Jumping the line

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  By Guest Blogger Sinan Terzioglu
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Every year thousands of Canadians go to the US to work or spend their winters. For those planning to relocate there for the long term or become a snowbird it’s very important to understand the tax implications, eligibility for cross-border social security benefits and American estate laws.

U.S. Retirement Accounts

Many Canadians have accumulated retirement savings in US plans such as a 401(k) or an individual retirement account (IRA); or they may have inherited a US plan after the death of a spouse; or received a portion of a US plan from a former spouse.  Those who eventually return to Canada are often surprised to learn the Canada-U.S. tax treaty allows continued tax deferral for Canadians who consolidate their US-based retirement plans with their RRSPs in Canada.

The Canadian Income Tax Act allows Canadian residents to contribute withdrawals from a US-based retirement plan on a tax deferred basis to an RRSP without requiring RRSP contribution room, provided a number of conditions are met:

1.       You must be a resident of Canada at the time of the contribution to your RRSP.
2.       The withdrawal from the US-based plan must be received as a lump sum payment.
3.       Transfers to RRIFs are not allowed and the transfer to your RRSP must take place by December 31 of the calendar year in which you turn 71.
4.       The transferred amount can only be contributed to your RRSP, not a spousal plan.
5.       For employer-sponsored plans such as the 401(k) the transfer amount must relate to your services as an employee.

There are several other conditions to be met and the tax rules can be complex so it’s very important to consult a professional tax advisor to ensure consolidating plans makes sense and that the US-based plan qualifies under all of the special provisions.

Consolidating a plan with an RRSP provides many benefits especially for those expecting to spend most of their retirement here. Also, consolidating would simplify the management of one’s portfolio, more easily ensure proper asset allocation, potentially reduce investment management fees and reduce one’s exposure to US estate tax because retirement plans based there are considered US situs assets for estate tax purposes.

Social Security Benefits

Canada and the States have an agreement to coordinate the operation of the Old Age Security (OAS) program and the Canada Pension Plan (CPP) with the US Social Security program in order to protect the benefits of people who relocate between Canada and America. The process of totalization makes a person eligible for a social security benefit without affecting the calculation of the benefit.  Each country prorates the benefit to reflect only the credits earned under its system.

Example – Paul is 30 years old and moves to the US after working in Canada for 10 years.  The minimum requirement for a CPP retirement benefit is only one contribution so no requirement for totalization.

The OAS benefit is based on residency and in order to receive the benefit outside of Canada Paul would need to have lived in Canada for a minimum of twenty years after the age of 18.  If he continues to work in the US and makes contributions to the Social Security system, he will be permitted to combine his 12 years of residence in Canada with eight years of Social Security contributions to meet the 20-year minimum requirement.  The totalization agreement allows Paul to qualify for a benefit, but the calculation is based on his 12 years of residence in Canada.  In order to receive the full OAS benefit, 40 years of residency is required so Paul’s benefit will be 30% of the full OAS pension because 12 years is 30% of the 40-year minimum.

Estate Planning for Snowbirds

If a snowbird’s US–situated assets are worth less than US$60,000 at death, no estate tax, regardless of the value of the person’s worldwide estate.  All non-resident aliens of the US are permitted an estate tax credit of US$13,000, which provides a shelter for up to US$60,000 of taxable U.S. property.  However, if a snowbird’s US-situated assets at death exceed US$60,000, the executor/liquidator of the estate is required to file a estate tax return regardless of whether there is actually a tax liability.

The Canada-US tax treaty currently increases the US applicable credit for residents and citizens of Canada from US$13,000 to US$4,577,800 which works out to the equivalent to having US$11,580,000 of assets not subject to U.S. estate tax.  If a snowbird’s worldwide estate is worth more than US$11,580,000 and US situs assets exceed US$60,000, there could be US estate tax exposure on all US-situated assets.

The types of assets subject to US estate tax include:

·         US securities (stocks, bonds, mutual funds, ETFs) held in brokerage accounts in Canada and elsewhere.
·         Property held in the States including vacation homes, vehicles and boats.
·         US–based retirement plans.

There are various strategies to reduce or even eliminate US estate tax for non-resident and non-citizens of the US such as:

  • Sell U.S. securities that are held directly – The potential estate tax savings should be carefully compared to the costs of realizing capital gains taxes now because it may make more tax sense to defer Canadian taxes until death because the estate could then pay the US estate tax and use foreign tax credits under the Treaty to create some tax relief through the matching of foreign tax credits.
  • Gift US property prior to death – Intangible property such as securities or debt is not subject to gift tax for non-residents of the US.  However, the Americas have a separate tax on the gifting of tangible US–situated assets such as real tangible property.  The current annual limit for gifts to a non-US citizen spouse is US$157,000.
  • Be aware of how US real property is acquired and titled – real property such as a vacation home may be titled on a JTWROS basis (Joint With Rights of Survivorship) with a spouse, so when the first owner dies, title passes to the co-owner.  However, even though property may be titled JTWROS with a spouse, the entire value of the property may be subject to US estate tax, unless the survivor can prove he/she contributed to the purchase price because the US Internal Revenue Service (IRS) assumes that the first to die contributed 100% of the purchase price
  • Use only a non-recourse mortgage to finance the purchase of US real property.  It’s widely assumed by many Canadian snowbirds that mortgage debt reduces the amount of the taxable estate by the amount of the mortgage, however, this assumption is not correct.  This is only true with non-recourse mortgages as it only allows the lender to use the property on which the mortgage is provided as security for the debt.

