Weekend Reading – Canadian Financial Summit, FinCon2019 recaps and more #moneystuff
Welcome to my latest Weekend Reading edition where I share some of my favourite articles from the week that was across the personal finance and investing blogosphere.
Around my travels to and from Washington, D.C. to attend a major U.S. Financial Conference (aka FinCon) last week, I managed to post the following recently:
Here is how I intend to earn thousands of dollars per month in semi-retirement in the coming years – I shared my income investing strategy.
This was my dividend income update for August 2019. I think we might be on pace to earn almost $19,200 later this year!
Thanks to a reader question, I distilled the process to perform Norbert’s Gambit into some simple steps. A nice comment followed by another reader:
Awesome to read that. Go read the post here.
Get your FREE ticket to the Canadian Financial Summit!
Who doesn’t want to save more, invest better, worry less?!
Of course you do.
I suspect because you’re a dedicated reader, you’re well on your way to some form of financial independence – but there’s more to learn!
Over 25 Canadian personal finance experts are ready in just a few weeks to share what they know – for FREE – I’m proud to share what I know too!
Welcome to the 2019 Canadian Financial Summit!
With your free ticket, you’ll be able to watch some of the “who’s who” in the industry to learn about the following and much more:
- How to invest better, easier, and more efficiently
- How to earn more moneyby creatively advertising innovative side gigs
- How to see through financial jargon meant to confuse you (don’t fall for it)!
- How to check your “retirement readiness” now and organize your portfolio for an early retirement – that’s my subject!
- How to get the most of out of your TFSAs, RRSPs, and RESPs!
- How to avoid crippling feesand terrible financial advice (beyond reading my blog…)
- I.R.E. (Financial Independence Retire Early)
- How to legally avoid Canadian taxationwhen you move for work or retirement
- How to use Financial Technology(FinTech) to save major cash
- How to strategically pick the perfect wardrobewithout breaking the bank
- How to drawdown your nest eggin retirement & what a safe withdrawal rate is
- How to minimize costs and save cashwhen doing home renovations
- And MUCH MORE!
Once again – this event is completely FREE to attend. However, if you can’t make it for the scheduled date/time, you will be given the option to purchase a special any-time, anywhere, Premium All Access Pass that will allow you stream the entire conference whenever fits you best.
That’s it. It’s that simple.
I look forward to your feedback on my talk and what you think of my plans!!
Weekend Reading material this week:
5iResearch identified three boring but successful stocks on the cusp of momentum.
The Fioneers wrote about a slower path to financial independence – one I agree with from the #FIRE community. The reason is simple:
“Because we only have one life to live, I truly believe that we should search for happiness and meaning every day of our lives. I’m not willing to put that off until a day I can retire early. The tradeoff isn’t worth it.”
Tawcan (my roommate at FinCon) was one of many bloggers that recapped the U.S. FinCon conference I was at last week. Here are some selected posts from various bloggers on the experience. I might pen my own update in the coming weeks…
How to survive FinCon by Smile & Conquer.
The power of human connection by OneFrugalGirl.
FinCon is the best community of money nerds by Tread Lightly, Retire Early.
Ottawa-area blogger Modest Millionaires shared her first FinCon experience.
Full-Time Finance enjoyed the conference as well – citing value.
A Purple Life, believes FinCon is the ultimate personal finance bootcamp.
Last but not least, Tawcan provided a comprehensive review from his Canadian perspective – and he was a great roommate as well.
In other interesting reads, will our CRA eventually tax the Tax Free Savings Account (TFSA)? I doubt it but they will likely put a lifetime cap on the amount of contributions any one individual account holder can contribute to. I say this because such monies inside the TFSA are tax-exempt, they are not income-tested, and any gains can (currently) be leveraged to skirt some complex Guaranteed Income Supplement (GIS) rules for the seniors. I have a solution:
Have a great weekend nonetheless and max out the TFSA while you can friends!!
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
I see Mr Felix has another video on how dividend investors are wrong. Sadly, I only grasp about half of what he says. I will note he mentions “stock value” as opposed to “stock price”. They are not necessarily the same thing.
Yes, I will watch it.
