Investing Five Daily

Ooops QSR.UN Priszm Income Fund

2009-11-20T11:55:00.000-08:00

I've held Priszm Income Fund, QSR.UN, through two distribution cuts, from $0.10 to $0.01 and now to $0.00. The company is cutting the distribution to shore up the balance sheet. However, my initial attraction was a high yield, and have decided to sell my shares and reinvest elsewhere.

In this tough market, income funds are showing some strain, trying to maintain distributions in the face of falling income. I'm gravitating away from retail stocks and am now moving towards more stable sources of distributions and dividend income. I took the funds that I recovered from my sale of QSR.UN and invested in Transalta, TA.

TA is a more stable electricity and utility company that has in recent months taken action to improve its green credentials by acquiring Canadian Hydro.

TFSA - Tax Free Savings Accounts

2009-10-28T17:47:00.000-07:00

The TFSA (Tax Free Savings Account) introduced by the Canadian Government in 2009 has become a cornerstone of my new investing philosophy. A TFSA is similar to a Roth IRA in the US; after tax monies are contributed, investments gains are tax sheltered within the account and withdrawals are tax free.

Some background on the rules:

Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.
Investment income earned in a TFSA is tax-free.
Withdrawals from a TFSA are tax-free.
Unused TFSA contribution room is carried forward and accumulates in future years.
Full amount of withdrawals can be put back into the TFSA in future years.
Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
Contributions are not tax-deductible.
Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
TFSA assets can generally be transferred to a spouse or common-law partner upon death.

Current investment amounts are only $5000 a year, but in 10 years this will provide an account of $50000 plus any investment growth. This is a significant sum and will be a significant part of any portfolio.

TNK TeeKay Tankers

2009-05-20T20:44:00.000-07:00

I've come to a conclusion about my investing, I like learning about new things. I was watching a documentary about large super tankers, and got caught up a bit after the fact in researching all of the different ways to charter a vessel. For example there are time charters where a vessel is chartered at a given rate for a given time, or spot charters, where the going rate is paid. This got me to researching various companies, and I have decided to invest in TNK, Teekay Tankers. Teekay Tankers is owned 54% with a 53% vote by TK, Teekay corporation, and owned 46% with a 47% vote by public shareholders. TNK owns 9 Aframax and 4 Suezmax tankers, and manages their fixed rate and spot contracts to maximize their dividend and limit downside risk. To illustrate, their projected dividends are shown in the following table.

The spot rates for 2009 have been lower than in 2007 and 2008, but TNK seems to have enough fixed contracts to maintain a dividend, even at low spot rates, which lends it more stability than other players like NAT, Nordic American Tanker Shipping Ltd.

DRIP Investing

2009-04-19T12:24:00.001-07:00

I've been researching options for DRIP (Dividend Reinvestment Plan) Investing.

I'm currently using BNY Mellon (Choose investment plan enrollment) . This is where my holdings for General Electric, AmBev, and China Mobile are. I enjoy the website, easy to use. You get an investor number, where holdings are grouped. My only complaint is that my GE and CHL holdings are under on number, but my ABV was issued under another. Note, there is an option to group IDs together if you have multiples, but this involves a phone call and I haven't done that yet. There are plenty of holdings to choose from, I'm thinking of adding American States Water Company (AWR) , and Waste Management Inc (WMI).

The other option that I'm looking at is Computershare. This is the transfer agent for Walmart, Coca-Cola, McDonald's, Exxon and so on. This looks like a good option and one I'm wanting to try soon. The only issue is that all foreign investors have to invest via a mail in form, no online access. I will report soon.

Note all of these require US funds drawn on a US bank. I've used RBC Access USA to establish a US bank account. See my previous post,RBC Access USA.

Canadian High Interest Savings Accounts

2009-04-13T12:03:00.000-07:00

Recently I've been looking for a place to stash some of my free cash. I had been using ING but am disappointed by the dwindling interest rates. This type of review has appeared in a few places but thought I would share the most up to date information.

