Entries Tagged 'Book Updates' ↓



The hard thing about predicting is that involves the future. Things happen. Like the collapse of the Dippers and the ascendancy of the just-not-ready kid. And while I have no idea what will happen a week from today, the polls suggest there will be (a) a Lib minority, supported by the socialists or (b) a Con minority, which will soon be defeated by the barbarians. In the second scenario, it’s likely the G-G will allow the anti-Harperites to form a new government without another election – since we’re all tired of campaigning.

This is speculation, of course. The Conservatives may well retain most of their base and do better than it appears possible, with the ABC vote splitting in enough ridings to allow many blue seats with just over 30% of the vote. But there’s a mood in the nation. Change is palpable. The prime minister should have left after three terms.

My old friend Bill Casey gets it. I went to Nova Scotia a decade ago and campaigned for him as a Conservative. The former Ford dealer from Amherst won the seat, then (like me) countered Harper on a policy issue and was booted from the Conservative caucus for insubordination. He sat as an indie for a while (like me), then quit and now is trying to re-enter the House of Commons, this time as a Lib. But mostly he’s telling people in the riding that this election is all about one thing:

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Guess what that message is?

Well, this post actually has an economic, financial and tax raison d’être. It’s about your TFSA. Lots of people have posted here over the last few days that they went to the advance poll and cast their ballot in favour of the blue guys simply because of this issue. Other commenters ridiculed them, suggesting they sold their souls (and the country) out simply to gain a tax advantage and make their own futures more comfortable.

It’s ironic this conversation was going on two days ago while we were all debating the court decision allowing the company-formerly-know-as-Stelco to walk away from twenty thousand retirees, cutting their benefits now and their long-term pension payments next year, because it’s run out of funds. This is one of the new economic realities.

Over 70% of Canadians have no corporate pension plan. Defined-benefit plans, which guarantee a future payment, are rapidly disappearing. Many defined-contribution plans, essentially glorified group RRSPs full of crappy mutual funds, are woefully inadequate. And we have a swampy economy which strongly suggests there will be more Stelco-type heartaches down the road.

In this new world – markedly different from that which defined the workplace and retirement a generation ago – controlling one’s own destiny has never been more critical. It’s why I’ve consistently recommended  anyone given the option of commuting their pension – taking a lump sum payment rather than signing up for a monthly cheque from the administrator – grab it.

There are a number of benefits. Risks too, of course, but the advantages far outweigh. By controlling this money you can tailor the investments more to your needs, often securing better returns than the overly-conservative administrator. You also ensure 100% of the money is the property of your family, so if you croak too soon your spouse or kids get it all, instead of a small survivor payment that could run out in a few years. And while all of your pension cheque is taxable if you remain in the plan, when you commute it a portion can be taken as return-of-capital, which is not added to your taxable income, hopefully keeping you in a lower tax bracket. Finally, you prevent becoming a victim, like thousands of former Stelco workers.

Risks? Of course. You’re responsible for your own investment strategy, and could screw up. But so can the institutional pension plan – which is also subject to political and regulatory pressures you cannot control.

The choice is simple. You trust others, or you trust yourself. In the context of this election, that might translate into supporting a fat annual TFSA contribution limit which will accrue during your lifetime, or you vote for guys who say we need a stronger public pension plan instead. It’s sure not the only issue, but it touches the eleven million people who have already opened a TFSA. Over 90% have not maxed their plans, but they all have the ability to do so as they age, and to thus increase control over their own futures.

Also remember that whatever your corporate pension plan, income from a TFSA is taxless and non-reportable. In retirement it will not boost you into a new tax bracket (as will money from an RRSP), nor reduce CPP or OAS benefits.

In practical terms – as stated at the outset – there’s a fair chance the roll-back-the-TFSA guys will win. So, obviously, you and your spouse should ensure you have made the $20,000 contribution for 2015 and maxed out all previous years – even if you have to borrow the money to do so by the end of December (interest is not deductible). Then, see what happens next Tuesday morning. If the red-orange wave happens, it’s unlikely Parliament will resume before Christmas, or that there’ll be a budget prior to February.