Ben is of course right in that there is nothing ever magical about dividends, including $1 in dividends is nothing different than $1 earned from capital gains. I mean, $1 is $1. He’s a smart guy. I like his videos.
However, I get excited investing in dividend paying stocks and watching my dividends grow with time. That is something that Ben cannot claim for me.
“He’s a smart guy.”
He’s multiple times smarter than me. I guess that’s why I can’t grasp half of what he is talking about. It’s almost like it is in a foreign language. Doesn’t stop me from watching his stuff though. 🙂
That made me laugh.
That in itself shows you’re smart.
I agree Ben is smart and is generally right in what he’s saying. However I find his view a little too extreme. I utilize indexing internationally and for US but stocks for CDN and try to see both sides of this.
However I think he ignores some of the benefits and reasons dividend investors gravitate that way which Mark covered in his recent post. I also don’t think he’s right in saying there is no basis whatsoever for dividend investing which presumes he knows each persons own goals. He seems to be assuming his statement” a reliable long term outcome” is the goal for everyone. Whatever that is exactly? We know there are people who don’t measure or seem to care about the gains or losses in their stocks- only growing income.
I recognize and accept its a stock pickers job and my over total return outcome may be less or more than the market index for my CDN equity portion. I plan and project it to be less. I sleep at night.
On the other hand I like the relative steadiness of dividend income, the likelihood of increased earnings and dividend increases, the efficiency of collecting dividends with no sales cost, and the ease & efficiency of dripping inside my TFSA.
His example of capital gains from indexing vs dividends eligible tax seems like cherry picking to serve his purpose. He used a person with other income 46+K as a base first considering investment dividend income or capital gains in unregistered accts only. Probably not a situation for a lot of folks.
Maybe I’m off base with my view above but I too enjoy listening to other perspectives and trying to learn something.
I have a bigger problem with those who abuse EI and welfare. These are helpful programs and there are many who need the assistance, but there are also many, probably more than most know about who are too lazy to look for work, take jobs which don’t pay what they think they are worth and abuse the system. There are also lots of people who abuse the welfare program, collecting money for doing nothing and avoiding looking for or even trying to support themselves.
ps: Alain posted the podcast where we did an interview.
Listening to your podcast now.
Certainly not a fan of abuse of EI and welfare. Not a fan of abuse anywhere really. Unfortunately our government does not seem to have the design expertise to figure out how to design effective (let alone efficient) programs.
More scientists and engineers in government – vs. bureaucrats – wanted. 🙂
For myself, I couldn’t care less how TFSA will impact GIS. Never intend to get it and never will.
Overall though, I think GIS, maybe also other Government benefit, should change from income testing to net assets testing. For myself, of course, I would like TFSA contribution limit to be higher. However, to be fair, I think TFSA might should be also like RRSP, based on income but reversely. It’s like if your income is higher than a level, your TFSA contribution limit should be reduced.
Overall, I like the idea from Andrew Yang in the states. I know Ontario tried UBI in a small town before conservative took over? Get rid of all benefits including GIS and OAS and other social benefits, just give everybody $1K a month. We can get rid of all the people working on social benefits. There will be nobody being afraid of losing their social benefit and doesn’t want to go to low-income work. Everybody would feel more secure. Maybe tax rate for higher income will be even higher but I really don’t mind.
I always think eventually AI will take away a majority of low to medium income jobs, also even some high income jobs. Truck drivers will lose jobs first, then bus drivers and taxi drivers. People still need to survive, so UBI is not avoidable, the question is sooner or later. Then why not sooner?
I take a litte different perspective.
GIS certainly won’t apply to me directly but I care about TFSA/GIS because its a waste of taxpayers dollars in some of these cases shown. Our money should be used effectively where it actually does good and is genuinely needed. Yes, I would also like to see the limits for TFSA raised but not regressive based on income. Higher income people need more limits, not less in order to maintain their existing lifestyles.
I would favour a massive simplification of our tax system, and at the same time fix these type of issues that are wrong.
I would also like to see simplication of various programs and how they integrate including OAS, GIS. However I am not yet sold on UBI. I have yet to read a success story. It was recently tried and scrapped in the highly socialized country of Finland. I am a bigger proponent of self reliance. Ironically to me some of the prominent proponents of UBI are billionaires like Zuckerberg and Musk.