1. ICICI Bank 2.0%

2. PC Financial Interest Plus 1.45%

3. Achieva Financial 2.10%

4. Outlook Financial 2.00%

5. Altamira High Interest Cash Performer 1.05%

6. Citizen's Bank 1.85%

7. ING Direct 1.70%

ING is the bank that I'm currently with. My orange key is 32561936S1 if you want a $13 bonus when you signup.

8. HSBC 1.50%

9. Manulife 1.55%

10. RBC 1.50%

New Picks OPC and ABV

2009-04-11T10:49:00.000-07:00

Some new additions to my portfolio, OPC and ABV.

OPC -OPTI Canada Inc. (OPTI) is a Canada-based company focused on developing major oil sands projects in Canada. Its first project, Phase 1 of the Long Lake Project (the Project), consists of 72,000 barrels per day of steam assisted gravity drainage (SAGD) bitumen production integrated with an upgrading facility. OPTI is focused on developing the next integrated oil sands project in Canada, Phase 1 of the Long Lake Project (the Project), in a joint venture with Nexen Inc. in which OPTI has a 35% working interest.

ABV- Companhia de Bebidas das Americas - AmBev (AmBev) is a Brazil-based company. AmBev and its subsidiaries produce, sell and distribute beer, draft beer, malt, soft drinks and other non-alcoholic beverages, such as isotonic sport drinks, iced tea and water. The Company operates in 14 countries in South, Central and North America. Its business is divided in three segments: Brazil, Hispanic Latin America, and North America. The Brazilian segment commercializes beer, carbonated soft drinks and non-alcoholic non-carbonated drinks, malt and by-products to third parties. The Hispanic Latin America segment operates in Argentina, Bolivia, Chile, Paraguay, Uruguay, the Dominican Republic, Ecuador, Guatemala, Nicaragua, Peru and Venezuela. In the North America segment, it is active in the sale and export of beer in the United States and Canada, through Labatt Brewing Company Limited. As of 2008, the Company holds a 99.56% stake of Quilmes Industrial Societe Anonyme.

OPC is a speculative move for me. I'm either holding until the company is bought out, or until production ramps up in the long lake project. ABV is a more long term holding, increasing my exposure to BRIC.

The Old and the New, investing in GE and CHL

2008-11-09T01:01:00.001-08:00

I made my first stock picks this week. I used my RBC Access USA chequing account at BNY Mellon to open two stock accounts. One with General Electric (GE) and the other is an ADR (American Depository Receipt) with China Mobile (CHL).

Why GE? It's a good dividend paying stock, it's trading around its 52 week low, Warren Buffet bought into it, and over the long term it should do well, it appears well positioned to take advantage in new technology and renewables, along with its other strong businesses.

Why CHL? China Mobile is one of the largest telecoms in China, it's dividend policy is to pay 45% of profits to shareholders, trading at a 52 week low, and it's growing a huge subscriber base. More and more of China's people are moving into the middle class and CHL is a company that's poised to meet those needs. I've bought into an ADR, which is basically stock of a foreign company that's traded on the NYSE.

Holy Smokes the Sky is Falling

2008-09-30T19:02:00.000-07:00

Well the sky is falling these days, markets falling, house foreclosures and all the rest. For the time being I am reasonably optimistic, I know the short term will be tough, still believing that the long term will work out. So I will stay the course, collecting my pennies, although my investing tactics may be more conservative for awhile. I'm hoping that the lowering of the market will actually present more opportunities to buy.

Eleven Cents

2008-09-01T14:24:00.002-07:00

Well the first profits have been realized and my ING account has netted me 11 cents at month end. Next month should prove more promising with a full month of a more sizable amount of money in the account.

Good Advice

2008-08-26T18:22:00.000-07:00

I finished reading a book called Confessions of a Subprime Lender about the credit crisis in the US. What struck me was the stories about how many people were living beyond their means, barely getting approved for mortgages, then being forced out when their adjustable rate mortgages adjusted up.

