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Displaying 31 to 40 of 228 Records.
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<RRSP carry-forward>
<Saxon fund changes >
<Tax on RRSP withdrawals >
<Short-term trading >
<TFSA investing>
<Short-term money >
<Mortgage strategy>
<CPP changes>
<TSX high>
<Auto loan dilemma>
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RRSP carry-forward
The maximum RRSP deduction limit for 2009 is $21,000. However, if you did not use your entire RRSP deduction limit for the years 1991-2009, you can carry forward the unused amount to 2010. Therefore, your RRSP deduction limit for 2009 may be more than $21,000. My question is: was this possible before 1991? - George V.
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No. The carry-forward mechanism for RRSPs officially came into effect on Jan. 1, 1991. Prior to that it was a case of "use it or lose it". Initially, there was a seven-year limit on carry-forwards but then Finance Minister Paul Martin removed that in the 1996 budget, allowing carry-forward credits to be available indefinitely. - G.P.
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Saxon fund changes
Mackenzie Financial took over the Saxon funds some time back. Recently they lowered the yield for the Saxon High Income Fund, raised the MER, and in some cases imposed a redemption fee (previously Saxon funds were no-load).
I have a self-directed account with National Bank Discount Brokers (NBDB). As far as I know, neither NBDB nor Mackenzie notified investors of these changes, which seems to me to be manifestly unfair. Fortunately I anticipated such increases, but shouldn't Mackenzie or
perhaps NBDB have the responsibility to notify investors of such significant changes to their fund? Is there a body to which I might complain about this policy of non-notification? - Stephen C., Strathroy ON
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This fund lowered its monthly payout from 4.16c per unit to 2.91c in January. There is nothing unusual about this. All funds reserve the right to adjust their distributions although some do so more frequently than others. This fund's prospectus says simply: "Each month, the fund will distribute an amount calculated based on the fund's net income for the month". In fact, until April 2009 the distribution from this fund varied from month to month. It was fixed at the 4.16c rate until November. The December distribution, which included capital gains for the year, was 15.55c.
That said, I agree that it would be helpful to investors if Mackenzie posted such information in the news section of its website. There is no reason to expect a discount broker to update clients on every distribution change.
MERs change annually but usually by a small amount. In this case, the MER for the original units moved up from 1.33% to 1.51% currently. It will rise again when the HST comes into effect on Ontario in July. (This will be the case with all Ontario and B.C.-based funds.)
As for redemption fees, it depends on which type of units you hold. If you bought units of the original no-load fund, no redemption fee will be changed when you sell. If you bought A units, which are optional front or back-end load, you could be required to pay a DSC depending on which purchase option you chose.
If you want to complain to anyone, I suggest you do so to Mackenzie Financial with the suggestion that they post information that is important to investors on their website. - G.P.
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Tax on RRSP withdrawals
What percent am I taxed when I pull money out of an RRSP? -Randy G.
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RRSP withdrawals are taxed at your marginal rate, whatever that may be. In other words, you'll pay the same rate of tax on an RRSP withdrawal as you will on the last dollar you earn. There will be tax withheld when you make the withdrawal but that is only a "downpayment" on the final amount owing. That will be assessed when you file your return. - G.P.
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Short-term trading
More and more, I am becoming concerned about "buy and hold" strategies for investment. I often am faced with falling fund values at times when market corrections seem imminent. My advisor has indicated that there are some restrictions to switching between funds (they call it "short term" trading and "market timing") and that these restrictions are available in my fund prospectus. Upon my review of the prospectus, I have found that there is no clear definition for "short term" trading and that the definitions (and penalties for improper trading) might be unfairly applied from one investor to the next.
Question: Are there any industry standards defining "market timing" and/or "short term" trading that I can use as a clear guideline to my trading? - Brenda D.
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In this context, short-term trading is normally defined as 90 days. Many funds impose a penalty of 2% if units are sold within 90 days of purchase. The wording in the Mackenzie Financial prospectus is typical:
"An inappropriate short-term trade is defined as a combination of a purchase and redemption (including switches between Mackenzie Funds) within 90 days that Mackenzie believes is detrimental to fund investors and which may take advantage of certain funds with securities
priced in other time zones or illiquid securities that trade infrequently. Excessive short-term trading is a combination of purchases and redemptions (including switches between Mackenzie Funds) which occur within 30 days or so frequently that Mackenzie believes the trading is detrimental to fund investors.