I’ve read some things on AI but don’t really know enough to judge how and when this will actually unfold. I’m less sure it will have such a large negative affect as that being forecast. There is a huge truck driver shortage in North America. AI may even be a positive solution.
When I said couldn’t care less I mean for my personal financial situation. Of course being a citizen I care how our society works including how tax and benefit system works. Being a tax payer I completely agree with you that I don’t want my money to be wasted.
RRSP is designed for high income people to prepare for retirement, right? Thus the more your income, the more RRSP room. I think TFSA is designed for lower income people to save for retirement as RRSP is not beneficial for them. For many of Mark’s readers, including myself, just put the money that originally will go to taxable account into TFSA. We will have a decent retirement no matter TFSA being here or not. The difference might be more years at work or less expense in retirement.
Roth IRA in the states is similar as TFSA, but has contribution room adjusted with income. The higher the income, the lower of the room.
Self driving technology will eventually change the way cars and trucks being driven for sure. It’s already has indeed. There are quite a few hot videos online to show Tesla drivers sleeping at the wheel while the car self driven tens of miles. For one thing, future family may not need to have their own cars, and there is no need to waste precious land for garage at home and huge parking lot at mall any more. Self driving trucks might be the answer to the shortage of truck drivers, not more drivers I guess. How far is that future? I am not sure, but hopefully when I become uncomfortable to drive a car, it’s already here. If not, I will pay big money to buy a Tesla. LOL.
For past few years, I normally use the self check out stations in walmart and superstore as I am very impatient to wait in lines. I go to McDonald and Costco, order on the Kiosk now. Being able to order on the Kiosk is actually one reason I eat there more than where I cannot. I am pretty sure those places hire less cashiers because of these. Technology, especially AI, definitely doing more and more work for us. There will be new jobs created due to this, but normally requires higher education and skills. Let’s say if future houses are all 3D printed, some of the labour heavy construction jobs will not be there any more, how many of those workers will have skills for a new job?
When the unemployment rate is not 4%, not 10%, but 20% or 30%, what is the solution to enable everybody to survive?
Thanks for the clarification. I think we’re pretty similar in our ideas here.
I haven’t eaten at McDonalds for 20 years plus. Never Costco. Other than our trips I might eat out 2-3 times per year. Self check rarely, as for me it is usually more time than a line. I read Canadian Tire is taking some of them out.
Hope its a long time before I’m uncomfortable driving.
I have something more controversial May….
How about:
1. UBI.
2. TFSA.
3. Flat taxes.
That’s the tax code in a nutshell.
The more you make, the more you can save; invest; bequeath and likely the less taxes you pay.
Isn’t that incentive to get ahead?
AI will be good but very dangerous. We don’t know what we don’t know.
I think we need to encourage people to get ahead while we also want to take care of people being behind. We need some balance here. It’s not good like in the states, the top 1% get ultra rich and the bottom 50% getting nowhere or even poorer everyday.
I don’t think I have enough knowledge to see what’s the best. But the current system definitely has lots of problems for sure.
I’m all for helping people who are behind in their finances. I started this blog for part of that reason. To give back. I didn’t have any income in the early days (of this site) and I barely make min. wage running it like I do.
The biggest challenge our government has – it has far too many fingers in too many pies. There are some minimum standards they need to focus on – that’s it. Do a few things very well is all they need to do. They (government) want to be everything to everyone. That’s impossible.
Focus is the key to success. Dilution leads to disintegration. I rest my soapbox after a few glasses of wine. 🙂
Great reason Mark.
I agree 100% on too many fingers and pies and especially with “everything to everyone”. I dislike that one vehemently.
I’d like to go back to the days when self reliance and living reasonably and responsibly within our means was much more important. But I’m old school. 3 levels of governments constantly changing, trying to manage every part of our lives by taking in more money and redistributing it leads to inefficiency, unfairness, enormous govt staffing, and a vast complex costly web of tax code and misguided programs. Where we are now. Get back to the basics, let us keep more of our own money and choose how to spend it.
