Entries from December 2013 ↓

It’s a date

CHILDREN modified

OK, knock it off. Enough shortbread, eggnog and being nice to relatives. Reality beckons. We have work to do here, people.

In a week it will be 2014, time once again to get serious about your finances. There are three deadlines to remember. First, you have until Tuesday to shove money into your kid’s education savings plan in order to get a government grant this year. Generally speaking, if you contribute $2,500, F will hand over $500. Seriously. Where else are you going to get a guaranteed 20% return on your money?

Note that the deadline is the end of the year, not Junior’s next birthday. Also if you’re just starting this, get the right RESP. The last choice, unless you like fat fees and skinny returns, should be one of those squirrely, pre-packaged deals flogged by the baby-sniffing salesguys hanging around hospitals, working for any company with the word ‘scholarship’ or ‘knowledge’ in it. Instead, open a self-directed plan which will allow you to pack it with efficient, low-cost ETFs.

By the way, Tuesday is also the deadline for settling trades  involving tax-loss selling. Yes, time to unbridle yourself of that RIM stock you bought at $92.50, or anything to do with gold. At least those turkeys will give you a bloated capital loss to offset the gains you scored on US equities – a loss which can also be carried forward and utilized in any future year. (Remember that investment losses cannot be used to reduce your taxable income from employment or dividends, or rental revenues – only capital gains.)

Another deadline is March 1st. That may seem some distance off, but if you’re planning on an RRSP contribution for 2013, start putting money aside now. While you can contribute up to 18% of what you earned this year, and get a honking big refund for doing so, most people don’t. Not even close. The average is more like 5%, and only one in three people  even do that. This is what you get when houses suck off everybody’s cash flow.

RRSPs, by the way, are not just for retirement. Their greatest use is for tax-shifting. Dump money in while you’re working, in other words, and take it out when you’re not. You get to claim the refund from income when you’re making money, then withdraw the funds at little or no tax later. Great for that screwing-off-on-the-Harley year. Or a mat leave. Or going back to school. Or insurance against an uncertain future.

By the way, a spousal RRSP is ideal for income-splitting. If your spouse makes less, will retire sooner than you, is working on a baby or plans on staying home and eating bon-bons, you can use this sucker to save on household taxes. Contribute to his or her plan up to your own limit, deduct the amount from your taxable income, and after three years in the plan it becomes the property of your spouse, who can withdraw at a lower rate. You get to reduce tax on your high income, the spouse gets to take it out and hopefully pay nothing. And remember you can use a ‘contribution in kind’ to do this, which means you don’t need actual money. Cool.

Finally, on Tuesday you can dump another $5,500 into your TFSA. Or $11,000 between you and your squeeze. Or $22,000 more including your two useless adult children living in the basement. If you do nothing else in 2014 to look after your financial wellbeing, this is it. If you make an RRSP contribution, use the refund to stick into your TFSA. If you have money in a pathetic high-yield savings account in the orange guy’s shorts, move it out and into a TFSA. Hoover your chequing account, the couch cushions or your wife’s secret divorce cache to get enough to max your 2014 contribution in January.

Most folks don’t get this, as you know. A recent survey found 81% are ignorant of the contribution limit, 89% don’t know what can go in a TFSA, and fewer than half even have one – with the bulk of the money sitting in dead-end junk like GICs and savings accounts. Bad. After all, this is the only place you can grow money through capital gains, for example, and never, ever pay a cent in tax. In the coming decades the TFSA will become the primary vehicle for funding the second half of your life, and yet the majority squander it.

Why? Maybe it’s because they get their TFSA advice at the bank, which grows fat from every GIC funded. Maybe it’s ignorance, lethargy, financial illiteracy or inbreeding. Maybe it’s Remax’s fault. Or the schools. Beats me.

But I understand this. The wealthy have assets, and the rest have a mortgage. The divide between them is turning cavernous. Rich people never have the bulk of their net worth in a house. And they sure know what the date is.


XMAS modified modified

To those who come here to learn and discuss.

To the 1% who leave a comment. To the 90% of those who behave themselves.


To those who read, reflect but feel no need to leave words of their own.

To the critics, realtors, the horny and the house-humpers who cannot help themselves. To the doubters and the insecure who nonetheless wonder.

To my colleagues obligated to review this blog each morning after it’s published and who occasionally have a cow.

To those in the MSM who come here looking for things to write about.

To the unknown weirdos who regularly send me pictures to use. Especially ones involving underwear.

To those who ventured here, and since became friends.

To the strangers who stop me on the street or in the elevator. Your thanks sustain.

To the people who build or maintain web sites devoted to bringing me down. You inspire.

To Dorothy and Bandit. F & the peckerettes. The bond market.

To the knuckle-draggers, the western separatists, climate-change deniers, America-haters and Ford-lovers, the doomers and all Kia owners.

May you know that even if your family ridicules you, there’s always  a home here.

Comfort and joy, blog dogs.