So on Monday, January 4th, make sure you max the 2016 contribution limit. It will be messy and difficult for a new government to disallow a portion of TFSA contributions made in that calendar year, so it all might be shuffled off with an effective date of 2017. Or, existing contributions could be grandfathered.

Of course, it’s dumb we even need to consider this. The anti-Harper guys could have been just as effective without removing a key tool for achieving personal financial independence.

But maybe they don’t want you to be free. I better ask Bill about that.


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More long lineups at the 400 advance polls across the nation yesterday. People (like me) waited an eternity to scratch their X in a process that’s being overwhelmed. The better part of a million people voted on Friday alone, up from the last election by 26% and ahead of the one before that by a stunning 98%.

If that day’s any indication, 16% of all eligible voters in Canada may end up having chosen an advance poll. If the final voter turnout is similar to 2008 (61% – which I doubt), then almost a third of all voters couldn’t wait for October 19th.

What does this tell us?

Beats me, but an Elections Canada background paper on advance polling reached the conclusions that (a) advance voters tend to be older than those who wait for election day and (b) they’re more “motivated by an engagement in politics.” Layer over that the results of a bunch of polls, like one done by Ipsos in August showing two-thirds of voters think this election “is about change”, and Mr. Harper may not be too hungry as he stares at his Thanksgiving dinner tomorrow night.

Speaking of turkeys, there’s new evidence about how many foreign Chinese buyers are gobbling up BC real estate. It comes on the heels of remarks by premier Christy Clark that it’s probably unwise to blame Hot Asian Money for Vancouver real estate being the most expensive in North America. Clark says her government’s “rough estimate” of the number of foreign investors is 4% or 5%, and most of the deals they’re doing are concentrated in a small area – that rarified, carrot-up-your-butt hood known as the Westside.

As we all know, this has turned into an election issue, with the Cons and Libs both vowing to analyze the origins of buyers and then take action, if necessary. Said Stephen Harper a few weeks ago: “If such foreign ownership non-resident buyers are artificially driving up the cost of real estate and Canadian families are shut out of the market, that is a matter we can and should do something about.”

Well, we actually already know this isn’t the case. The BC Real Estate Association says phooey, that foreigner investors account for about only 5% of transactions. The Victoria Real Estate Board, which actually surveys its members, puts the number of non-Canadians in that market at 1.6%. And as blog dog Sunni points out, at least one North Van realtor has published new data from the YVR board showing the number of foreign investors over the past year doubled – from 1.9% to 4%. Wow.

Here’s the full report:


As you can see, 90.3% of all buyers in the Vancouver area came from BC. Another 4% were refugees from Canada. So a relative handful either emigrated from outside the country or were foreign investors. Of course, this won’t stop the squawking and wailing among those who need something other than their own house lust to blame for high prices in the Lower Mainland. They’ll continue to argue that when rich Chinese zillionaires buy mansions all the regular people suffer the trickle-downs, or that a lot of “BC residents” are really just relatives of wealthy foreigners. Some of that may be true. But evidence of a wholesale invasion simply does not exist. And soon the taxpayers of Canada will have spent many new millions to prove it.

By the way. Christy Clark is correct to lay more blame for stupid prices on low interest rates than voracious Chinese. But in the same breath she proposes raising taxes on high-end homes so first-time buyers can be subsidized. Yes, that will certainly take more pressure off the market. Not.

Finally, while we’re talking about delusional Wet Coasters, here’s Kijiji-reading Elaine in Van. “If you ever thought rents were not in line with housing costs in Vancouver, here is a perfect example. Rent this house for $2900 a month, or buy for $1,500,000. Mortgage = $6000 a month, or you can rent for $3000 less. Nice neighbourhood, we live a few blocks away in a house that’s assessed at about a million, and our rent is $2k. Still not the time to buy is it?”

Nope. It ain’t. BTW, here’s the house:


I just hope all those people jamming advance polls in Vancouver this weekend don’t think casting their vote for anyone is going to impact the price of real estate. As this pathetic blog has indicated, every major party leader has turned into a housing pimp during the course of this campaign. They’re all merchants of debt.

The election’s fascinating, but it reminds me of a bidding war. Nobody wins.