As with all options it is very important to compare the various costs for each strategy and weigh the pros and cons by consulting with tax and cross-border legal specialists before executing a plan.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

 

 

63 comments ↓

#1 Don Guillermo on 10.17.21 at 2:14 pm

and “That’s why god made Mexico” Tim McGraw

https://www.youtube.com/watch?v=UA15t4XBpnA

and especially since PP likes the heat – John Prine & Josh Ritter – “Mexican Home” (Live)”

https://www.youtube.com/watch?v=CmvPve3pXpE

#2 crowdedelevatorfartz on 10.17.21 at 2:25 pm

Well.
I wasn’t planning on moving to the US anytime soon.
But, with Trudeau as our Supreme leader and Freeland as his bobblehead doll…..
You never know.
Over to you Sail Away.

#3 Flop... on 10.17.21 at 2:57 pm

Felt dirty reading this type of information for free, Sinan.

Pretty sure I was supposed to pay someone a $200 consultancy fee.

Went and stood in the front yard during a torrential downpour for 5 minutes in my Walmart 2XL underwear that I bought in The States and now feel much cleaner…

M47BC

#4 Sail Away on 10.17.21 at 3:10 pm

#2 crowdedelevatorfartz on 10.17.21 at 2:25 pm

Well.
I wasn’t planning on moving to the US anytime soon.
But, with Trudeau as our Supreme leader and Freeland as his bobblehead doll…..
You never know.
Over to you Sail Away.

——

Thanks! Yes, there are many financial benefits to dual citizenship. If one has worked in both countries for significant time (currently 16 years each country for us), you get double the registered and retirement accounts. So we have around 10 registered accounts there that have been quietly compounding away for many years.

Just keep up with taxes. Fun fact: a dual citizen filing with the deduction method instead of earned income exclusion can contribute to a Roth IRA as a nonresident. And buy Series I US treasury bonds paying 3.54%. Yowza.

#5 TurnerNation on 10.17.21 at 3:26 pm

– RESET- incoming. The Globalists’ plan for us. Fire the middle class, locals. (But the hospital capacity guys!).
Thank you to our frontline heros!!

https://montreal.ctvnews.ca/facing-shortage-quebec-to-headhunt-health-staff-in-france-brazil-lebanon-elsewhere-1.5620510
“Facing shortage, Quebec to headhunt health staff in France, Brazil, Lebanon, elsewhere”

.TTC to fire employees who don’t get vaccinated (thestar.com)
““It is unfortunate we have to take these steps,” TTC CEO, Rick Leary, said in a statement. “The TTC is an essential service and we need it to be a safe place for everyone. We will be doing everything we can to uphold our core value of safety.””

——
— USA is key to this. The Globalists are trying to topple it. But hey we are almost back to normal guys!?

.Is America experiencing an unofficial general strike? (theguardian.com)

.Get ready for Thanksgiving travel chaos due to unvaxxed TSA workers (nypost.com)


— Life in the global New System. As I said the future lockdowns and control over Travel/Movement will be *Electronic*. Look at life in this Former First World Country- herded and tagged as cattle:

.Switzerland: “No Covid certificate was working in the whole country and people were not able to enter restaurants or cinemas. People returning from vacation or trying to get out of the country were affected too.
Swiss certificates were back online after one hour, but other EU certificates didn’t work until midnight.”
https://www.nau.ch/news/schweiz/app-streikt-corona-zertifikate-sind-ungultig-66023846

— The global government locking you in your home is now normal. Apparently no level of needles will change this.

.Northern B.C. COVID-19 crisis brings back private home restrictions (terracestandard.com)

#6 Nonplused on 10.17.21 at 3:33 pm

The number of accountants you need rises considerably if you work or do business in the US. Accountants are like surgeons in that they all have their specialty and that is all they do. You need one for New Jersey, one for Texas, one for the fed, and then your Canadian accountants. It gets expensive.

#7 Shawn Allen on 10.17.21 at 3:39 pm

Great Information

Highly valuable for those it affects

Sail Away mentions 3.54% treasury bonds available to some people in the cross-border world (not me)

$10k max per year but Wowza indeed .. 30 year rate but cashable after one year.

https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm

The high rate presumably driven by recent high inflation.

#8 Cottagers STAY THE HELL AWAY! on 10.17.21 at 3:43 pm

Good idea.

By all means, go to the States and live off your combined retirement savings there, as Sinan outlines so well.

Just don’t come up to our neck of the woods again, all you slimy little pathogens from Oakville. We don’t need you.

Just.

Stay.

Home.

#9 Sail Away on 10.17.21 at 4:06 pm

#8 Cottagers STAY THE HELL AWAY! on 10.17.21 at 3:43 pm

By all means, go to the States and live off your combined retirement savings there, as Sinan outlines so well.

Just don’t come up to our neck of the woods again, all you slimy little pathogens from Oakville. We don’t need you.

——-

You and yours are welcome to camp on our property in South Dakota and watch the bison on the grasslands, Cot.

The SA clan believes in inclusivity and a welcoming embrace, even for the irrational and intolerant among us.

#10 Sail Away on 10.17.21 at 4:08 pm

#7 Shawn Allen on 10.17.21 at 3:39 pm

Re: Series I US bonds

The high rate presumably driven by recent high inflation.

——-

The rate resets 2x per year. It will be reset again within a month and almost certainly higher.

