Canadian Personal Finance Blog

Time and Financial Goals

Yesterday I celebrated my daughter’s 20th birthday, by reminiscing about the day she was born (she is out of town at school, so we won’t celebrate with her, but assume she celebrated with friends).

Twenty Years Ago

The decision to have kids was a hotly discussed topic between my wife and myself, since I was positive we could not afford to have kids at the time (as usual, my wife was correct, that we would simply adjust our lifestyle to fit the new costs in).

Twenty years ago, I had little or no thoughts of retirement, and saving, we hadn’t even bought our first house yet (another hotly discussed topic in the apartment we rented at the time).

My parents luckily thought about the future for us, and started buying our kids savings bonds for their post secondary education (or when they moved out of the house). This is something that I hope I can remember to do for my kids when they have kids, and that money has since moved into RESPs and such. This is something that all parents can pass on to their kids, teaching them the importance of saving for the future, because the future comes a lot faster than you think.

I didn’t really even have any RRSP’s set up in 1990, I did have some savings that we were putting away to buy our first house, but that was hard enough to build up. In hindsight I could have made a lot of shrewd investments, but I have also seen over twenty years that “sure things” in the world of investment are not as sure as they look (i.e. Nortel stock and such).

What Would I Change?

It’s easy to be trite in this situation and list out the obvious things that I should have done back then such as:

• Start an RRSP and invest in high tech early and get out early
• Don’t build up credit card debt
• etc., etc., etc.,

but this would imply some degree of regret or sadness about those twenty years, and I don’t wish to portray those years that way.

I have learned more from being a parent than I would have, had I got a PhD. I have had more happiness and joy in those twenty years than I deserve (or merit), but I am unapologetic too.

Yes there are times where I look back and think, “I should have….”, when it comes to some money decisions and some other decisions in my life, but in some ways I learned more from my mistakes than from my (minor) successes in the financial world.

Am I saying, “Don’t worry, be happy!” (to paraphrase Bobby McFerrin) about your money? No! I am saying you should be careful and take the obvious steps to be safe with your money and to avoid debt every which way you can, however, if you think you have done all you can, and you are comfortable, then you should enjoy your life, is all I am saying.

Tempus fugit, and twenty years will fly by in a heartbeat, so make sure you are enjoying it.

This has been mentioned by a few bloggers, but I think the topic is a good case study in investing in “growth areas” (or as I would call it speculating on stocks).

Olympic Final Hockey Tickets

When the Olympic Hockey Final tickets went on sale about 2 years ago, they were snapped up very quickly, but were all sold (presumably) at their face value by the Vancouver Olympic Committee. VanOC made their money selling those tickets, and this is much like a company issuing stock or like an IPO (for a newer company). The profits have been made by the issuer.

Now we get into the world of presumed value of the tickets, and what they start being re-sold for.

As the Olympics came closer and closer the value of the tickets rose from their face value, to what folks are willing to pay for this Final Game, and I would assume that they started appreciating in value the day they were sold by VanOC. The appreciation may not have been much, but I am sure you could have made some good money simply “flipping” your tickets as soon as you got them.  At this time there is very little “risk” in this investment, because other than the Olympics being cancelled or Team Canada refusing to use NHL players, the tickets are worth at least as much as what they were bought for.

Speculation Time

When Team Canada was announced a month or so ago, that is when the value of the tickets might have started going UP and DOWN (i.e fluctuating), with all the Arm Chair GM’s looking at the roster and deciding whether Team Canada could make it to the game.

The big risk now introduced is, if Team Canada does not make it to the game, the tickets value drop significantly (possibly well below face value).  This is what now will drive the value of the tickets, Canadians would go watch the game if Team Canada was going to win 100-0 or lose 0-100 (maybe not pay as much) but if there is no Team Canada your investment is going to “tank”.

Tournament Starts

Team Canada blows Norway out to start the tournament, and Confidence is high, so your ticket value is going up, and you are sitting pretty. No reason to sell right now, right? What about locking in your profits, because remember what happened in 2006? No, you decide to keep your tickets, and keep going!

Team Canada then plays a worrisome game against Switzerland to begin with and now the ticket value could go up or down with “experts” saying there is a chance this team may not “have the stuff” that is needed to get to the Gold Medal. Do you take your profits now, or do you hold on and hope for  Team Canada to turn it around? You decide to keep your tickets and pray for the best.