"All trades determined by Mackenzie to be inappropriate short-term trades will be subject to a 2% fee. All trades determined by Mackenzie to be part of a pattern of excessive short-term trading will be subject to a 1% fee." - G.P.
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TFSA investing
I am opening up a TFSA account and want to make the best use of it. My advisor suggests putting a safe GIC in it as they have the most benefit from a tax point of view. However, I feel that it would take a long time to make any money at today's rates. Would it not be better to take a chance and put it in stock? Where else can you get the opportunity to really grow your TFSA tax free? - Jim S.
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I agree that any kind of interest-bearing security offers the most advantage from a tax perspective. But I also agree with your view that in the context of today's low interest rates a GIC does not make much sense if you are seeking to maximize returns. If you invest $10,000 in a GIC that pays 3%, you are only tax-sheltering $300 a year. If you invest in a stock or mutual fund that gains, say 10%, you are sheltering $1,000. It's true that if the stock is outside the TFSA, half the gain is tax-free anyway but you'll still be farther ahead than with a GIC. The trade-off is that you are taking on more risk. - G.P.
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Short-term money
Given that money market funds provide zilch returns, what do you recommend for 1-2 month holds with good liquidity, and without penalties for pulling cash out within 30 days or so? Mackenzie Cash Maximizer appears to be a somewhat better choice from what I can see. The other MMFs truly provide nothing. - Alan M.
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I suggest you look for a high-interest savings account with the best available rate. As of March 24, Peoples Trust was offering 2.1% and Ally and Comtech Credit Union were paying 2% according to Globeinvestor.com. You would need to check each financial institution for their terms and conditions. Most offer telephone banking service. - G.P.
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Mortgage strategy
What advice would you give about a mortgage - lock in or leave it variable? - Anthony A.
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Mortgage rates are moving up so there is a rationale to lock in now. But you'll pay a premium to do so. For example, as I write Royal Bank is charging 2.99% on a five-year open variable rate mortgage. A five-year fixed rate closed mortgage is being offered at 4.58% so you will have to pay 1.59 percentage points more. If that doesn't seem like a lot, think of it this way: the five-year fixed rate is 53% more expensive. That puts things in perspective.
I always advise going for the lowest possible rate unless someone would face financial hardship if the rate goes up. I also suggest calculating what the five-year term payment would be and paying that amount each month. This reduces principal faster and gives you a cushion if rates rise. - G.P.
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CPP changes
I seem to recall reading your advice some time ago regarding CPP. You stated that if someone stops working (say at age 55) they should take their CPP at 60, as the more years without employment income the lower the CPP amount would be. The non-income years reduce the CPP amount payable. Am I right?
Also, as I turn 60 in September 2010, if I apply to start receiving CPP at that time will the deduction of 0.5% a month be increased to 0.52% a month if and when the new rules come into effect in 2012? And would I have to make CPP contributions after 2012 if I work? In other words, would they change the rules after I start receiving my CPP or would a grandfather clause apply? - Pam in Ontario
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You are correct that you are only allowed to exempt a certain number of years from the CPP calculation so the longer you wait to start collecting before age 65, the more low income or zero income years will be included in determining your pension amount.
As far as the changes to the rules governing early withdrawals from the CPP, no one who has started to receive benefits before Jan. 1, 2011 will be affected. - G.P.
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TSX high
What was the highest stock market level ever in Canada? - George V.
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The S&P/TSX Composite Index closed at 15073.13 on June 18, 2008. We haven't been anywhere near that since. - G.P.
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Auto loan dilemma
We recently purchased a new car and took out a floating-rate loan for $20,000, payable over six years. I am thinking of paying off at least half of that amount from another line of credit, which offers a lower interest rate than my 5.5% floating rate. Of course, interest rates may go up on my line of credit, but since the 5.5% is a FLOATING rate, am I any safer with the latter? - Geraldine S.
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You are asking the wrong question. What you need to know is the basic calculation for the interest rate on each loan. Since both are floating rates, I assume each is tied to prime. Your car loan might be, for example, prime plus three percentage points while your PLC loan might be prime plus one. Once you know the formula, it will be easy to determine if your strategy will save you money. - G.P.
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1999 - 48 Questions