#11 Planetgoofy on 10.17.21 at 4:24 pm

Turner Nation.
Your correct in “restricting humans movement”
There will be rules for the elites and rules for the rest of us. This is the plan and it’s being accelerated now. Hilariously corrupt.
58 mins in.
https://omny.fm/shows/money-talks-with-michael-campbell/entire-show-oct-16

#12 Bananas on 10.17.21 at 4:28 pm

50 years later…watched Woody Allen’s Bananas.

As the Revolution succeeded, and new President was making his first speech, it felt very familiar to our leaders mixed messages in this pandemic. Just slightly different clothing and proclamations but…well…making it up in equal measure.

Here…see for yourself if 50 years later this comedic point still holds up and feels in any way familiar.

https://m.youtube.com/watch?v=dkYfmRwryQo

#13 IRA / 401k on 10.17.21 at 4:44 pm

Great article Sinan!
Not clear to me: if I’m a Canadian, residing in Canada, with a IRA (or 401k), say US$500k (that is < US$11,580,000), and my 401k beneficiary is my spouse, with son as contingent- when I pass away, will my wife (or my son after my wife passes away) have easy access and inherit my IRA or 401k through a simple process? or will they have to go through the U.S. estate tax laws ? (whatever complicated stuff is behind this term).

#14 Dolce Vita on 10.17.21 at 4:47 pm

#5 TurnerNation

Good. Serves the Swiss right. They act like they’re always so squeaky clean and superior to the rest of Europe.

A nation of boring bankers all with the personality of a gnat (add hideous food & espresso at their airports).

——————-

After that RANT I’m going to Inferno, literally:

https://www.rainews.it/dl/rainews/media/mostra-a-roma-Inferno-di-Dante-alle-Scuderie-del-Quirinale-008d6df6-77a6-421b-b053-d718699c5416.html#foto-1

Dante’s 700th at the Quirinale, Italia’s Presidential Palace in Roma. 15th of Oct to 9th of Jan. Art works brought in from all of Europe & the World to commemorate Dante. Besides Botticelli, Breugel, et. al. Rodin’s “Porta dell’Inferno” will be there too (grazie Messico) *:

https://en.wikipedia.org/wiki/The_Gates_of_Hell

Ya, that was a TRAVEL TIP for all you art loving, literary mangia cakes (the few of you that frequent this Blog). I’m going early next month.

https://www.scuderiequirinale.it/mostra/inferno

Tickets online at above web page, from €15.

* Only thing missing would be Giotto’s Last Judgement, Giudizio Universale, then again kind off tough to move Cappella degli Scrovegni from Padova or Michelangelo’s Last Judgement from back of the Cappella Sistina altar:

https://www.artesvelata.it/giudizio-universale-giotto-cappella-scrovegni/
https://it.wikipedia.org/wiki/Giudizio_universale_(Michelangelo)

Good time to travel Italia now, pain in the heinie turisti mostly gone…then again, what have I just done?

#15 WTF on 10.17.21 at 5:00 pm

Pretty sure most snowbirds who own prop over 60k don’t file in the US.

Nice to see the pic of the flag at full mast……kinda forgot what that looked like.

PM “Im PM and your Not” Will of course keep them flapping at 1/2 until he get his guidance from a higher authority only he communicates with.

Cant wait to see his Wokeness blubbering a simpering oily “heartfelt apology” in his breathy stuttering declaration in Kamloops tomorrow. Then a dramatic wave of the Imperial hand to “raise the flag”?

If you can forgive the carbon footprint, time on “Canada 1” will allow him gaze over the kingdom and start pulling names out of a hat to finalize the gender specific cabinet decisions he has probably been agonizing over since his surfing Vacay.

The entire PR exercise Should be nausea inducing for all. Strong stomach required. Stay safe dogs.

#16 the Jaguar on 10.17.21 at 5:21 pm

Dear Dorothy,

As fond as I am of Sinan Terzioglu, which is very, ever since he tried to pull a fast one by posting a photo of dog prone to taxi rides and his grandfather, I can’t can’t quite ‘cotton on’ to today’s blog topic.

I will say that with the biggie firms such as Microsoft, Google, Facebook, and the like, there is a significant increase in peeps living on both sides of the border for work reasons, and I am pretty sure many don’t understand the Canadian Border Services Agency’s views on what a “visitor” to Canada means, versus permanent residents and those who have severed residential ties to Canada for taxation purposes. Enough said. Let’s get to my important ‘tip’ for Dorothy:

Next time Garth takes the two of you to Toronto to inspect the current state of ‘The Path” and everything else interesting or not in the “Big Smoke”, be sure to also take in the following. It runs until January 22nd 2022. I plan to visit in the first two weeks of the new year, and then gobble down a nice lunch and a glass of wine with a friend. Unless I am misguided I think you like photography. 200 years of notable photographic work. Here is the link and a brief recap. It goes without saying that we might all benefit from ‘forgetting about the outside world for a while”.

https://www.rom.on.ca/en/exhibitions-galleries/exhibitions/breaking-the-frame

“Breaking the Frame” presents a wide selection of historical works from the Private Solander Collection based in the United States, complemented by works from the permanent collections of the ROM. It’s the first time the collection has been on public display and there are enough sights to make you forget about the outside world for a while.

#17 the Jaguar on 10.17.21 at 5:23 pm

Oh crap. On till January 16th. I messed up. Don’t miss it, peeps. Support the ROM.

#18 Shawn Allen on 10.17.21 at 5:37 pm

Estate Planning for Snowbirds

#15 WTF on 10.17.21 at 5:00 pm

Pretty sure most snowbirds who own prop over 60k don’t file in the US.

