Canadian Personal Finance Blog

OK, I am tired it’s been a long week at work, and for some odd reason there is a theme in my random thoughts postings and it has to do with Exchange Traded Fund (ETFs), and I do like a nice title.  These cheap(er) versions of mutual funds or Index Funds have been getting a lot of press lately in the legitimate press and in the great financial blogosphere as well.

ETFs Are Evil

OK, I couldn’t resist again, I do actually own a few ETFs, if anyone is interested:

• Jon Chevreau the Wealthy Boomer got me started on this kick with his article Why ETFs are a Scam, where he in fact debunks this notion to a certain extent and comments on another financial columnists odd views in this area.
• The Canadian Capitalist continues the blasphemous commentary in his Top 5 Investment Deals where he mentions the Devil’s Spawn the ETF again!
• The Larry MacDonald another Financial Infidel speaks of these unholy investment vehicles in Mutual funds vs. ETFs, may he burn in hell for his sins against the Financial Industry!
• Then another Financial Demon Preet at WhereDoesAllMyMoneyGo has the audacity to write Hate Mail to the Mutual Fund Dealers Association, UNCLEAN I declare him (financially speaking).
• Michael James (known Financial Goblin) then asks the excellent question Why Do Economists Use a Bell Curve if it Doesn’t Apply? I always liked double bell curves, but then again, I also liked Poisson distributions as well.
• Rob Carrick had some excellent advice for Parents of kids going off to University who might live off campus, Get Renters Insurance, or risk the consequences (think of a kiddie pool full of half melted ice being turned over in your son’s 8th floor apartment, do you want to pay for that? EVIL!).

Long weekend ahead folks and I plan on enjoying it, so don’t look for any new posts until Tuesday.

With Nortel’s bankruptcy protection announcement yesterday there is a sickening scenario for some very unlucky folks (many I know personally). Today’s title comes from one of my favorite expressions, “Sometimes it’s better to be lucky than talented”, and that is how I feel right now.

I  am OK

As background let me outline what has happened to me, in terms of my lay off.

I was notified of my redundancy on July 30th of last year, due to restructuring. This meant that for the next TWO months I would still be on the Nortel payroll and I would have access to my office and such and I could look for jobs inside of Nortel. On the 30th of July I was also given the specifics of my severance package (I cannot disclose the terms of this agreement).

As part of the severance procedure, I had an option  to either take my entire severance payment (lump sum) on September 30th or I could take some then and delay some until January 2nd of this year. I did split the lump sum payment and received part in September and part in January.

I also was given the option to opt out of the Nortel pension plan, and I did so, and I received those funds just before Christmas as well.

All this means Nortel owes me no more money (there is a small caveat to this, which is not worth mentioning), thus Nortel filing for bankruptcy protection has no direct effect on me financially.

Some are Not So Lucky

For those who were notified of their redundancy after November 16th 2008, they now are in limbo (or possibly hell, I am not sure). I have heard from one former associate that his severance package is now “gone”, because he has not received it yet.

I do not know if this is just hearsay, rumor or fact, but it is a possibility. The severance package becomes part of the liabilities Nortel owes, and it may well be that these severance packages are now simply “unsecured debt” and must be dealt with as part of bankruptcy protection.

If these folks do not get their packages this would be diabolical (in my opinion) and I really hope this is not the case, but I suspect it is a real possibility.

As for pensioners (retirees from Nortel) I do not know where this leaves the pension plan, given it is underfunded and the repayment of the short-fall must be dealt with as part of the bankruptcy protection plan as well.

In terms of investors, anybody who still holds stock in Nortel is out of luck, the paper is worthless (at least that is my guess, I am willing to hear arguments to the contrary) and the Bond holders are now part of the bankruptcy protection plan as well.

Bad Day Financially and Other Ways too

A sad day for me, seeing a company that I worked for and enjoyed most every day there take another step toward oblivion, and now many of my co-workers and former compatriots are in a “bad way” thanks to some very questionable decisions by the Senior Management Team.

I remember I was at a GIS where the present CEO Mike Z. was attempting to put a friendly smile on the capping of the pension scheme, and a former co-worker went up to the mic and berated the CEO and asked the pointed question at the end, “… I don’t know how you sleep at night!”, I wonder how Mike Z. is sleeping these days?