It reminded me of some advice I got a few years ago from a family friend about living within your means. Specifically, he talked about how many people that he worked with in a seasonal, construction type industry depended on their bonuses as part of their income. He on the other hand did rather well treating his bonuses as just that bonuses. He lived on his income, and then used his bonus as an investment.

It also speaks to the greater topic of found money, ie bonuses, tax returns and inheritances. More good advice, park found money in an investment account, wait and decide, rather than spending a new found windfall. Certainly pay yourself, spend 10% on yourself, but invest the rest or pay down debt.

Review of ING Direct Account Setup - Week One Update

2008-08-12T16:33:00.000-07:00

The end of week one and I have achieved a savings of $35, $5 each day for 7 days. My money is resting in my ING Investment Account while I wait for some of the other accounts like the RBC Centura account through RBC Access to be set up. I'm also going to be investigating a low cost brokerage. I haven't achieved any gain on my savings as yet, will update you on the amount of interest at the end of the month.

Setting up the ING account was relatively quick and painless. Fill out a form online, return a cheque payable to yourself. They've set up an electronic transfer with my main chequing account at Bank of Montreal. So far I've been pleased with the service, any transfers have gone through in a day or so, with a 5 day hold on the funds. I will report back on how long it takes for the funds to be returned back to me. The account is no frills, but it serves its purpose as a leave your money there for awhile account.

Linking around the Net

2008-08-12T16:10:00.001-07:00

Back to School Edition of Money Stories

2007 Top Marginal Rates of Tax for Canadian Dividends

2008-08-10T13:01:00.000-07:00

I've been researching into the tax implications of having various dividends and capital gains. I found a good resource from Grant Thorton LLP which I've shared here. Simply put in each province, when you combine federal and provincial tax rates, you're going to get taxed at a different rate depending if you declaring interest income, capital gains, foreign, eligible, or other canadian dividends. An eligible dividend is declared when it is awarded by a Canadian company. You will pay the highest rates of tax on common interest and on foreign dividends.

Paying Attention To Money

2008-08-09T21:27:00.000-07:00

I'm finding that I'm developing an interesting mindset about money and savings these days.

Personally, I was pretty lucky to graduate without much debt. Now that I'm working, most of my major obligations are taken care of with automatic payments. My RRSP contribution is automatic, my insurance and car payments come out once a month and so on. So after the paycheck went in, and the money came out, I was pretty comfortable spending the rest.

I purposefully created this project around a small amount of money to focus my spending and savings habits. I'm finding that I'll walk up to a vending machine, stand there for a moment, decide that I don't really need to spend the money and then walk away. I don't really feel deprived, and when I do make a small purchase it seems more rewarding. I'm following my budget more closely and I'm reducing my overall spending.

RBC Access USA

2008-08-08T16:12:00.000-07:00

I paid a visit down to my local RBC branch, carrying my driver's license, SIN card and my passport. Thanks to Sam and Nancy I was able to quickly enroll in their RBC Access USA program. They set me up with an RBC Day to Day Savings Account, which has no monthly charges, the fees are transaction based, with one free transaction a month at their branch. Then we fired off an application for the RBC Access USA program. I opted for the basic level service, which let's you have a few free transactions, write cheques etc, there is a premier level service that has some more fees, but more included. Everything seemed to go fairly easily because I had all my ID and such. They faxed the application off to RBC Centura who are then supposed to go ahead and set me up an account and mail me the information. So step one completed, hopefully all goes ahead with no issues. If everything goes ahead, I should be able to log into both accounts through the RBC canadian account and move funds into the US account.

The RBC Access USA program appears to be set up primarily for Canadian snowbirds, for the unfamiliar, snowbirds is the nickname for Canadian retirees who spend 6 months or so over winter each year in Florida. The program looks like it will work for folks like me as well who require a bank account physically located in the US. In this day and age, this looks like one of the last viable options for US banking for canadians without traveling to the US.