*****************************
Pretty sure most them are not dead yet and therefore are not required to file.

#19 Love_The_Cottage on 10.17.21 at 6:00 pm

#8 Cottagers STAY THE HELL AWAY! on 10.17.21 at 3:43 pm
Just don’t come up to our neck of the woods
_________
Great timing, rental prices drop after the Thanksgiving weekend so I’m up for 2 weeks and working from the rental cottage! Still nice fall colours.
Many local restaurants close in November but are still open now for take out. Risk couldn’t be lower right now. You are double vacced, right? Those from SK stay away!

#20 Ponzius Pilatus on 10.17.21 at 6:10 pm

#6 Nonplused on 10.17.21 at 3:33 pm
The number of accountants you need rises considerably if you work or do business in the US. Accountants are like surgeons in that they all have their specialty and that is all they do. You need one for New Jersey, one for Texas, one for the fed, and then your Canadian accountants. It gets expensive.
————-
Good information.
Same goes for lawyers.
Everyone sues everyone in the States.
Takin into account limited health insurance, living in the states is probably more expensive in the long run than in Canada

#21 Sinan Terzioglu on 10.17.21 at 6:25 pm

#13 IRA / 401K – Non-US citizen spouses and beneficiaries can inherit and own an IRA just like a US-spouse or US-beneficiary. They have the same options as US beneficiaries so if you pass away your spouse (or son if your spouses passes) will have easy access to the IRA/401K – Sinan

#22 AccidentalAmerican on 10.17.21 at 6:29 pm

Dual citizenship with USA is not a benefit tax-wise for most people. Quite the opposite. USA is the only country in the world, other than Eritra, to have citizenship based taxation such that taxation is based not on where your income is earned or where you live, but rather on what your citizenship is. All other countries leave you alone tax-wise when you end your residency (residency-based taxation).

As a US citizen, you cannot end your tax filing (or non-US account reporting i.e Foreign Bank Account Reports (FBAR)) by ending your US residency.

Things can get very complicated and expensive for a Canadian having Canadian tax residency and US citizenship at the same time.

For example, as a Canadian/US dual citizen the sale of your principle residence in Canada is tax-free with respect to the CRA, but not with respect to the IRS.

Most Canadians living in Canada with US citizenship have been completely unware of their US tax filing and FBAR reporting requirments (local banks are foreign according to the IRS) as it is such a unique anamoly and not well known until very recently with the implementation in 2010 of the Foreign Account Tax Compliance Act(FATCA) requiring banks world-wide to report the accounts of US citizens (regardless where they live and which other citizenships they hold) to the IRS.

Fortunately, for those Canadians caught unaware and unable to backtrack US tax filing and FBAR reporting without excessive accounting costs and risk of penalties, it is a simple matter of not disclosing US citizenship status to one’s Canadian financial institution.

#23 AccidentalAmerican on 10.17.21 at 6:31 pm

Eritrea

#24 AccidentalAmerican on 10.17.21 at 6:34 pm

“All other countries leave you alone tax-wise when you end your residency (residency-based taxation).”

Presuming you also earn no income from said country.

#25 Dr V on 10.17.21 at 6:37 pm

In keeping with today’s post, and in addition to “Greater fool” and “Money Road” I bought this book during the period immediately after the GFC

https://www.amazon.ca/South-49-Canadian-Buying-Residential/dp/0470161310

With the dollar swing at the time, I could have mustered
a modest US RE purchase. I had a couple of clients who did, as well as a lawyer buddy whose wife is an FA (but not my FA). AFAIK, they have all sold.

With so many luxury goods (boat, ski condo, RV etc), to really enjoy the benefit, you have to use them regularly. That would mean renting the place out at all other times, and after getting a feel for the rules and possible remifications, I figured better to start investing in financial assets and vacation where and when I wanted.

It sounds like blogger Sailo has it figured with the dual citizenship. I think he once gave a link to his place is
South Dakota(?). Looked beautiful. (Not a MSU for cheap rent)

#26 Ponzius Pilatus on 10.17.21 at 6:41 pm

#2 crowdedelevatorfartz on 10.17.21 at 2:25 pm
Well.
I wasn’t planning on moving to the US anytime soon.
But, with Trudeau as our Supreme leader and Freeland as his bobblehead doll…..
You never know.
Over to you Sail Away.
——————–
And straight into the welcoming arms of Trumpland.
If he’s still alive, Trump got a good chance to retake the White House.
Sailo can’t wait for this to happen.

#27 Don Guillermo on 10.17.21 at 6:56 pm

#17 the Jaguar on 10.17.21 at 5:23 pm
Oh crap. On till January 16th. I messed up. Don’t miss it, peeps. Support the ROM
*************************************
Interesting looking exhibit Jag. ROM is awesome!

#28 Philco on 10.17.21 at 7:05 pm

Just bouncing back to the 7% return on your portfolio mention prior blog.
In my world hard to stomach when I see major inflation across the board. You losing the battle in my view. The best hedge is owning a lot of productive assets.
Prepare for more of it.