Team USA appears with a hot goaltender and puts a beating on Team Canada that causes a collective PLOTZ in Canada, and the experts are now sure this team does not have what it takes and now some of your implied profit disappears, because now Canada must play Germany and then Russia to get to the Semi-Finals. Your ticket value has now dropped a great deal, and you kick yourself for not selling after the Norway game, when your value must have been at the highest, but you decide to ride this donkey to the end.

Canada knocks off Germany handily, and now your ticket value is increasing again, and that voice in your head asks, “Is it time to sell?”, but you are a gambler, and you know that if you hold on and Team Canada beats Russia (the experts are again saying this is going to be a rough game) your ticket value will rebound, so you hold on.

Holy cow, Canada obliterates Russia, and your ticket prices sore, with the possibility of a re-match between the US and Canada in the finals a real possibility (this would give you the Maximum pay back on your ticket, because not only could you sell to Rich folk from Vancouver you could make Yankee Dollars from Americans there too). You are on Cloud 9, thinking, all Team Canada has to do is knock off the Slovaks, and you will make a fortune, on your simple investment!

Here come the Slovaks and Team Canada is cruising, until that Goal and suddenly the market for your tickets gets a lot more nervous. That second goal and you are again panicking that you should have sold after the Russian game and taken your profits!!! OH NO!!! But, Team Canada pulls it off and you are given the added bonus of the Americans pulverizing the Finns, so here you have the ultimate appreciation of your ticket investment, Team Canada vs. Team USA in the finals, your investment has paid off.

Congrats Your Investment Has Come in!

Or has it? Should you sell the day before the game, or what until the day of the game? How are you going to sell it? Will you sell it to a scalper, or will you stand in front of Hockey Place and try to sell the ticket yourself (risking running afoul of the law enforcement agencies that frown on that kind of free enterprise?)? What happens if you don’t find a buyer who is willing to pay what you want?

Maybe you are a Hockey Fan and you don’t care what anyone offers now, you are going to enjoy what you paid for, and don’t care of how much money you can make (you will however feel smug when the two guys who sit down beside you at the game saying they paid $10,000 each for the tickets, or will you? Will you have non-sellers remorse?).

An interesting case study, what would you have done?

RRSP Spectacular!

The deadline is looming and Canadians still ponder about whether they should put more money into their RRSPs?

When is the Deadline? According the to TD Waterhouse web site the deadline is Midnight on March 1st (so you get an extra banking day) for contributions to count on last year’s income tax. So you still have plenty of time to ponder this.

A useful tool for this exercise is Quicktax’s RRSP scenario tester (it’s too bad no one gave away copies of that software, too late from me, but other bloggers still are giving out copies). I will announce the winners on Thursday morning (as you can tell I write the day before usually).

If you really want to “last minute” it, you can do it on line, but I won’t be doing anything like that, since my income was lower last year, I am in a lower tax bracket (for the first time in 20 years), so I will save any RRSP room for next year’s taxes (and instead take advantage of my TFSA to put any extra money in).

Haven’t opened an RRSP yet? Maybe it’s time to think about doing that, but this might not be the best time to do it, given the crush of folks trying to make last minute payments (but then again, I went to my bank yesterday and it didn’t look too crazy (yet)). I would suggest a self-directed account is the best place to put things, but remember that those accounts typically have a hefty yearly charge if you don’t carry a minimum amount in them (I forget that sometimes, given my accounts are above those levels).

What should you invest in? That’s not my call, I can only say that if you aren’t sure if you have a self-directed RRSP you can “park” money in there (simply deposit it) and then figure out what to invest in later. Hasty decisions now could mean unwanted consequences later, so keep that in mind.

Where is my T4?

Your employer should have sent you your T-4 by now as well. They have until March 1st to get it to you, so don’t forget that you really need that to correctly fill in your tax forms. I received 1 of the 2 I should receive, however my former employer’s info is still not received. This will hopefully show up this weekend and then I can submit my returns and be done with this.

T2202A Receipts

I checked with my daughter about the receipts I should receive from her University for tuition payment and I was not happy to see that they leave this all up to the student to collect. It used to be they mailed those to your home address, however now, the burden is on my child to go to the correct web site, and print out a copy of the receipts and send them to me, so I can get my taxes done.

