Canadian Personal Finance Blog

Fruitful Bank Trip

My visit to the bank was quite fruitful.  I arranged to get money out of an RESP (evidently there are two ways of doing it):

• EAP which takes out the CESG portion of the RESP
• The other thing that takes out the other part, which I did

Tax implications? No bloody idea, I’ll figure that one out in February.

Opened a self-directed RRSP with TD, and ensured I could get at their E-Series index funds (another point well made by the Canadian Capitalist).

Opened a Locked In Retirement Account, well sort of did, filled in the forms, yet another system in TD which is all paper based. Found out from our service rep there are 5 different systems she deals with (at least) and none of them talk nicely to each other and many are still mostly paper based. Maybe TD can use their HUGE profits to fix that?

Finally, I got free banking for a while too. This time I phrased it in a way that made our rep happy to give it to us, and thus I don’t have to pay for banking for a while longer.

I love it when a plan comes together!

Owe for 3 on Stocks

After bad mouthing Scotiabank, BMO and Nortel yesterday, on Wednesday they all rebound back…

• Nortel up 5%
• BMO up 3.6%
• Scotiabank up 2.26%

I can sure pick them, can’t I? I have pointed out this is NOT where to get your hot stock tips, have I not? One day does not a trend make, and given most stocks were up, could be just a “follow the leaders rally”, but again, don’t take my advise on that one.

Humor

Here is a rhetorical question for the lady readers, would you go to LaSenza to a “Sports Bra Blow Out” sale? Something about that advertising doesn’t sound right to me.

BMO Numbers Stink

Is now the time to buy then? I have no bloody idea, but it is an interesting question to ask.

BMO announced their numbers on Tuesday Morning, and they were crappy. Not crappy like Nortel numbers (which are really crappy), crappy where they didn’t make enough money to make analysts happy. Does this mean we should all run out and buy stock because they did such a bad job? OK, maybe I phrased this incorrectly, but that is basically what I am hearing from some analysts, “Buy now because the stock is lower, and it is a stock with good solid foundations”. 

If a company performs badly and puts out bad numbers, and the stock drops in values, I should buy the stock? This is an over simplification, but that is some of the advice I have heard, and that I heard during the Tech Bubble explosion too.

I have never really figured out when is the best time to buy stock, so I just buy when I have the money and hope for the best. An odd tactic, but that is the way it works for me.

Scotiabank Sucks Too

Scotiabank announced at 2:00 PM and their numbers did not make analysts dance for joy either. Should we go out and buy Scotiabank now too? Don’t ask me, I just report this stuff, should you invest in a company that had their profits drop by 2%? At least they have profits, is one way of looking at it.

Today Bank Attack

Today, I walk back into my bank and will attempt a few precise financial manoeuvres:

• Set up an RRSP for me
• Investigate how to set up a locked in retirement account
• How to extract money from an RESP, which is interesting
• Try to get no fee banking for another year

I want 4 out of 4 success, I’ll keep you all posted.

After watching athletes work hard to reach their goals, I feel invigorated to attempt new financial goals of my own (OK, that’s pretty lame, but I couldn’t figure out any other way to spin the Olympics into a post over the past two weeks).

Glad to see the Canadian Athletes compete and do the Canadian thing and not win too much and be boastful, we are a very polite nation.

Coming Financial Decisions

The coming week is an important one for me financially because I must make key decisions on how much, and when my severance package is to be executed, and what to do about my pension (whether to leave it in my company’s badly underfunded pension (last time I heard it was funded up to about 87%)) or take the money and run, with some severe tax implications)).

I am meeting with a Financial Planner today (who is also a Chartered Accountant), to hear his ideas on how to make my severance package run as long as it can, and to maximize it’s financial impact for me. Ideally, when I find a job soon, I can simply use it as a debt destruction vehicle, but I must plan in case I have issues finding a job, as well (remember Hope for the Best, Plan for the Worst).

Mostly I am meeting with this gentleman, because it is free, as his services are being paid for (evidently he charges $175 an hour normally) by the Right Management team that I am dealing with. I’ll listen to anyone for free, doesn’t mean I will necessarily follow their advice, but I can listen easily for free.

Interesting questions that may come up:

• Is it better to pay down debt quickly thus having less to deal with, or plan to simply service debt so that my liquidity stays sound?
• Is it worth working at Home Depot in my spare time right now? The easy answer there is NO, not this year, because whatever I earn, I lose about 1/2 of, and we should be able to budget well enough to last that long.
• Should I cash out of my company’s pension plan? Do I think they will exist in twenty years, and will the pension fund ever get back to 100% funding is the real question.

What other questions maybe need to be asked? I am open to suggestions here folks, any good questions, please pass on in the comments section.

Should be an interesting visit.

So today I had an excellent presentation about the financial aspects of my severance from my employer, by a C.A. who is also a Financial Planner. He brought up several very interesting points, one that I had heard about but didn’t understand and another that I wasn’t even aware of (and caused me to write down many more questions for my one on one session with him in the near future).

RRSP Severance Rollover

Up until 1996 the rules for moving severance packages into RRSPs was pretty wide open, but then in 1996 the rules changed and you were not allowed to simply plow your severance directly into your RRSP (if you didn’t have room to put the severance allowance in your RRSP). The accommodation for folks like me that were still employed (and have been) by the same employer before 1996 (and haven’t received a severance package), I get a $2000 per year RRSP “bump up” for every year I worked for my employer before 1996 (and working in the year, could entail only 1 days work, too bad I didn’t work there as a Co-Op student).

For me this means that since I was employed from 1988 to 2008, I get 8 years counting in there or an RRSP bump up (for this one time) of $16,000 which I can put some of my severance package in (which is a good thing).  Since it is so late in the year, any dollar I shelter most likely saves me 46 cents of taxes I don’t have to pay on this year’s CRA tax forms (sorry Mr. Harper).

Severance Income is the Worst Kind of Income

Well, if there is such a thing as bad income, a severance package is that, because you get a T-4A for this income, but this income will not increase your RRSP room for the year, and it is not really counted as income per say (other than the fact that it gets TAXed like it is income). What I am trying to say is that severance is not an EARNED Income, thus you don’t pay CPP or EI premiums against it, but you don’t get RRSP room for it either.  I didn’t know that one either.

Another Idea the Lifelong Learning Program

Instead of simply cashing in RRSPs to pay for going back to school, the government has set up the Lifelong Learning Plan (LLP) where you can withdraw $10,000 in a  year and $20,000 total over 4 years to help pay for your schooling. There are rules for you to repay your RRSP the amount you borrowed to pay for your education, but I thought this would be a really good idea (for me or my wife). I don’t think this is something I will use now, but it is an interesting concept.

Best Joke to Say Around Former High Tech Workers

The presenter had a great comment for the section we skimmed over, “So this should be a short section, it’s about what to do if you make profits on your stock options during your severance period…”, everyone in the room burst out laughing, as did the instructor. If you aren’t in High Tech, you might not get it, but if you saw the Simpsons episode where it showed a high tech company giving out Stock Options from a toilet paper roller, you might get the joke.

I learned a lot today.