From one of my fav guys.
“In our view, the signs are in place today that the next round of inflation will be coming in the year ahead. We saw the index for producer prices in Germany increase 10.4% year over year in July¹. This is the highest increase since January 1975, or on a month over
month basis, it was up 1.9%, which is near the peak from 2008. (Bloomberg Finance L.P, September 2, 2021)

Additionally we saw Taiwan Semiconductor Manufacturing Co, the largest contract chip maker in the world, plan to raise prices by as much as 20%. Interestingly, it is the most advanced chips that will be seeing prices rise by approximately 10%, and the less
advanced chips will see prices rise by about 20%. These types of price increases will impact a wide variety of global products given the continued digitization of the world.
The producer price index inflation today along with the chip price expansion, in our view, will sow the inflation seeds of tomorrow and we remain vigilant to that risk within our portfolio today.
As a result, we have lowered the overall exposure of our portfolio. Most of what we own on the long side is very cheap growth stocks and we are short expensive companies and/or companies with no earnings. We believe the market may have peaked for the year as the Fed may start tapering very soon.”

I say YUP no rush to get in the market at this time….
And yes I looked at moving to the USA or ASIA to escape Mr. Socialism and his financially illiterate side kick.
Forever punishing the successful, as its an easy sell, in the land of the great divide and discontent these days.

#29 Ponzius Pilatus on 10.17.21 at 7:15 pm

#9 Sail Away on 10.17.21 at 4:06 pm
#8 Cottagers STAY THE HELL AWAY! on 10.17.21 at 3:43 pm

By all means, go to the States and live off your combined retirement savings there, as Sinan outlines so well.

Just don’t come up to our neck of the woods again, all you slimy little pathogens from Oakville. We don’t need you.

——-

You and yours are welcome to camp on our property in South Dakota and watch the bison on the grasslands, Cot.

The SA clan believes in inclusivity and a welcoming embrace, even for the irrational and intolerant among us.
——————–
Sure, your clan does, Sailo. Sure.
Just watching a clip by Fareed Zakaria about South Dakota.
“Billions stashed in America’s own backyard”.
According to him, the tranquil backwater where the bisons and the Sailos roam, is also a major destination in the  international money laundering business.
Sailo, you’re a player.
Care to comment.

#30 ww1 on 10.17.21 at 7:16 pm

That 401k/IRA roll over to an RRSP explanation seems to ignore that the IRS will tax the lump sum withdrawal at 30% and you may be unable to use all the resulting FTC (foreign tax credits) and they can’t be carried forward.

Leaving your 401k/IRA in the US and taking regular withdrawals after retirement (@15% US tax rate fully FTC eligible) is often a better plan. Especially as you can income split the 401K withdrawals with your spouse.

#31 the jaguar on 10.17.21 at 7:26 pm

@27 DonG.

I thought the 1937 vintage gelatin print ‘A bride dances’ by Emilio Amero, Mexico ( 1901-1976) might catch your eye. So classic and beautiful. He was a great Mexican artist. So many incredible talents from a great country with an impressive and sometimes troubled history. ‘Poor Mexico. So far from God and so close to the United States’………..

#32 Shawn Allen on 10.17.21 at 7:29 pm

Own Productive assets – but not the market

#28 Philco on 10.17.21 at 7:05 pm said:

… I see major inflation across the board. You losing the battle in my view. The best hedge is owning a lot of productive assets.

We believe the market may have peaked for the year as the Fed may start tapering very soon.”

I say YUP no rush to get in the market at this time….

***************************
hmmm … but the best way for most people to own productive assets is to own the equity market indexes? Timing the market has worked out badly most times.

So best bet for most is the diversified and balanced portfolio?

#33 TurnerNation on 10.17.21 at 7:46 pm

Technology. Yes all this took place to force us into a global digital ID. In the Blockchain. Freedom is long gone. You gave it up that cold winter week, March 2020.

.Global QR Travel Codes? (bbc.com)


–Yep the children must never again know normalcy. Wall St Journal pretty much acknowledges the new A.I.-based control system.

https://www.wsj.com/articles/covid-19-precautions-prompt-backlash-on-college-campuses-11634376600
or https://archive.is/Xnjo2
“Student-led petitions have prompted some schools to drop the use of location-tracking apps and requirements to wear sensors that monitor vital signs.”
“At the core of their concerns is a fear that universities are constructing a bureaucracy designed to control a generation just coming of age.”
“It feels like the school is blackmailing me, they get all this personal information and in exchange I get an education,” said Dan Smith, a graduate student studying labor history at Wayne State University in Detroit. “It’s the growth of the surveillance state.”
“At the University of Southern California, 95% of students are vaccinated but they need proof of a weekly negative Covid-19 test to enter campus. Students must leave classrooms to take a sip of water, rather than just sliding their masks down. Security guards circulate in the library and student union reminding students to cover their noses and mouths with their masks, said sophomore Marin Ruiz.”

— Dolce what’s going on.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8481107/
“Increases in COVID-19 are unrelated to levels of vaccination across 68 countries and 2947 counties in the United States”
“Of the top 5 counties that have the highest percentage of population fully vaccinated (84.3%-99.9%), the US Centers for Disease Control and Prevention (CDC) identifies 4 of them as “High” Transmission counties.”

#34 Albertaguy in AB on 10.17.21 at 8:07 pm

And this is why i felt it time to unload my seasonal home in AZ…and yes i filed each year with irs…hrblock 250 bucks…is dotted … ts crossed.. besides water is becoming a scarce resource and weather becoming too unstable. Putting my 200k tax free gains (claiming PR) to work elsewhere.

#35 Bdwy on 10.17.21 at 8:14 pm

——–
And straight into the welcoming arms of Trumpland.
If he’s still alive, Trump got a good chance to retake the White House.
Sailo can’t wait for this to happ…….