I got my official “welcome to your TFSA” paper letter on Friday from TD Waterhouse and it cleared up a few misconceptions that I had about my account (and my wife’s account). The letter was very cordial and such but it carried an important statement on it (and I quote):

More Ways to Save

* Register for our paperless record keeping solution — TD Waterhouse eServices online trading confirmations, monthly statements , and tax documents

or when,

*Your total household assets (1) with TD Waterhouse Discount Brokerage equal $100,000 or more

(1) Household accounts are defined as those TD Waterhouse Discount Brokerage accounts for clients living in the same household with the same address. Your must advise TD Waterhouse Discount Brokerage of those multiple account relationships.

Interesting statement that you must take into consideration before you open your account with TD Waterhouse in specific or any other financial institution in general.

The paperless records keeping seems easy enough, but I always like getting paper copies of transactions just so I can get that tangible feedback from the system. Thanks to my LIRA I fall into the “you have a lot of money with us so do what you want” part of the statement. 

So I have a no fee TFSA? Not positive, I will be phoning TD Waterhouse on Monday just to confirm that one.

I’ll comment on the employment figures announced last Friday tomorrow.

This has been one of the most interesting years in my life and in the financial world, and I will not lament it’s end, but it is certainly not the worst year of my life (but it isn’t one of the top 10 either). 

This year has seen:

• My retirement savings drop by 20% in value thanks to the stock market implosion, caused by the shenanigans and tom foolery over low rate mortgages in the states, and the financial apocalypse.
• My career at Nortel finish at 20 years (I am still looking for gainful employment), but maybe that is a good thing at the end of it all. With this I have taken complete control of my retirement savings, as well.
• My oldest go off to University and now I am learning how the business of higher education works (and it’s ins and outs). 
• An election that seems to have resolved nothing and we are more likely than not off to the polls again in 2009, which always makes for fun writing.
• The birth of the TFSA, but I am not sure how I am going to use it yet.
• Gas prices going up and down have caused havoc with any kind of budgeting attempts by my family, but the cheaper prices now, has managed to balance mid-year large outlays for fuel.
• Interest rates remain at historic lows and inflation has calmed down with the drop of fuel prices as well, where will this lead? I have no idea, but I hope interest rates stay down for a while longer, then they can sky rocket (remember interest rates low good for borrowers, bad for bond holders).
• I await a “bail out” by the government for me, but I guess for the common man, the “bail out” is called buying lottery tickets. Maybe I should change my name to Ford?
• I have written well over 250 posts this year, which is the most active writing year I have ever had.

I thank you kind reader for your patronage this year and hope you keep coming back to see my view of the Personal Finance world in the coming year.

Bye Bye 2008

Man that was a tiring year

Show me the Money?

For those who have been reading for a while, I had to decide about whether to leave my pension in my former employer’s pension fund (which is under funded) or to take a cash settlement and transfer most of the contents into a Locked In Retirement Account (LIRA) (and take the remainder as a cash settlement).

I got a lot of advice from different folk about whether I felt confident enough to invest the money wisely enough to mimic or improve on the growth I might get in the Pension fund, however, in the end I just did not trust that my former employer will:

1. Exist in 5 years
2. Whomever buys, or takes over them will not replenish the pension fund short fall

So I have decided to take my money out, and move it to a LIRA (and a small portion to a TFSA and whatever else I can into my RRSP). 

I tried to show as much diligence as I could to the documentation that I had to submit, because the default answer if I do not submit my request in time is for the company to keep the money in the (under funded) Pension. I had the Investment Councilor at the bank that set up the LIRA, check over to make sure all the forms had the correct info and then I had Mrs. C8j check everything over as well. No point in making this big a decision and not being careful with the forms.

I mailed the forms using Registered Canada Post delivery, so I have a tracking number and will know when then the forms were delivered as well (can’t be too careful here). Paranoid? Maybe, but again, it would be imprudent to trust regular mail with these forms.

$20 More on Plumbing

I went out and replaced the fill valve on the water closet, turned the water back on, and so far so good. I am still a bit concerned that the amount of water that leaked into our ceiling, seemed more than a leaky valve might create, but my suspicion is this is a problem, but it may not be the ONLY remaining problem. It’s good that Home Depot is only a 5 minute walk away.

Advent Financial Calendar Box Day 5 

We continue the Safety Deposit box in a box idea, but in that box is an official looking piece of paper, you open it to see it is your Will.

Do you have a Will? Is it up to date? Now is the time to think about updating or writing it, using either a Lawyer or some of the Will at Home kits that are available out there. If you are single, a Will is not as important, but if you have kids and/or Property or substantial holdings, you must have an up to date Will, or your wishes after you are gone will not be followed.