Fat chance of that happening. Citizens of this country seem to be clamouring for more and more, many governments respond by handing out more and financing it from future generations when more can’t be squeezed from existing taxpayers. Change that affects some negatively no matter how justified would be political suicide and might cause chaos. That’s the trouble with these stuctural deficits from beefed up social programs.
I can’t see UBI working as it hasn’t proven successful anywhere yet, even in the most socialized of countries. That would be an incredibly expensive program, and couldn’t effectively account for all the different programs out there now. And the potential work disincentive factor could be scary.
TFSA only would be inadequate with current limits.
Flat tax would be interesting but has lots of issues, even like those with RRSP assets withdrawing. Would govt get their money back? I was always keen on this back when I think it was Peter Pocklington and Ross Perot talked about it.
I would favour a larger personal exemption like 50k? per couple, 35K? for single before a flat tax 20%?? kicks in.
May is right the US is certainly not a model for us to follow with huge polarization and so many being unhelped in such a rich nation.
Lol, maybe I had too much coffee this morning.
All programs and processes have flaws – the catch is – what things can you live and/or live without?
While very expensive to maintain e.g., $1,000 per month per adult? – I don’t see how the administrative overhead could be as nearly as expensive as running GIS + OAS + CCB + other…
How many tens of thousands of people are employed because we can’t understand in plain language how our tax code works? Crazy. That’s waste. We create a system that includes complexity and we hire people to remove that complexity. Go figure.
If you have a great, updated TFSA, just as an example – you don’t need RRSP, RESP, RRIF, LIF, LIRA, etc. Just a thought. Not saying I would vote in that direction but I’m simply saying there is beauty in simplicity.
As for flat tax, correct, my thinking. There is a basic personal exemption and then flat tax after that. Not sure of all the thresholds. I would need to look at data from Stats Can myself 🙂 Too busy for that – going for a bike ride soon.
Trying to remember who was championing flat taxes many years ago? Peter Pocklington? Ross Perot? I was always a fan of that and remember pushing that a lot myself 25 years ago but probably because it helped me.
You better increase the TFSA limits, without RRSP or you’ll be paying a lot more taxes.
It’s going to cost a lot of money to implement UBI. $1000/mth x 35 million people, unless your idea for it is something different.
Open to looking at it but have serious doubts its workable and will improve productivity of the country and lives of many people. Facts are its not proven successful and has had numerous trials. We’ll still need OAS, GIS, other? replacements.
I think I’d rather see a much higher personal exemption, and then a flat tax. Say first 50k per couple or say 35K single person? no tax.
I’d have to spend some time thinking about all this as its not really something I’ve considered too carefully. Dreamland.
Agree on AI.
May, I agree the states is not a good model for us. Way too polarized and light on help for many on lower end. Our system is too complex now and has some broken pieces but I remain concerned we are slipping pretty far to the socialist side now, and that always means those at the middle/high end will pay a lot or we will run out of money. Like we are now, financing too much into the future (especially in good times) and hoping for negative rates that might come. A sure sign of trouble and perhaps even failure.
Agree too many fingers in too many pies. People really need the pie in the other hand didn’t get enough. That’s why I don’t want to vote for liberal this time. Not growing the pie, just getting more fingers in the pie.
As for UBI experiment, @RBull, you may want to look at this link.
https://medium.com/basic-income/what-is-there-to-learn-from-finlands-basic-income-experiment-did-it-succeed-or-fail-54b8e5051f60
Looks like that experiment designed with flaws. Even though, there is positive results.
The attraction of UBI for me, is the simplicity of that system, and also people have control of their own life. I am all for self reliance and living reasonably and responsibly within our means. So here it is, you get your unconditional $1K every month, but you will not get anything else.
Thanks May. I’ve read several pieces on this before. I was in Helsinki for one day almost exactly one year ago, but can’t say I discussed UBI with anyone!
On UBI here I’ll wait for something much more conclusive after some other country similar enough to ours proves it out.
35+ million Canadians – $1000 a mth? wow.