#36 Ponzius Pilatus on 10.17.21 at 8:20 pm

#30 ww1 on 10.17.21 at 7:16 pm
That 401k/IRA roll over to an RRSP explanation seems to ignore that the IRS will tax the lump sum withdrawal at 30% and you may be unable to use all the resulting FTC (foreign tax credits) and they can’t be carried forward.

Leaving your 401k/IRA in the US and taking regular withdrawals after retirement (@15% US tax rate fully FTC eligible) is often a better plan. Especially as you can income split the 401K withdrawals with your spouse.
————–
Far too much fancy financial footwork (I get exhausted just reading one sentence) for me.
Just go with a [email protected] portfolio, and relax.
Now I go for a for walk and let the gentle rain wash all my sins away.
Try to do that in Mexiko.

#37 When Will They Raise Rates? on 10.17.21 at 8:56 pm

Good post, but will wait to see how Biden’s vax mandates play out in court.

#38 Philco on 10.17.21 at 8:59 pm

#32 Shawn Allen on 10.17.21 at 7:29 pm
Own Productive assets – but not the market

#28 Philco on 10.17.21 at 7:05 pm said:

… I see major inflation across the board. You losing the battle in my view. The best hedge is owning a lot of productive assets.
We believe the market may have peaked for the year as the Fed may start tapering very soon.”
I say YUP no rush to get in the market at this time….
***************************
hmmm … but the best way for most people to own productive assets is to own the equity market indexes? Timing the market has worked out badly most times.

So best bet for most is the diversified and balanced portfolio?
——————————————————-
Depends on the individual and what you know.
I see a bunch of hair splitting here on owning a house or a B&D. I say both….back to what you can do or afford. Who cares really they both work…you could own 2 or 3 homes/rentals? Id did years ago.
But these days….. there been a paradigm shift with major inflation of assets……or is it the destruction of your buying power and wages stagnating?
You just cant buy a duplex and put cash in you pocket even at these int rates.

When I say productive asset I would lean towards owning your own tangible that can produce an income. Not easy now. But owning good companies that can grow and provide a solid Div. via the stock market is the answer for most. The Garth Turner method likely provides survivability with a Div. But one wrong move or black swan and things can change depending on what you own.
Take the income trusts, when the Gov said “WE WILL NOT TAX THEM” and ya wake up the next morning poof your a bucket of shit. They slammed them.
The most dangerous thing to your financial health is the government they are my silent partner I didn’t sign up for that gets 50%+.
So for me, 2009 crash I went all in. 2020 April I had very high cash levels and I did the same.. There are indicators of a retracement now so Ill wait.

Like buying RE if you can find a cheap piece that has cash flow that makes sense do it. (That is the best no brainer investment)
But ya can’t. A good example trailer parks as I was looking 10 years ago.
RE Investors love them for a variety of reasons.
Primarily land value increase and steady cash flow no brains required. Peeps need a place to live and there more and more that cant afford to run a house. They are gold mines.
BUT…..since they pounded interest rates into the ground these things were bid up to the stratosphere knocking down the cap rate to 3.5 or 4%. These investors were looking for yield!!
I think everything’s pretty bloated right now. I wouldn’t sell anything but I wouldn’t be a buyer.
I wait years for deals.

#39 Philco on 10.17.21 at 9:11 pm

#37 Philco on 10.17.21 at 8:59 pm
#32 Shawn Allen on 10.17.21 at 7:29 pm
————————————-
sorry for the bla bla bla.
There is a magic bullet….its called buy 20-30 years ago. Anything.
If your older and a renter….rents have gone up a lot where I am. You need a lot of extra dough for that, plus eat and run you car.
There’s no way most can keep up. Is your portfolio going too??

#40 Dr V on 10.17.21 at 9:27 pm

32 Shawn

“hmmm … but the best way for most people to own productive assets is to own the equity market indexes? Timing the market has worked out badly most times.”

While true, I believe there are certain sectors that perform better in different “inflations” – cost-push, demand-pull, or stagflation. I cant recall which ones,
and there was some disagreements amongst the
“experts”.

Utilities stick in my mind. These were labelled “poor” during inflation as they are often stuck with long-term
pricing contracts. I dont know if that is still generally the case, or do they now have more pricing power?

Also their reaction to interest rates. I understand insurance companies do better, as their cash assets earn more so they can hold less cash. I think. They can charge higher premiums as well if prices are inflating.

Resource companies for demand-pull either directly or indirectly. Maybe not so good for cost-push.

I’ve even heard the arguement that gold miners actually do well during deflation because of lower costs.

An economist needs a lot of hands.

#41 Philco on 10.17.21 at 9:44 pm

Shawn Allen
I reserve the right to retract my call on a larger pullback…
Just surfing charts now. They are looking like recovery is possible and higher highs….
Staying the course is the best. Looks like inflationary policies will prevail. Good for you portfolio and your RE..
TSX breaking out, the loonies moving up…all good..
Stay the course…

#42 Russ on 10.17.21 at 10:15 pm

Philco on 10.17.21 at 9:44 pm

Shawn Allen
I reserve the right to retract my call on a larger pullback…
Just surfing charts now. They are looking like recovery is possible and higher highs….
Staying the course is the best. Looks like inflationary policies will prevail. Good for you portfolio and your RE..
TSX breaking out, the loonies moving up…all good..
Stay the course…
=============

Thanks for the update Phil.

My best feature as an investor is to procrastinate. Looks like a normal Monday morning for me.

