $9.95 fees for trades with more shares.  ETFs can be bought for free!
  • Ability to hold US$ in rrsp account.  If you sell a US$ security in a rrsp – almost every other broker charges 1% ore more to switch it to CDN$ and then another 1%+ to go back to US$.
  • Good trading platform.  I only used the free platform (Webtrader) and I really liked it.  It is very simple and doesn’t have all the bells and whistles that other platforms have.  Real time quotes is the only feature I need.
  • Excellent service.  I had no problems setting up accounts and doing trades, moving money etc.  They have an online chat function which I never used but apparently is pretty good.  I either phoned (very quick response) or sent email.  Both methods worked fine for me.
  • No account fees whatsoever.
  • Low balances. Minimum account balance to open an account is $1000 and you only need $250 to keep an account open.
  • All account types available.  Open, RRSP, RESP, RRIF – you name it, they have it.
  • Mutual funds – they will rebate up to 1% of the management fee back to the investor.  Read more about the Questrade mutual fund rebate.

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

Promo code to get $50

Get $50 in trading fees when you sign up with Questrade.  Click on the banner below to get started or use the code “dc988dd9” to get the free trading commissions.

More Questrade Info

How to buy an ETF or stock at Questrade

How to sell an ETF or stock at Questrade

Categories
Investing

The Death Of Index Investing And Other Silly Stats

I recently came across yet another post on investing which goes something along the lines of “If you invested 10 years ago in the Dow then you would have earned exactly nothing in that time”.  I hate to pick on any one blogger since I’ve read these articles all across the blogosphere but this one is the latest and he also had the temerity to tie in poor index performance with the death of index investing.  Of course all the stock pickers out there ALWAYS beat the index so poor market are no concern to them…!  I want to emphasise that Jacob at Extreme Early Retirement does a great job with his blog and I don’t want to sound like I don’t like the blog – just that one post!  🙂

What about the dividends?

Usually these posts look at the point value of an index at a previous time, say 10 years ago and compare it to the present index point value.  This is incorrect because they are missing dividends.  Published index returns always included reinvested dividends and any type of analysis on index performance should always include the same.  Admittedly, if you are looking at a 10 year period where the index point value hasn’t changed, the addition of dividends isn’t going to change the argument very much but it should be there.

Selectivity of stats

Why is it that all the articles always pick the worst peak to trough period to illustrate their rather suspect point that maybe equity investing or even index investing is evil?  Have you ever heard of such a person who invests all their money on the same day the markets peak and then doesn’t invest any more?  Doesn’t seem all that likely to me.  Most people invest their money over time because that’s how they earn it, then save it, then invest it.  Picking one particular time period to prove or disprove a theory is like measuring your gas mileage one mile at a time and then using the best or worst mile to prove your point.

Investment performance

And what about active stock pickers – did they all do better than the indexers over that period?  Or did some of them do better, some of them the same, and some of them didn’t do as well?  I’ve asked many bloggers and non-bloggers who claim they can beat the index by picking their own stocks to prove it – measure their performance and let me know if they did better than the market or not.  You know what?  Not one of them has ever shown that they can beat the market – oddly enough, most of them don’t even bother to measure their performance.  How can someone who doesn’t even know how their own investment method measures up criticize someone else’s?

What is average?

One of the criticisms of indexing is that you will only achieve “average” results – again – will I do better by randomly picking stocks or paying someone lots of money to pick them for me?  One thing about indexing is that you will get the index return minus a very small fee – you will never beat the index but more importantly you won’t underperform the index (except for the small fee) either.  Active pickers can certainly outperform the market but they can also underperform as well – sometimes by a huge margin.  I like making money – if I thought it was possible for me to beat the market then you can rest assured that I would give it my best effort.

Dividends, smividends

Ok – one more rant… I like getting dividends just as much as the next investor but I really think there is an over-weighting on the importance of dividends in the blogosphere.  Yes, the idea of living off your dividends is nice but investment performance measures total return which is capital gains plus any reinvested dividends and interest payments.  That’s it.  I don’t care in what form the company pays out in the end – if the total return is higher, then its a better investment.  If that includes dividends, fine – if not, that’s fine too.

Categories
Announcements

4P Media Mention in the National Post or Eric Lam is God!

I’m happy to announce that Four Pillars and my other learn to invest blog ABCs of Investing made it into Eric Lam’s Saturday column in the National Post which is quite flattering. Unfortunately, any visitors from the National Post would have been greeted by my cheesy learn to trade video post – oh well, that’s what you get for trying to make a quick buck! 🙂

I don’t have a link to the article and in fact I haven’t read it myself since I couldn’t find it on their website – but I’m sure it was a good mention!

Thanks to the Canadian Capitalist for letting me know about it.

[update]

Ok, thanks to Canadian Capitalist I now have the article – it is very nice and complimentary, which needless to say is what I like!