High Interest Savings Accounts

2008-08-07T16:41:00.000-07:00

What to do while I wait to build up some funds? A stack of bills under my mattress won't do me much good. I went looking around for some high interest savings accounts. Most of the major banks have some kind of a higher interest option, one maybe two percent. That's not very good, the better options are high interest savings accounts from discount banks. These banks are usually characterized by having little to no storefront presence, and their business is primarily conducted online. You usually have to submit an application form, have a social insurance number, and submit a cheque payable to yourself so that the accounts can be linked. Once your account is linked you can move funds by Electronic Funds Transfer.

Some of the options out there are:

Citizens Bank Investment Account

Citizens Bank Ultimate Savings Account

HSBC High Rate Savings Account

ICICI Bank HiSAVE Savings Account

ING Direct Investment Savings Account

The plus side is that these are all CDIC insured, the only drawback is the potential for slightly lower customer service. Personally, I've opened an account earning 3% with ING, not big dollars, but somewhere to put the cash for now.

Dividend Reinvestment Programs and Direct Stock Purchase - Not So Easy For Canadians

2008-08-06T22:36:00.001-07:00

I want to avoid brokerage costs as much as possible right now, as I would have to wait a long time to save up enough money to invest and to cover the brokerage costs. I investigated dividend reinvestment programs (DRIPs) and direct stock purchase programs. For a DRIP if you own at least one share, you can participate in dividend reinvestment through companies and their transfer agents. I found www.directinvesting.com is able to transact the one share and enroll me. Even better, in some cases with stock like General Electric (GE) you can participate in a direct stock purchase plan and buy stock directly from their transfer agent.

HOWEVER, you need to write a cheque, drawn in US funds on a US bank with a US address (Basically, the branch needs a 9 digit ABA transit number and has to be located in the US). Hmm, can't open accounts online anymore thanks to the Patriot Act and what not. No trips to the US planned in the near future. Alright, I've had an account with Bank of Montreal since I was six, maybe they can facilitate something....

"In regards to your inquiry, I can advise that, regrettably, BMO Bank of Montreal does not provide the facility you have requested. Please note that we do provide the option to open US Dollar accounts, however we are unable to set up accounts that are held at banks in the United States. I apologize for this limitation."

Well there goes that idea. I'm going to try RBC next, they have a program called RBC Access USA. It looks like it's set up for snowbirds and it looks like the accounts are held with RBC Centura bank. Not much information online, and you have to go in to the branch to set it up. Well Thursday is the day they're open late so wish me luck.

The First Five

2008-08-06T16:53:00.000-07:00

So here it is, the first fiver.

Day One Total = $5.

The Plan

2008-08-06T00:21:00.000-07:00

My plan looks like this:

Start Early: I won't get anywhere if I don't gain the benefits of compound interest.

Invest Often: I will transfer funds from my savings accounts to my investment accounts every two weeks.

Buy and Hold: I can't afford broker commissions for switching stocks around, so I'll be using a buy and hold strategy to try and pick winners and then hold on to them.

Diversify: I'll try and hold stocks and bonds from a variety of industry sectors to try and mitigate losses in any one area.

The Math

2008-08-06T00:02:00.001-07:00

So what's five dollars a day worth? I'm 22, let's assume I save and invest five dollars a day, everyday, until I retire at 65, that's 43 years. Assuming an annual rate of return of 8% and 2.5% inflation and a marginal tax rate of 33%, I will have deposited $ 137 702.65 and my investment will have produced $ 313 111.06 in growth for a total value of 450 813.71. This all presumes that I increase my $5 per day savings with inflation also. I'll index my inflation to the previously mentioned Starbucks latte because I believe that if you can cut out a latte a day, you can try and follow along with me.

The Project

2008-08-05T23:57:00.000-07:00

I'm 22, going on 23 and I just graduated college. The first thing they told me was, start saving for your future. So that's what I'm going to do, cut out the Starbucks latte, save five dollars a day and invest it and let's see what happens.