Cheers, R

#43 Ponzius Pilatus on 10.17.21 at 10:25 pm

#34 Albertaguy in AB on 10.17.21 at 8:07 pm
And this is why i felt it time to unload my seasonal home in AZ…and yes i filed each year with irs…hrblock 250 bucks…is dotted … ts crossed.. besides water is becoming a scarce resource and weather becoming too unstable. Putting my 200k tax free gains (claiming PR) to work elsewhere.
————-
Interesting.
People who understand that climate change is real will reap financial benefits by moving to more temperate locals, and away from coastal regions.
Should see many more Albertans abandoning foreign climes, and re-unite with the mothership.

#44 Don Guillermo on 10.17.21 at 10:43 pm

#36 Ponzius Pilatus on 10.17.21 at 8:20 pm

Now I go for a for walk and let the gentle rain wash all my sins away.
Try to do that in Mexiko.
***************************
Verdad amigo. We have no sins in Mx : -)

#45 My dog has fleas on 10.18.21 at 2:25 am

I am a Canadian from Toronto who at age 45 was unemployed with a few thousand dollars to my name.
Could never make and save much money in Toronto.
Thought I would try my luck in the U.S. so in 1995 I pack up what little belongings I had and drove to California.
Did not plan on staying long, but the years went by.
I recently retired here at 66 , over the years I became a U.S. citizen, got married to a Japanese women, bought a small house in the Bay area and saved $1.2 million U.S. in an IRA and Roth IRA investment account. (Read Garth’s blog to learn investing, money management).

Asked my wife where she wanted to retire and she said Vancouver Island. From what I read I can probably not afford to live in Canada, high house prices and all.

With Dual citizenship it seems very complicated, taxes and IRA, etc.
Would I have to cash out my U.S. IRA?
Not really sure how to go forward.
Can you suggest any resources or firms that can help me research answers , if too complicated probably best to stay and enjoy warn winters here.

#46 6uild 6ack 6eavers on 10.18.21 at 4:36 am

#32 TurnerNation on 10.16.21 at 2:00 pm

RE: Climate deaths

“Ella was the first person in the UK to have air pollution listed as the cause of death on their death certificate, following the inquest ruling by Mr Barlow last December.

In a report to prevent future deaths, he said the government should reduce existing legally binding targets for particulate matter pollution to bring them in line with World Health Organisation (WHO) guidelines.”

https://www.bbc.co.uk/news/uk-england-london-56801794

Strangely enough in the last couple years (just a coincidence, I;m sure) the UK has witnessed these “Gr££n” zones and congestion charges popping up in every major city centre with punitive fines meted out to the tax farm slaves (up to £160 or roughly $300 per infraction) all enforced by the ubiquitous and merciless digital surveillance panopticon that we now enjoy.

#47 Sinan Terzioglu on 10.18.21 at 6:01 am

#45 My dog has fleas – If you move to Canada you do not have to cash out your IRA – Sinan

#48 Wrk.dover on 10.18.21 at 7:00 am

US tax system; more complicated than girls!

#49 crowdedelevatorfartz on 10.18.21 at 8:12 am

@#45 fleas
“Asked my wife where she wanted to retire and she said Vancouver Island.”

+++

Does she like the rain?

#50 the Jaguar on 10.18.21 at 8:14 am

Supply Chain Snippet from the NP:

Fashion brands like Benetton are increasingly turning away from globe-spanning supply chains and low-cost manufacturing hubs in Asia, in a shift that could prove a lasting legacy of the COVID-19 pandemic.

Italy’s Benetton is bringing production closer to home, boosting manufacturing in Serbia, Croatia, Turkey, Tunisia and Egypt, with the aim of halving production in Asia from the end of 2022. Today a shipping container that used to cost US$1,200-1,500 can cost US$10,000-15,000, with no certainty of a delivery date.”

The tenfold jump in sea freight costs has been driven by a scarcity of available vessels, as many were idled during the pandemic, coupled with rebounding consumer demand.

For those players who decide to move manufacturing closer to their markets, or “nearshoring,” the investments involved mean there is unlikely to be any reversal in the near future.
For family-owned Benetton, based in Italy’s northeastern Veneto region, the production shift is part of a drive to regain profitability.WE WILL EXPAND THIS (NEARSHORING) CONSIDERABLY

#51 crowdedelevatorfartz on 10.18.21 at 8:20 am

Lets play a game dogs.

How many billions of dollars will our PM give away today at the Kamloops apology fest ?

#52 Perfect Prophet on 10.18.21 at 8:27 am

The “fools” cheerleading a whiz bang recovery are either Liberals or clueless. Consumer prices are skyrocketing, commodity prices are already uncomfortable. Even the G&M is suggesting you get ready for a Convo with your family about choosing food or heat as the new normal. The stats on hyper-inflation don’t look like the cheerleaders vision of flash cars and a new wardrobe. Reality is suggesting a very FUGLY future.

https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-households-that-made-money-in-the-pandemic-should-prepare-for-some/

Forget a retail splurge, it ain’t happening. And do you hear these guys who day that the inflation is temporary? If your boss has to increase your pay, will he lower it later? No? I didn’t think so.

If your landlord raises rent 20% will he lower it at Tiffs suggestion of ‘all clear’? Bacon at $9 will go back down? Cars up 15% will settle back? Etc etc. Nonsense. When prices go up they stay up..like taxes. It’s what’s called “sticky”. Don’t believe these guys, all lies.

