A layman's advice. -rounder(rounder) @卡尔加里华人论坛:卡尔加里枫下论坛 The Rolia Forum of Calgary

A layman's advice.

rounder(rounder)

本文发表在 rolia.net 枫下论坛I started to contribute to company RRSP plan this March. Up till now I have been parking the money in a Bond fund. My expectation 8 months ago is stock market is in a downward spiral as we are at an early stage of a recession. Bond will go up as the central bank cuts the interest rates to boost the economy. ( You need a finance 101 course to understand the relationship between bond prices and interest rate). Uptill now the bond funds have been outperforming the stock funds. I didn't consider the money market funds (which invest in treasury bills), as the return is too low. Now the rate is already very low, I will probably look at some balanced funds(which hold equities, bonds and treasury bills). But I am not in a hurry to change my asset mix.

As you see I am trying to time the market, (guessing whether bonds will outform equity or vice versa). Most financial advisors will say this is against the diversification principle for long term investment, and they are right. Historically experts have been on the wrong side as much as the right side when they try to time the market. But I still did it because a little betting is fun, so long I am not taking too big a risk.

Asset allocation is the single most important factor (90%) in investment performance. You might want to compare the management fees of the funds before you buy it, as the fund manager are not contributing too much on the fund performance anyway. to me 1% difference is a lot.

Historical performance is often misleading. A star fund last year might be the dog this year. The reason is simple, it WAS the star because its holdings were overbought last year. So don't just look at the best performing funds of last year.

I have more questions than answers myself. Let's continue the discussion.更多精彩文章及讨论，请光临枫下论坛 rolia.net

(#251774@0)
Last Updated: 2001-11-7

UP一下, 看是否有人可以给点建议 :) -dropoutinmiami(东北的饺子); 2001-11-7 (#251726@0)

我也想知道，有请高人，谢谢. -eglington(_); 2001-11-7 (#251738@0)
不好意思. UP 是什么的缩写? -clinux(C/Linux); 2001-11-8 (#254072@0)

如果你想买股票，今年可能是个好时候。建议诸位 -banker(见面熟); 2001-11-7 {211} (#251759@0)

到任何一间银行的DISCOUNT TRADING 开个帐户，就可以买卖股票，基金和债券。
基金其实也是变向的投入在股票，如果你们自己有能力和时间研究股票，可以
自己买股票。向你们懂技术，可以考虑高科技公司，花点时间做点研究而已。

谢谢, 有几个问题, 请进... -dropoutinmiami(东北的饺子); 2001-11-7 {387} (#251776@0)
没错, 我也认为现在的时机不错, 虽然还有很多UNCERTAINTY, 但是如果是长期投资的话, 应该是个难得的机会.

1. 请推荐比较好的站点可以跟踪股市行情, 分析等等. 主要是加拿大的股市.

2. 如有投资在MUTUAL FUND, 可以交流一下.

3. 如何MAXIMIZE FOREIGN CONTENT.

4. 跟踪TAX LAW

5. 如熟悉某些公司, 也可以介绍一下.

我准备在ROYAL BANK的ACTION DIRECT 开个帐户. 不知道有人使用过他们的SERVICE吗?

朋友，现在特忙，下午回你 -banker(见面熟); 2001-11-7 (#251781@0)
answers -banker(见面熟); 2001-11-7 {1392} (#251939@0)
本文发表在 rolia.net 枫下论坛1. no many good site available for canadian stock commetary, you may want to try this one:
www.stockhouse.ca
for market commentary, try www.investorlinks.com , www.cnnfn.com

2. if you have time and ability to do your own research, you don't need to buy mutual fund. mutual fund is actually a pool of stocks invested by professionals like portfolio manager. but they are not necessarily better than you. when the general market is down, mutual fund price down too.

3. max. foreign content is 30% of the book value. let's say you open an new account today and contribute $1000 dollars, this $1000 is the book value, your foreign content available is $300. everytime you buy and sell, your book value increase or decrease, then your foreign content portion will change accordingly. for example, you buy $300 microsoft which is foreign content, then $700 you put into CIBC shares which is domestic, a few month later, CIBC shares drops and you sell all shares to get back only $400, then at this moment your book value will be $300(microsoft) + $400 (CIBC) = $700, 30% of 700 will be $210, thus, you will have to contribute more money to maitain foreign content room or sell your microsoft shares to bring down foreign content, if you do nothing, you will have to pay penalty on the $80.

i used Action Direct a few years ago, i don't really like their service.更多精彩文章及讨论，请光临枫下论坛 rolia.net

非常感谢! 请问你用哪个BROKERAGE FIRM? 关于你文中的例子, 如果我没有卖CIBC, 尽管其MARKET PRICE已经下降, 但计算FOREIGN CONTENT时还是按照当时的购入价格计算, 对吗? -dropoutinmiami(东北的饺子); 2001-11-7 (#251981@0)

你说的对。我现在用CIBC的服务。 -banker(见面熟); 2001-11-7 (#252001@0)

thanks to Banker, but I don't agree on this part... -bono(Monarch); 2003-10-22 {301} (#1427791@0)
I noticed this topic is discussed about two years ago, still want to throw in my 2 cents.
Your foreign content margin (30%) is only calculated when you first invested. Even if the value of your domestic part of the portfolio droped later on, you don't need to do anything to make it up to 30% again.