Categories
Investing

Free Educational Stock Trading Videos

I recently found out about a company (INO) that offers free stock trading videos online.  While I’m not into active trading anymore (at one time I had a big interest in it), there are plenty of investors out there who love to trade stocks.

INO offers free online videos which are basically educational trading strategy lessons for someone who wants to trade stocks.  This particular link leads to four different videos by trading experts who give up some of their secrets.

First you go to an intro page where you must register to watch the videos – this involves a basic registration – no banking info or credit info is required.

The four videos available:

Market Wizard Insights – Jack Schwager explains the traits and behaviour patterns that supertraders have in common.

Applying Technical – 90 minute video – verteran market analyst John Murphy explains how he looks at the markets.

Five New Tools for Winners – Jake Bernstein is probably the most prolific writer and researcher of material for today’s individual trader.

The Art of Morphing – Every position is the right position when things go exactly as planned.  If not??

INO TV
Categories
Investing

Will A Big Canadian Bank Fail?

I have to admit that while I haven’t been bothered by the falling markets, today I found it a bit tough for some reason.  It seems like every day the market falls and if it’s only 1 or 2% then that is ok.  Well today the Canadian market fell 9%.  9%!!! That would be a bad year by itself and it was only one crappy trading day of many crappy trading days.  The worst part was the banks – they have been pummelled this year and today the big 5 went down by an average of almost 13%.  13%!!! Very depressing I thinks.

Now, I haven’t gone all anti-Bernstein or anything – I have no plans to sell any equities under any circumstance.  What my concern is now is will one of the big Canadian banks fail? Here are some things I’m worried about:

Canadian banks own bad US mortgages as well

Our banking system was recently named as the best in the world.  Our lending standards were much stricter than the US banks so everything should be ok?  The only problem is that from what I understand, the US banks got in trouble buying investments containing bad mortgages – it wasn’t necessarily all just from writing bad mortgages themselves.

The problem is that the Canadian banks also bought these same investments and have been slowly taking related writedowns all the while not talking about what their real exposure is.  These investments were enough to bring down some big US banks so why can’t they bring down a Canadian bank?  Yes, the Canadian banks have good business models so did Washington Mutual and Wachovia.  They had customers, lots of assets – a normal bank in other words – but they lost it all on the investment side.

A bad dividend trend

The thing that concerns me is that the US banks I mentioned all paid a dividend at one time.  When the stock went down the dividend yield went up…and up and up and up.  First there was a dividend cut and then the bank went out of business.

The dividend yields for the Canadian banks in order are:

  • BMO 8.4%
  • CIBC 7.3%
  • BNS 5.9%
  • Royal 5.6%
  • TD 5.4%

The ones that really stand out for me are BMO and CIBC – 7 or 8% dividends that don’t pay return of capital are too high.  Either they are mispriced or investors are expecting a dividend cut.  Now we haven’t seen the double digit dividend yields enjoyed by the US banks before they went belly up but the yield on BMO and CIBC has roughly doubled over the last year or so.

Summary

I really hope that none of the banks go under but I am concerned about it.  Can anyone please tell me that I’m wrong??

Categories
Announcements

Monday Linkstuff

Every once in a while I like to showcase a new or “newish” blog that I really like and I don’t think a lot of my readers know about.  This time I’m talking about Tough Money Love.  I really like this American blog because the auther is very opiniated.  Too many blogs are just plain boring – they write for search engines, they compile lists of ways to save money on groceries….boring, boring, boring!  TML tells it like it is and doesn’t mind if he offends a few people on the way.

Weight

182 pounds.  I didn’t exercise as much last week since I was out of town for several days eating, eating and eating….

Rest of the links

Ron from the The Wisdom Journal had a post on the Canadian banking system which is the soundest in the world.  His description of US investment banks was priceless:

…US banks, which operate like a mix between a Wild West cowboy, a suckling piglet, a guy who wants to sell you a Rolex from the trunk of his car, and a two year old throwing a fit while screaming “MINE! MINE! MINE!”

Canadian Capitalist says that recent numbers indicate that managed funds don’t do well in bear markets either.

Million Dollar Journey has 7 financial tips for newlyweds.

Preet is a financial advisor no longer!

Financial Blogger talks about big bailout money.

PFN and stuff

Money Ning says if you have time for a shower, you have time for personal finance.

Clever Dude has some ways to cut down on your food bill.

Blunt Money worries about rationalizing purchases – yes, I have that problem too!

Squawkfox wants to know what are your 3 best purchases?

The Intelligent Speculator says that even Buffet is taking a beating in the markets with BRK.

Investing School explains earnings per share (EPS).

ABCs of Investing wrote about investment diversification and timing the stock market.

The Credit Toolbox says to ask for a line of credit.

Carnivals

The Skilled Investor hosted the Carnival of Financial Planning.

Carnival of Money Hacks was hosted by Taking Charge.

Carnival of Personal Finance was hosted by Sun’s Financial Diary.