Inflation is shooting up. If wage increases fail due to lag in business and prices continue to rise that’s called stagflation. Incurable without seriously raising rates.

There’s no recovery coming. Covid is in fact being called endemic. Prepare for the sixth wave….and the seventh. Without revenue after killing Canada’s pillars of revenue in energy, industry and mining Trudeau will have to raise taxes fast to stave off the cuts coming from the IMF and tax you before you have a chance to spend your own money. Are you ready?

#53 Dharma Bum on 10.18.21 at 8:58 am

As a frequent visitor to the Yew Ess Uv Ay, I blow tons of coin at Trader Joe’s.

Their junk food (disguised as healthy snacks) is excellent.

Can I deduct this expense from my income?

Just asking.

#54 IHCTD9 on 10.18.21 at 9:47 am

In the post-Trudeau financial Canapocolypse, there may well come a time when biding adieu to this once fine country may be a no-brainer for middle Millennials on down.

Or, you may want to stay; in which case you’ll need to learn some appropriate ways of living that come with our new woke activist-led paradigm. Some preparations I’m working on are simplification, minimalism, and reducing energy consumption and taxability.

Come Christmas, I’ll be down to one pc of heavy equipment – just enough to maintain the bunker complex. I have two trailers, one too big, one too small – they’re going on the block and I’ll be building/buying one that is just right. Both ATV’s will be going on the block also in the spring of 2022. The 22.5 L/100 km gas eating 2500HD is going on the block as I have just purchased a new (to me) diesel 3/4 ton that can do 9.5 L/100 km, yet still do everything I need it to do. One of those things is hauling (free) firewood to supplement my heating requirements. Last-year’s rocket stove project is getting a revamp for this year – and will do the full season for the first time.

This shuffle will free up ~$31K in cash, while costing about $5K to execute, and saving 3500.00/yr in fuel/heating costs – every year. Lots of taxes dodged too. If I like how things work out with the diesel and the wood burning – both can be expanded to reduce energy costs an additional 2900.00/yr off – every year.

In the new Canada, living like a baller will cost you big-time, and half the country will hate your guts. Like Mr. T says, “live quietly among the masses”.

#55 Nonno Nicola on 10.18.21 at 10:17 am

#54 IHCTD9

Thoreau would be proud of you! Congrats!

#56 Jim Lahey, Sunnyvale Trailer Park Supervisor on 10.18.21 at 10:26 am

#38 Philco

Trailer parks are an excellent investment! We at Sunnyvale welcome any and all! Ricky, Julian and Bubbles rock and Randy is ok as well.

#57 Nonno Nicola on 10.18.21 at 10:32 am

#8 Cottagers Stay the Hell Away

You need to get the Don Rickles Insults Award for your posts! You are a scream! Tell me when your next comedy show is!

#58 Nonno Nicola on 10.18.21 at 10:35 am

#53 Dharma Bum

Hopefully your place in the Bruce Penninsula will be ready for the amazing Concours D’Elegance car show in Sept.2022. I attend this annually except for the last two years thanks to it being cancelled because of Covid.

#59 Philco on 10.18.21 at 1:35 pm

#56 Jim Lahey, Sunnyvale Trailer Park Supervisor on 10.18.21 at 10:26 am
#38 Philco

Trailer parks are an excellent investment! We at Sunnyvale welcome any and all! Ricky, Julian and Bubbles rock and Randy is ok as well
————————–
Hahaha
Preferably in the OKanagan Sunshine coast Van Island WA State.
Tidy ones. In 09 they were going dirt cheap in WA but I chickened out.
But I think the best investment is storage as you hold all the cards.
I’ll be starting up my second one if I can get motivated.

#60 Shawn Allen on 10.18.21 at 1:52 pm

Dearly Unvaccinated by choice

Of the people under 40 who landed in ICU in Alberta, 95% of them are unvaccinated according to Alberta Health. 95%!!

Unless they had a medical reason I would say 100% of the 95% were idiots. Not a lot of COVID people are coming out of ICU in good shape. A lot come out dead.

Also have the anit-vaxer, my body, my choice people considered that the VIRUS does not ask permission to enter our bodies?

#61 anon on 10.18.21 at 4:32 pm

Hi Sinan, thanks for your valuable advice. On your third point:

“3. Transfers to RRIFs are not allowed and the transfer to your RRSP must take place by December 31 of the calendar year in which you turn 71.”

If I’m not mistaken, you have to be at least 59.5 before you can transfer from the US IRA. If not, you will have to pay the 10% early withdrawal penalty. On top of that, you still have to pay the US tax for the withdrawal amount. I never quite understand how the US tax is calculated on the withdrawal. It would be nice if you can provide a simple example of a person that transfers $100k IRA to RRSP at the age of 60.

Thanks again.

#62 Capital One on 10.18.21 at 4:34 pm

Hey Sinan – hope you’re still checking the comments. Great – and timely – post for me.

My wife and i worked a number of years in the US a couple of decades ago and just left our IRAs there. And you’re right – it’s a bit of a challenge to keep a nice balanced view of the portfolio when it’s not consolidated. And I had NO idea that we could move them to our RRSPs. Will look into it.

But … a question on Social Security. We don’t have the minimum number of quarters (40 I think) but I know the agreement between the two countries covers this. I’m just not 100% how to apply for SS. Just apply? Or is there a provision to port those years into the CPP calcs?

Thanks,
CO

#63 Ordinary Blog Dog on 10.18.21 at 9:15 pm

Thanks for taking us to school Sinan!