This does save the university a great deal of time and money not having to mail these out, but getting my daughter to collect this data for me, is going to be no easy feat for me.

For those who don’t realize it, today is Shrove Tuesday (aka Pancake Tuesday). This day means Lent starts tomorrow, and in New Orleans we have Mardi Gras festival as well (although I am not sure they have stopped partying since they won the Super Bowl).

The word Shrove, is the past tense of the English verb shrive which means to obtain absolution for one’s sins by way of Confession and doing penance. Doesn’t sound like it is much to do with pancakes, now does it? Evidently we are also supposed to make merry and enjoy ourselves before we go to Lenten confessions (I like the first part, the second is not as likely).

Financial Shrove Tuesday

NO! I am not saying you should go out and blow your finances up before you start your Lenten Financial Journey, far from it. You can have some fun, but all in moderation. If you plan on giving up your daily Latte, then have 1 last one on Tuesday, and savour it. If you plan on brown bagging your lunch for Lent, then maybe a lunch out is OK, however, don’t splurge! If you plan on using cash, maybe it’s time to find a really good hiding spot for your credit cards (or maybe you should visit your bank and put them all away in your safety deposit box). If you are planning on reading some books on Personal Finance, today might be the day to get them out of the Library.

Make sure you have some pancakes too.

Random Acts of Kindness Week?

Forgot to mention that it is Random Acts of Kindness week (I would not kid about this topic), so if you were thinking about doing a Random Act of Kindness, this would be the week to try them out.

A few ideas:

• When in line at a Drive Thru (preferably a coffee shop), offer to pay for the next car’s coffee as well
• Clear your neighbour’s driveway if it is covered in snow (especially if you have a snowblower).
• Give the toll booth attendant a $20 bill and tell her to pay for as many cars that follow as possible.
• Phone up a local kids sports team and ask if they have a fund to help pay for less fortunate kids to play, and give them some money.

These are only a few trite examples, you know how you can help out, so do so. Anybody care to comment on what they may have done so far this week?

For my Buddhist readers, a belated Happy Parinirvana Day. May we all reach that level of enlightenment in our lives (some day).

Video: Madoff Saga

It seems PBS is being quite liberal with their video library so here is a very interesting clip about the Madoff Affair, an interesting view from one of Bernie’s “partners”, sounding very disingenuous (IMHO). Any time someone claims, “As God is my witness…”, I start getting figity:

A very busy weekend for all of us and for me in particular:

1. The Winter Olympics started on Friday night, interesting to see the “Winter” Olympics in a city with no snow and it is 10 Celsius, oh well.
2. Valentine’s Day, but we have talked about it’s significance to Personal Finance
3. The Chinese Year of the Tiger began, and my question is, is it a tradition with the Chinese New Year to make resolutions? Happy New Year!
4. My parents celebrated their 58th wedding anniversary, which is the most significant part of the weekend.

In the coming week there will be lots more interesting things happening:

• It is “Family Day” in Ontario and lots of folks have today off, I don’t being a Federal Employee.
• Lent begins on Wednesday, an excellent time to start a new Personal Finance adventure.
• Stats Canada announces their Inflation numbers for January on Thursday.
• Shrove Tuesday means you should also get out and have some pancakes too!
• RRSP and Tax Season continues on

Tax Season

I await the delivery of most of the documentation I need to complete my taxes. I know that this year I will actually be getting tax back (at least that is my guess, I might be wrong), so I am eager to get my taxes submitted (electronically). For those who have RRSP room, or extra cash, they should be weighing the decision about whether to put their money in a TFSA or into an RRSP (or a spousal RRSP), which makes this season stressful as well.

There are some excellent articles out there comparing and contrasting whether you should be using an RRSP for your long term savings goals or a TFSA, and I encourage you to read other financial blogs and articles to figure out what decision is best for you (my guess is this is a personal decision, and there is no real “cut and dry” decision point that everyone can use).

Your T-4’s should arrive some time soon, but make sure you know what forms you will need for your taxes as well.

The Go Go 90’s

Frontline on PBS has an excellent video about someone who tried to cry Wolf, before the great melt-down. The lady who said Greenspan was wrong.