Canadian Personal Finance Blog

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.

As my regular readers see, sometimes my mind wanders to weird places and I must admit I am not sure where most of this came from. On Sunday night at 5:00 PM I had nothing to write for Monday, but looked at the GPS I had just received from Christmas, started writing about a Financial GPS and from their we got to Financial Shock Collars and here we are Friday with a whole week of very odd postings by me.

I empathize with those in dire financial quandaries, but in some cases the Financial Shock Collar may be the only answer. As Mrs. C8j pointed out in a comment she made, a lot of issues with money in couples comes from lack of communication, so maybe it’s time to start talking to your spouse about money? Just an idea.

Random Shocking Thoughts

This week other Personal Finance Bloggers found more solid issues to write about, and some are well worth checking out in this weeks Random Thoughts:

• Given the C.D. Howe institute put out a very good e-brief Saver’s Choice: Comparing the Marginal Effetive Tax Burdens which has caused many bloggers to discuss this interesting point.
• Michael James spoke of this in his post RRSP versus TFSA where he discusses various scenarios about putting your money in either savings vehicle.
• The Canadian Capitalist also posted talking about the C.D. Howe’s take on TFSA versus RRSP where he talks about the Howe findings specifically.
• Canadian Financial DIY also comments on the Howe findings in New Data on TFSA vs RRSP and Canada’s Rube Goldberg Tax System.
• On a related topic, Larry MacDonald talks about RRSPs and business owners and how business owners might want to think about setting up RRSPs for their retirement, or perhaps even TFSAs?
• Preet wraps up his expose with Severing the Link Between Price and Weight Part IV.
• Million Dollar Journey talks about where they might get the money to put into their RRSP or TFSA with a the post How I saved 70% on my grocery bill, remember 50% off meat should be eaten the day you buy it too!
• Gail Vaz-Oxlade writes an important spiritual posting about Keeping Focus, which is important in this day and age, don’t get distracted from your goals.
• Let’s stop the madness is a very good rant by Ellen Roseman about the dirty tricks being played on some consumers, read this and be warned!
• I hadn’t noticed but Dave over a Investing Intelligently Got Laid Off, now it looks like he has found something, but does bring home that the alleged “recovery” may not be fully entrenched yet!

Enjoy your weekend, and remember, if you think you need a Financial Shock Collar, please get some help!

On Monday, Labor numbers which are out today!

My wife and I spent about an hour working with our TD/Waterhouse rep attempting to set up an RDSP. Luckily the rep had already pre-read as much information was available from TD (i.e. not very much), and so we spent 45 minutes filling in paper forms.

What really had my head spinning was:

• The large volume of paper forms (that will have the same information transferred to a computer later)
• The repition of the exact same information

The number of times, my wife’s name, address, and other info was awesomely bad. The reason we were given is because this is a new program for TD the enrollment is not automated, and hopefully one day they will automate it, because this paper trail stuff is really for the birds. I had to live through this last year when I opened a Retirement Fund, but I believe I have an answer as to why all this paperwork is necessary.

Each group inside of TD (and any other bank I would guess) that is part of the RDSP system (e.g. accounting, trading, web interface, etc.,) want information, so they design a form that will get all the information they want. The better way would be to have a single larger form which is then shared with all the groups involved in the savings vehicle set up, but I would guess, there are no bonuses paid internally at TD (or most other banks) to streamline customer interface systems, thus the problem is unlikely to be solved in the near future.

I was also dismayed to hear that the RDSP will not be hooked into the on line banking capabilities any time soon either.

I see this constantly with large firms, that each individual “fiefdom” of technology or information inside the firm feels they are omnipotent and worse still, isolated, from other groups, so they simply attempt to make their own lives simpler, and figure out what small part of a larger problem they have, and optimize the solution for their purposes only.

I would bet there are a few consultants out there making a bloody fortune wandering around to large firms and telling them to stop letting their individual groups solve issues at the sub-micron level and to start creating Macro solution teams instead.

I don’t mean to pick on TD, but this period of time got me thinking about when I deal with Bell, Rogers, Any Bank, Hospitals and other customer facing industries/companies it is rare you run into a Customer Initiation system that makes it easy for a new customer to be created.

This week a new pair of interesting topics arose in the world Financial Blogs, the changes that the government has passed to fix some loopholes in the TFSA program and a few bloggers pointing out that Bond Mutual Funds may seem “safe” right now, but if interest rates rise these funds are not as “safe” as you might think they are.

The proposed TFSA changes specific can be found on the Department of Finance web page and it outlines what and why will be changed in the system itself.

• Michael James points out why some of these changes are put in place with TFSA Changes Likely to Help Investors but he also comments on Bond Mutual funds in The Future of Bonds that you should read as well.
• Rob Carrick comments specifically on the Mutual Fund Bond issue in Latest Horror Flick: Attack of the Bond Market worth reading as well if you think your bond money is safe.
• The Canadian Capitalist also comments on the TFSA changes and also wants to know Why Ban Swap Transactions in TFSA Accounts ?
• Million Dollar Journey commented on the Proposed TFSA Changes as well, pointing out it most likely won’t affect (effect?) John Q. Public.
• Larry MacDonald replies to MacKenzie Financial’s “commentary” on ETF’s with I Thought I wanted a Mutual Fund , interesting how the Mutual Fund industry is not getting quite worried by ETF’s cutting into their profit margins.
• Gail Vaz-Oxlade did a Retirement Rant that is both entertaining and informative. I dare you to tell her why you aren’t saving, I dare you!
• Preet, who is looking for Folks to Be on the W Network With Him puts to rest some misconceptions about ETFs in ETF Does Not Mean Index well worth a read.

Read over these posts, very useful stuff for investors!

With Lent beginning, tax season roaring into view and the RRSP season coming soon to an end some very interesting posts were done this week, for the end of February.

• Larry MacDonald wrote an excellent article for the print Globe and Mail where my comments were included A Relief Valve for RRSP Holders. I was very happy to see they included a picture of my son’s bum as well.
• The Canadian Capitalist advises us to Keep Faith in Buy and Hold, which I think is important to remember, even with recent fluctuations.
• Michael James points out that It’s Different This Time, or is it? I’ll tell you in a few years, since we never know until it happens.
• Preet asks the interesting question How are the Pros Investing Their Money  (ok he quotes the Wall Street Journal). Preet was also mentioned in Larry’s G&M article as well, and is always and interesting read.
• Gail Vaz Oxlade talks about an important topic for me Starting an Allowance for kids, something kids need to learn about.
• Ellen Roseman asks a pointed question Can You Trust Your Financial Adviser ?  
• Nancy Zimmerman shares Here is What I am doing with my RRSP. What Are you Doing with Yours? She thinks it is a buyers market, but my question is, are we at the bottom?

Have a great weekend all, and watch for the Ultimate Canadian Get Rich Quick scheme video.