“The attraction of UBI for me, is the simplicity of that system…”
Agreed, along with the reduction in bureaucracy and administrative burden and horrific policy changes on top of policy changes. Easier to understand and comparatively easier to administer vs. dozens of other sub-optimal programs.
All programs and designs have flaws but a drive towards UBI would be certainly something I would support.
Yeah, it’s a huge bill. But I am afraid right now the bill for welfare and other social benefit systems is quite huge already. I found this:
https://www.fin.gc.ca/tax-impot/2014/2013-14-e.pdf
For the fiscal year ended March 31, 2014, Canada’s federal government spent $276.8 billion on social programs. Let’s say among the 35 millions Canadians, kids doesn’t need $1K each month. So round it up as 30 millions, using this $276.8 billion alone, it’s already more than $9K each year per person. So it’s really not that mad, isn’t it?
Simplicity sounds great. Call me a cynic but I have little faith a change to UBI would be more efficient saving money in adminstration, payroll etc. I don’t know where this has happened successfully in govt. How about Phoenix payroll system? How about the amalagamation of my city? These end up costing massive amounts over budget however the inital motivation was cost savings. The governments I know have no history of cutting or eliminating a dept without somehow transferring staff/ other costs elsewhere – another dept etc. Few if any lose their jobs.
What we all seem to agree on is corrective changes and simplifying with numerous programs + tax code is sorely needed.
The $276 billion was total government spending May- not just social programs. ie operating costs, debt costs, defense etc.
For most recent info fiscal yr ending Mar 31/18 https://www.fin.gc.ca/afr-rfa/2018/report-rapport-eng.asp
Total revenue 313.6 B up 6.9%
Total spending 310.7 up 6.6%
Debt cost 21.9
Deficit 19B
Total debt 671B up 20B
I couldn’t see a breakdown of the programs the way we’d probably like to see to give us everything we might want. I’m sure there is another source but I couldn’t find it. Best I can do in haste:
OAS & GIS were about 50B up 5.2% (approx 16% of total spending)
EI about 20B down 4.8%
Child benefits about 23B up 6.2%
these 3 equal 28.2% of spending
Other social programs incl health transfers = 21.2%
Total here is about 50% of spending ~155B.
Deficit 19.
Great stuff. I recall OAS + GIS + CCB = roughly 25%-30% of all federal spending. I would find it hard to imagine that if we kluged those programs, simplified them, harmonized them, income-tested them, related to UBI that we couldn’t give billions to those that need it ~ every adult AND provide a basic earnings exemption as well.
Interesting link to Dale’s cut the crap site and the column/discussion re TFSAs and GIS.
I’m doubtful the TFSA will ever get taxed. There may be more chance of it being capped but even that I’m not sure of. If there is better uptake of it than currently (what I hope for to encourage long term financial self reliance) it will make it that much more difficult for government politically to negatively change it. Other countries have programs similar but much more generous on saving tax free.
Regarding GIS and TFSA: Certainly people that have significant financial assets should not be able to leverage GIS, when it is intended for those who cannot/ truly do not have enough income possible without it. Anytime a government doesn’t introduce or change rules to prevent abuse of the intent and purpose of a program people will take of advantage of it. Unfortunately we can’t rely on peoples own ethics or principles to not exploit this. It is a no brainer and is way past due that governments need to change this, making TFSA income reportable but not not taxable or some other solution. This should not be difficult to do politically as it seems difficult to make a good argument otherwise. Its simply good governance with our taxpayers money and plugs an unwarranted and inappropriate money hole.
Same – I don’t see tax coming on tax-free assets. I see a lifetime contribution cap at some point. Could be $100k. That’s a modest threshold. Will it happen? No idea. I certainly hope not.
The wealthy (e.g., >2 M in invested assets); using GIS, is not right but it’s not illegal. I blame the designers; the process, not the people using GIS.
A complete tax code overhaul and simplification, including UBI (universal basic income) would go a LONG ways in making things right. Flat taxes would too. I suspect it would drive lots of entrepreneurial endeavours – exactly what a modern society should aspire to.
Same here, although personally I choose not to pursue GIS, I didn’t see anything wrong for people doing so even if they have more money than me as long as they don’t do anything illegal. If it’s not right, then change the rules.