A layman's advice. -rounder(rounder); 2001-11-7 {1804} (#251774@0)

That is great! 我最近也在关注BOND. 以前RRSP放在SAVING ACCOUNT, 大概是5%的利率, 但现在已经降到3.55%, 估计很快就要又降了 -dropoutinmiami(东北的饺子); 2001-11-7 (#251777@0)

i think if you just want to get stable return for your investment. -olivwb(quark); 2001-11-7 {599} (#251883@0)
i think if you just want to get stable return for your investment. you should make a diversified portfolio. it may have another 50-75 base point cut in CANADA. keep cash in Bond fund is good choice. but remember the interest won' go O in CANADA. and US. US needs a powerful Dollar to support its bond and stock market. if the rate are too low. the money in fixed income will move to Europe. this is a disaster for US market. But European market is boring. SO i think you could keep some cash in Saving accout in ING. 3% interest rate. good return now. then after half year reinvest in stock market.

Very insightful thoughts! -dropoutinmiami(东北的饺子); 2001-11-7 {17} (#251919@0)
希望有空多多交流.

Tax implication and foreign content -rounder(rounder); 2001-11-7 {1096} (#251836@0)

本文发表在 rolia.net 枫下论坛Go to Revenue Canada site for tax info:
http://www.ccra-adrc.gc.ca/menu-e.html
On the home page menu, there is "Registered plan" which is for RRSP.

One way to maximize foreign content is to buy mutual funds which are allowed to hold foreign assets but are not counted as foreigh content themselves. For example, you invest 10% of your portfolio in US stocks and 90% in a Canadian fund that holds 10% US assets but not classified foreign content. From the tax perspective, you foreigh content is 10%. From a Port. return perspective, it's 10%+90%*10%=19%. See details of each fund to see if they qualify for domestic content.

By the way, I think the rush for foreigh content in Canadian investor in the past 2 years are largely fueled by the US dot.com craze. I am not sure if it is stll a strategy worthwhile to pursue. there is admin costs involved if you really "maximize" it - the burden is on you to constantly monitor the foreign content as the market fluctuates to ensure you are not over the limit - unless you have your broker to manage it for you, usually for a fee.更多精彩文章及讨论，请光临枫下论坛 rolia.net

THANKS A LOT!我同意你的分析. 不过我现在想通过FOREIGN CONTENT来DIVERSIFY, 不一定是美国的股票. 有个问题, FOREIGN CONTENT是按照你购入的价格比例还是按现在的市场价格? -dropoutinmiami(东北的饺子); 2001-11-7 (#251856@0)

market price. so if it appreciates a lot after your purchase, you might be forces to sell osme. -rounder(rounder); 2001-11-7 (#251863@0)

IT IS HARD TO BELIEVE! 如果是这样, 就要适时监控了. :( -dropoutinmiami(东北的饺子); 2001-11-7 (#251921@0)
NO, if it appreciates a lot, you don't need to sell it because it goes by BOOK value, not market value. -banker(见面熟); 2001-11-7 (#251942@0)

Oops, I mixed up on the book value/market value issue. Just double checked. Thanks for the correction. -rounder(rounder); 2001-11-7 (#251978@0)

朋友，有空咱们探讨哇 -banker(见面熟); 2001-11-7 (#251980@0)

请问ROUNDER和BANKER, 当你们把RRSP TRANSFER到别的FIRM是否要付费? 我现在放在AMEX'S SAVING ACCOUNT, 转出来不收费, 但ACTION DIRECT就不知道了... -dropoutinmiami(东北的饺子); 2001-11-7 (#251982@0)

转银行是要收钱的，但是有些银行为了多吸收客户会免费，你各家问问吧 -banker(见面熟); 2001-11-7 (#252004@0)
说得不清楚了。转出的银行一般收钱，但接受的银行有时会帮你交这笔钱。 -banker(见面熟); 2001-11-7 (#252006@0)

Take this one: -rounder(rounder); 2001-11-7 {416} (#252005@0)
Question about RRSP liquidation after giving up residency:

If I had been in the plan say 5 years, and now moves to another country. I want to liquidate my Canadian RRSP. How am I going to be taxed in Canada? Theoretically since I have given up my residency, I can be only taxed on my Canadian source Income, so my tax bracket will be lower than when I contribute into the plan... Is there any other penalties?

federal rrsp de-reg withholding tax for non-resident is 25%, so it's big amount. -banker(见面熟); 2001-11-7 (#252009@0)

Thanks banker. About with-holding tax -rounder(rounder); 2001-11-7 {203} (#252058@0)
If I withdraw 30k from that RRSP that year after I give up residency, I will be taxed at 17% of that 30k when I file the tax return. Will Revenue Canada refund me of that 8% which it withhold in excess?

明天上班查查再告诉你. -banker(见面熟); 2001-11-7 (#252312@0)
i think you will have to get your answer from revenue canada, because -banker(见面熟); 2001-11-8 {245} (#253214@0)
if you are not a canadian resident, which means you don't need to report tax here, you will pay tax at the country you reside.
why don't you de-reg before you move out canada, therefor you can get back the overpaid tax protion.

my 2 cents

Thanks dude. -rounder(rounder); 2001-11-8 {735} (#253222@0)
If I de-reg before I leave, since I have other income, it will be taxed in a higher tax bracket, probably above 25%. If I de-reg after, as I don't have any other canadian source income, taxed at a lower bracket, most likely 17%. Maybe I am wrong, but I think Canadian source income is still tax here, even if you have given up residency. i.e. disposal of property with a capital gain. Otherwise there is a loophole for really rich folks to sell their legacy without paying any tax on capital gain. Anyway my question is just for discussion purpose, I just want to know whether I should use all my RRSP contribution room if there is a possibility for me to leave the country 5 years down the road. Thanks again, have a good one.

@Calgary

A layman's advice.

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