Canadian Personal Finance Blog

It is that time of year, when I transfer money into my son’s Registered Disability Savings Plan (RDSP), and I continue to be disappointed by TD. I spoke to a very nice young man on the phone, who followed the  prescribed  method, by transferring money from my trading account to my son’ s account. We were chatting while the transaction bounced around the TD computers, and I asked, ” Are TD ever going to allow me to contribute from my Chequing account?”, and the  young man optimistically responded he thought that this might happen sometime soon .

As most of my regular readers know, I ask this question each time I speak to a TD rep , and I usually tweet the same question to TD.

I received assurances that this circuitous savings method would be updated soon. It has been many years that I have had this RDSP set up, yet, I continue to have to follow this diagram.

Deposit Route for Money to My Son’s RDSP

I can deposit to my RRSP, to my children’ s RESPs, but the RDSP continues to be a step too far. Please remember that the TD Direct Investing RDSP is the best product for RDSPs that I can find, but it does have a few shortcomings.

My savings methodology continues to be:

• Every pay cheque, I transfer a specific amount to my TD trading account
• I have set up automatic reminders in my calendars to tell me to call TD to do the transfer.
• I spend 15 minutes chatting with a very nice person from TD who helps me out, and optimistically says that the system will be better
• A few days later use the funds to rebalance the account (a sleepy portfolio).

Is There a Positive View on This?

The optimistic view on this is that this does force me every 6 months to rebalance and check the portfolio, which is true. This way the portfolio remains relatively well-balanced, and when the governments grant money comes in I can re-balance again.

I would rather be able to deposit funds directly to the RDSP account, from my Chequing account, removing many steps in the process.

Yes, I have written about this before:

• RDSP Providers : TD Investments Continues to Annoy
• RDSP TD and a Little Progress
• RDSP and TD Aggravations

Do credit cards help you get a mortgage ? Most financial folks say having credit cards (which you pay off) are good to help build your credit score and thus help you get a mortgage. This is true, but far too often this idea is used as a sales pitch for credit cards.

Does  the Credit Limit on every credit card you have counts against you for your mortgage?

The person we dealt with at our bank did a credit check on us, when we applied for our mortgage and gave us a report that looked like this.

Shackled to Credit
http://www.ccpixs.com/

• Credit Card 1 Balance $0  Credit Limit $1000
• Store Credit Card 1 Balance $0  Credit Limit $2000
• Credit Card 2 Balance $0  Credit Limit $2500
• Store Credit Account 1  Balance $500  Credit Limit $5000  (we were buying a couch on a zero % interest deal)

We were then informed we had been OK’d for a mortgage balance of $X , taking into consideration my income, and our down payment. We were then informed that the real balance they would allow us to borrow would be lower.

$X - ( $1000 + $2000 + $2500 + $5000 )

The explanation given was the calculation done needed to include the potential debt load I might add with those extra debt vehicles. This made sense to me, and we got our Mortgage.

There are reports that this potential debt load is no longer being considered by some vendors? How could any sane lender not take this into consideration?

Question for Readers

Did your lender ask about credit cards, also did the credit cards count against your mortgage loan level ? I have had differing answers from different folks.

How much would parents be willing to pay adult (over 18) children to move out of their house? According to the CIBC it is $24000 , which is a nice round number. I have written about Kippers and children living with their parents, so this data is of interest to me. The CIBC Gifting Poll, suggests there really is a magic number that parents are willing to shell out to get kids to move out. The poll mentions how “… gifts shouldn’t come with strings attached…” but I have no problem, calling a bribe, a bribe.

Another interesting point is the flood of inheritance money that will be unleashed as the baby boomers pass on their amassed fortunes ($750 Billion over the next decade?). I don’t know many folks that speak openly of inheritance money they expect, but if you know for sure you are receiving it, shouldn’t this be part of your financial plans? It sounds quite crass, but if the money will be arriving some time, why not add it to your plan?

I was disgusted to read that Sears employees are not getting their severance payments, yet, executives are having their bonuses paid. This cuts too close to the bone for a former Nortel employee. Nortel is finally paying out to their former employees (at pennies on the dollar), what the employees are owed. This kind of business bad practices that really does get under my skin.

I think the deepest thought I read in while was, “Hipsters listen to the Best Of albums, but real fans listen to the complete original LPs”. It is deep because there are so many parts of that phrase that my children wouldn’t understand. What is a Best Of album? What is an LP?

Next thing know that this was a major advancement in engineering and finance.

Behold the Magnificence of the Slide Rule!

I Wrote This Week?

Yes, I did write this week. I have been working a very loose schedule for the past while, I am hoping to step up the pace a bit more soon, but this week I wrote Low Inflation Means No More Interest Hikes ? Will the continued low inflation keep the interest rates low? I don’t think so. The Bank of Canada has been fairly clear that there is too much stimulation in the economy with low interest rates. I am assuming there will be at least another 1/2 point raise of rates if not more, but low inflation may slow other rate increases?

Micro Blogging

I am experimenting with tweets and Facebook posts that are not full stories, but get a point across about the economy, witness this GIC commentary. I would bet there might be a few millenials that might have asked, what is a GIC?

👇 For more great financial articles from this week click here 👇

It would be imprudent to assume that low inflation, will mean no more interest hikes. The Bank of Canada has wanted to lower interest rate stimulation, and they will continue with this policy. They may slow down their rate plan but rates are going up.

Stats Canada on Friday published the monthly inflation report. The report overall shows that inflation is running at 1.0%, but as usual those numbers are deceiving. The detailed report shows a better view on things.

Main upward contributors:

• Homeowners’ replacement cost (+4.1%)
• Food purchased from restaurants (+2.5%)
• Travel tours (+7.0%)
• Traveller accommodation (+7.1%)
• Natural gas (+10.0%)

Main downward contributors:

• Electricity (-5.3%)
• Gasoline (-1.4%)
• Women’s clothing (-2.5%)
• Men’s clothing (-2.9%)
• Household appliances (-3.3%)

I am glad to see groceries specific are not mentioned here, but food purchased from restaurants took a bump. The generic graphic gives you a better overall view though.

Inflation by Category for June 2017

B of C Final Words on the Economy

The Bank of Canada has the following view on the Canadian Economy.

Growth in the Canadian economy is projected to reach 2.8 per cent this year before slowing to 2.0 per cent next year and 1.6 per cent in 2019.

That seems to be a very modest view on things, however, it all depends on what happens down south. Is it safe ? I have no idea.

2017 Inflation Discussion

Reports on inflation in 2017 so far.

• Gasoline Pushed Inflation to 2.1 %
• Energy Up 4.0 % for 2016