That’s why I feel it’s pretty ridiculous to chase the TFSA accounts with big portfolio.
As a parent, I will not punish my kids if they did something wrong that I didn’t tell them they cannot do and also indicated what’s the consequence. I make rules afterwards what could happen if they do it again.
“As a parent, I will not punish my kids if they did something wrong that I didn’t tell them they cannot do and also indicated what’s the consequence.”
Good stuff. Live and learn. Continuous improvement. I expect nothing less from you!
Thanks Mark, I’d be very interested to read what your readers think of the potential that TFSA will be eventually taxed at a certain level and will they means test GIS payments so that Canadian retirees cannot employ some creative tax efficient retirement asset harvesting to access that GIC designed for lower income seniors? Hope to see some discussion on that. Readers should also be aware of the sensible planning that can be found within the spirit of the tax laws. Don’t harvest your own RRSP when you take take those gov monies.
And I’ll try and see as much of the Canadian Financial Summit, but I’ll be in England. I’ll have to catch up 🙂
Thanks for the link and mention, once again.
Dale
I’m all for amending the system so that benefits are received by those that they are intended for. The claim that people follow the spirit of the law is bogus. The “spirit” is to assist those that need the help. Manipulations to qualify for something that was not intended displays a lack of integrity. Might as partake at the food bank and soup kitchens too, or take all the money from the old “leave a penny, need a penny” plates. That is not what the program is for and people know it.
Hey Lloyd,
I really don’t blame nor shame the folks working within the GIS loophole, I blame the designers. If people are following the law, so be it even if I don’t agree with it. That’s at least better than some form of tax evasion or worse.
I just wish (like you I suspect) our policymakers would get their $hit together but too many people care about Justin’s plane getting hit by his tour bus than anything else these days.
“I really don’t blame nor shame the folks working within the GIS loophole”
I’m going to disagree with you on that Mark. We’re all adults and we all know what and who the program is intended for. Anyone who claims otherwise is not being honest, more so if they acknowledge there is a “loophole”. We ought not to have to be told not to touch stuff not intended for us (we learn that in the early grades at the latest). Sad that we now are requesting a government legislate something to prevent people from taking advantage of but here we are.
Fair Lloyd and I can appreciate and understand your perspective.
We ought not to have to be told what is not right or ethical but sadly those laws don’t always align.
Would carrying a gun in a U.S. mall make any sense? Of course not. Not to me whatsoever. But sadly, in some states, it’s perfectly legal. I don’t blame those people – I blame the idiots that made the law.
I don’t see personal responsibility and accountability as the same thing in some case. Personal responsibility – don’t take GIS if you are very wealthy. You won’t and I won’t – I know that!
Accountability – fix the tax code.
The government should be focused on creating simplified, minimum standards of care related to health, education, trade, finances, transportation, law and last but not least our environment. I would hope (eventually) at least some tax accountants, lawyers and other bright folks will change some of the stupidity that is associated with our tax code.
From your lips to some politicians ears. I’d be hugely supportive to a politician that stated and ran a campaign on your last paragraph! You should run. 😉
LOL. I have too much common sense to be a politician.
Inclined to agree, but I have no illusions about honesty, integrity and ethics these days in our country.
Citizens shouldn’t abuse this program and governments shouldn’t allow it now or in the first place. Both are bad.
I might write about that (TFSA cap) at some point. I don’t think they’ll tax the tax-free account (that would make government pros look more idiotic) but I do believe the days are numbered whereby contribution room will be capped.
I’ll be honest here – with some simplification of our tax code (i.e., provide basic universal income for all) – scrap GIS, OAS, other programs – with refinements for a mandatory, simplified CPP for all workers/working Canadians that moves on a floating income scale aligned to CPI for contribution room – our world would be a great place.
You could limit the bureaucrats while at the same time freeing up more people to be entrepreneurs.
There is some sensibility in the design of some regulations but my goodness, if people can’t find 10 min. over a 50-year investing career to figure out RRSP = tax-deferred investing then shame on them.
Happy to link to you! 🙂
Mark
FinCon was tons of fun. Thanks for being a great roommate and a conference buddy. 🙂
It was. Thanks again 🙂